MedAmerica says it is withdrawing from the long-term care insurance (LTCI) and short-term care insurance (STCI) markets.

MedAmerica — a unit of Lifetime Healthcare Companies Inc. that oversees the Pittsburgh-based MedAmerica Insurance Company, MedAmerica Insurance Company of New York and MedAmerica Insurance Company of Florida — has sent company agents a memo notifying them of the market withdrawal.

See also: Carrier to pull out of New York LTCI Partnership market

Bill Naylon, the company’s president, writes in the letter that the company provides LTCI coverage for about 120,000 people.

MedAmerica first entered the LTCI market in 1988.

“While we believe there is a growing and undeniable social need for financing long-term care, economic circumstances have impacted the entire long-term care industry, as evidenced by a 22 percent decline in 2015 industry sales, according to LIMRA,” Naylon writes. “Unfortunately, these circumstances, particularly the low interest rate environment, have left MedAmerica with no choice but to exit the marketplace.”

The company says in a separate answer sheet that the product discontinuations affect all products the company sells through independent distributors.

In-force LTCI coverage will continue without interruption, and MedAmerica will continue to provide good service, Naylon says.

MedAmerica will terminate producer contracts and state appointments on April 15 in Pennsylvania and on Feb. 15 in other states, Naylon says.

Regardless of the status of producer contracts or appointments, the last day when consumers can sign applications is Feb. 15, Naylon says.

“Commissions will continue to be paid per the terms of your contract,” the company says in the fact sheet. “You may be provided the option of a commission buyout.”

In response to the question “Will MedAmerica be able to pay claims for my clients in the future?”, the company says: “MedAmerica is committed to honoring the promises we have made to all of our insureds.”

And, in response to the question “Are you looking to sell your existing book of business?”, the company says: “MedAmerica will continue to evaluate all options to improve financial stability.”

Lifetime says in its 2014 annual report that it has a capital support agreement with MedAmerica, and that the agreement requires Lifetime to ensure that MedAmerica has enough liquid assets for the timely payment of amounts due on policies issued after July 1, 2010. Lifetime has directly guaranteed the payment of MedAmerica’s policyholder obligations for policies issued by MedAmerica from June 24, 1997, through June 30, 2010, according to the annual report.

See also:

Explaining LTCI rate increases

MedAmerica trims California LTCI product line

 

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