Navigating the complexity of a long-term care insurance policy

Moments after Jay Lucas first met his future wife, Susie, he owed her an apology.

He mistook the senior examiner for a clerk during his first day on the job at the U.S. Patent and Trademark Office in Alexandria, Virginia. She called him a “sexist pig.”

“I took her out for coffee to apologize,” Jay said. “I spent the next 35 years apologizing.”

Jay and Susie married, bought a home together and raised two children. “We had a very good life,” he said.

When they were thinking about retirement, the Lucases prepared for their old age by each purchasing a long-term care insurance policy from a private company. The two hoped it would cover the cost they thought they would incur if one of them needed to go into a nursing home.

A friend who worked as an insurance agent recommended the plan, which offered an unlimited duration, to them in 2000, and each plan cost about $1,700 per year.

People buy long-term care insurance as one way of financing “personal or custodial care” in a nursing home or a community facility, according to the U.S. Department of Health and Human Services.

The cost of these insurance plans is calculated based on a person’s age, how much a policy will pay per day, how many days or years a plan will pay out, among other factors. Without long-term care insurance, people often either use their own savings or Medicaid to cover long-term care. Medicare does not pay the “largest part of long-term care services.”

With their own long-term care insurance policies, Jay said he thought he could tap into the policy’s benefits in much the same way as if he had been in a car accident and needed to use his car insurance. He thought he only needed to pick up the phone, make a claim, and the long-term care insurance company would find and pay for the needed facility and services.

He always thought he would be the first to need to use long-term care insurance.

When Susie first showed unmistakable signs of Alzheimer’s four years later, Jay found out that their long-term care insurance policy was far more complicated than either of them realized. He quickly learned that the company would only pay money if she qualified to receive it. But, he said, “it’s up to me to find the facilities that are appropriate for the kind of dementia that Susie had.”

People often lack a basic understanding of what their long-term care insurance policies actually do, said Bradley Frigon, president of the National Academy of Elder Law Attorneys. According to the American Association of Long-Term Care Insurance, 8.1 million people have long-term care insurance. In 2012, 54 percent of people applying for long-term care insurance were between the ages of 55 and 64, AALTCI reported, and nearly two-thirds of new claimants were age 80 or older.

What surprises people the most about these policies is the so-called elimination period, Frigon said. That’s the number of days during which time a person needs and receives long-term care before an insurance company will cover the costs.

But there are far more intricate details and important definitions that are critical to understand but easy to miss in these plans, which are legally binding contracts.

For example, a plan’s benefit may not kick in until the policyholder experiences multiple “activities of daily life impairments,” which means a person requires assistance to go to the bathroom, eat, shower or get dressed. Other plans make provisions for “severe cognitive impairment,” such as long- or short-term memory loss, disorientation or diminished reasoning skills.

Susie’s deteriorating condition with Alzheimer’s qualified her to receive care paid largely by insurance as part of her policy. They were both in their 50s.

After Jay diligently researched facilities and forms of care to find the best fit for his Susie, he secured an at-home care company that sent a worker to their house every day while he continued to work at the patent office. The at-home care company billed him every month, and then a few weeks later, Jay would receive a reimbursement check from the insurance company to pay the bill.

That went well for a few years, he said. Then, her forgetfulness worsened, and her imagination haunted her even more.

One day, Susie attacked her caretaker, thinking she was being kidnapped when in reality, they were just going for a walk outside. Next, a lawn care worker in the neighborhood noticed that Susie had dementia and coaxed her into writing him a check for hundreds of dollars to cut a single limb off of their tree. Finally, Susie beat the trees in their backyard after she mistook them for giants who would harm the Lucas home.

“At that point, I realized I need more than just day help,” Jay said.

That meant Jay needed to do more research to find a place outside of the Lucas home where Susie would be safe and feel secure. Again, the company that held Susie’s long-term care insurance policy “didn’t help at all with finding her a place to live,” Jay said.

Social workers in Alexandria recommended one well-known group home, but Jay said “it was just not suitable for Susie, who needed a much more intimate atmosphere.”

Jay’s work led him to Labier Assisted Living, a small group house not far from their home. There, staff prepared freshly cooked meals, organized daily activities and offered supervised care day and night.

“I knew it was the right facility for Susie. It was small, it was intimate. Susie was comfortable there,” Jay said.

When the day arrived to move Susie out of the house she and Jay shared for three decades of marriage, Jay was wracked with guilt. He couldn’t even bring himself to tell his wife about it.

“It was probably the hardest day of my life,” Jay said.

However, the emotionally exhausting challenges that the Lucas family faced were not over yet.

The insurance company rejected Labier and would not cover the cost of sending Susie there, which amounted to thousands of dollars per month. The facility’s owner did not answer a survey question correctly about who would be contacted in the case of an emergency. The owner said facility staff would call 9-1-1.

That was when Jay contacted a lawyer, Robert Bullock, of the Elder and Disability Law Center in Washington, D.C., to appeal the insurance company’s decision.

Bullock drafted an appeal so thick that it “looked like a Supreme Court brief,” Jay said, arguing why the facility was good for Susie and should be covered by insurance.

For the insurance companies, these policies are simply part of doing business, Bullock said.

When someone buys a policy for $5,000 a year for 10 years, Bullock said, “The insurance company has taken $50,000 and invested and made whatever on the money and not had to pay a dime.”

When a claim is made on that policy, he said, “They build a wall up and make it difficult to make the payment. It’s a business.”

A month after Bullock submitted his appeal, the insurance company wrote Jay a letter simply stating that it would cover Susie’s care at Labier. She could stay in the group home.

Not everyone buys long-term care insurance, sometimes opting to self-insure if they can afford to do so. In fact, some experts recommend not buying long-term care insurance.

Despite the issues his family faced, Jay said he does not regret buying the policy for his wife, primarily because it offered an unlimited duration. He estimated that the insurance company paid as much as $700,000 to cover Susie’s care. If he had to pay for that care out of pocket, Jay said “that would have bankrupted me.”

“She needed the care. I had to do it, but it was unaffordably expensive,” he said.

Overall, the insurance industry could do more to educate consumers about the complexity of long-term care policies, explained Frigon with the National Academy of Elder Law Attorneys. That way, people would be better equipped to make smart decisions about how to fund their long-term care.

“I think the industry could be more consumer-friendly about that, but I don’t think that’s going to happen,” Frigon said.

After spending years in the group home that Jay thought was best for his wife, Susie died in September.

“My Susie, I hadn’t seen for 10 years. My Susie, with the laughter, the spark, the competent person I married, little by little, she died 10 years ago,” Jay said. “The body went on, but that’s the story of Alzheimer’s. That’s all.”

Jay hopes people learn from the challenges his family faced and remember one thing if they are confronted by problems with long-term care insurance: “The lesson is to fight it.”

Support PBS NewsHour: