Plaintiffs Get Settlement in Long-Term Care Insurance Lawsuit

Kansas City, MO: Consumers who purchased long term care insurance are now fighting back against policies that they say are unfair and unreasonable. Some consumers are fighting back by filing long term care insurance lawsuits, alleging their insurance provider misled them or denied their claims on a questionable basis. Recently, 1 class action lawsuit, filed against 3 companies, resulted in a settlement.

The lawsuit was filed against American Heritage Life Insurance Co. and Wakely and Associates Inc., who sold the policies, and Mutual of Omaha Insurance Company, who co-insured the policies. The class action lawsuit, filed on behalf of people who purchased long term care insurance from American Heritage or Wakely, alleged that the defendants set low premiums for the policies but did not tell policyholders that they planned to raise the rates dramatically.

The suit was settled for approximately $15 million, with American Heritage and Mutual of Omaha paying $11 million in insurance and benefits while Wakely will pay $4 million. All of the defendants deny any wrongdoing in the sale of the insurance policies. According to a lawyer for the plaintiffs, many of the policyholders will receive $35,000 to $40,000 in long term care benefits without paying any more for their premiums.

If you think your long term care rates will not dramatically increase, you may be wrong. An article in the Federal Times reports that up to 155,000 civilian and military employees enrolled in the federal long term care insurance programs will see their premiums increase by as much as 25 percent in the coming months. The increase will affect people enrolled in the “automatic compound inflation protection” option, with the premium increases determined by the age an enrollee first signed up for coverage. Whoever purchased the policy at 65 years or younger face an increase of 25 percent.

The office of Personnel Management, overseer of the program, said that the premium increase is necessary to cover the costs of running the program.

Long term care insurance is designed to help a policyholder should she become in some way incapacitated or unable to take care of herself. While most people do not want to consider that a possibility, the truth is that there are many ways that people can become incapacitated as they age, and, in fact, some people need long term care well before they hit age 65.

Long term care insurance policies vary depending on the contract, but they can include nursing home care, institutional settings, in-home health care or managed care. They do not cover hospital stays or medical treatment.

Of course, given the recent controversy surrounding long term care insurance, some people may wonder if they will ever access the benefits they were promised when they signed up for their policy. After all, long term care insurance providers have been accused in the past couple of years of using unfair tactics to deny claims. Such tactics allegedly include sending people the wrong paperwork, questioning their need for care (even when the claimant is diagnosed with early-stage dementia) and not updating policies to include changes in assisted living, meaning that newer types of assisted living homes are not covered in the policy.

The list of grievances against some long term care insurance providers is long, and has resulted in action being taken against some of those providers in the form of lawsuits.

Long term care insurance can be a vital part of a person’s life-long care plan as well as her financial plan. Unfortunately, when premiums rise suddenly or when claims are denied for questionable reasons, they can have a serious effect on a person’s financial and physical well-being.

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