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Those who plan for old age deserve protection

By HOWARD TROXLER
Published June 18, 2006

Here is how I want to go.

I want to go after an old age rich in joy and memory, and after vigorous years during which I putter around my house fully able to take care of myself.

On the last day I want to take a nice walk on the beach with my wife. We'll hold hands and talk about dinner. Back home, I'll lie down for a nap, and that will be it. No need to make dinner after all.

Odds are that you'd prefer a sunset like that, too. Few of us envision spending our senior years unable to take care of ourselves, in a nursing home or assisted living facility, sick or weak or dependent on someone else.

But the truth is that a lot of us will need long-term care of some kind. According to the feds, a person reaching the age of 65 has a 40 percent chance of entering a nursing home, and one in 10 will stay there five years or longer. And that's just one kind of care.

Who pays for this? Sadly, it's usually a two-step process that works like this:

(1) You go broke.

(2) The taxpayers take over through Medicaid.

That's why a small but growing number of people are buying private insurance earlier in their lives to cover their eventual need for long-term care.

Unfortunately, there's a problem with that, too. The state's Office of Insurance Regulation has compiled hundreds of consumer complaints. Most of them boil down to two big categories:

- As policyholders get older, their premiums get higher and higher until some are forced to drop their coverage before they ever make a claim. They paid all those years for nothing.

- Companies can wait for any number of years, until a claim is finally filed, and then deny the claim based on the allegation of fraud in the original application.

"Policyholders don't have a choice right now,'' says state Sen. Mike Fasano, R-New Port Richey. "Their only choice is to pay every rate increase, or lose what they've been paying for all those years."

As for denying claims based on fraud, it's not fair to reach far back into the past, Fasano said - often the policyholder has reached the mental or medical state of being unable to challenge the denial.

The result of these complaints was House Bill 947, passed this year unanimously by our state Legislature. Several Tampa Bay area members of both parties, notably Fasano and state Rep. John Legg, R-Port Richey, were the sponsors and co-sponsors.

Among other things, the bill would:

- Require insurance companies to charge the same premium to the oldest customers as the newest. They now base their premiums on "blocks" of customers, then close off those blocks to new policies. So the premiums keep going up as the block grows older.

- Force insurers to give customers another option besides paying rate increases or dropping their policy. Customers would be able to choose to drop back to a lower level of benefits for a lower premium.

- Bar insurers from denying claims based on alleged fraud made in the original application once a policy has been in force for two years. That's how life insurance works.

House Bill 947 is in front of Gov. Jeb Bush, who must decide in the next few days whether to let it become law or veto it. The governor is under heavy pressure from the insurance industry. Florida would be the first state to adopt such a law.

I talked with folks from the American Council of Life Insurers, which is leading the opposition. They said the way the bill is written, they couldn't do anything even if the most outrageous and deliberate fraud were discovered after the first two years.

Patricia Parachini, a vice president for the insurance council, also said it was wrong for Florida to order retroactive changes in rates or benefits for existing policies, long after the companies issued those policies based on calculation of the risks.

Of these arguments, I am less sympathetic to the first. It seems wrong to take somebody's money indefinitely, year after year, and then declare, out of the blue, that they don't get coverage.

Neither does it seem fair that premiums should be calculated on the basis of limited, always aging, always more expensive blocks of customers, instead of spreading the risk.

If I were the governor, I would sign the bill and invite the industry to make its case for any needed changes to future Legislatures.

[Last modified June 18, 2006, 04:19:25]