Iowans with long-term care insurance face huge premium hike

The Iowa Insurance Commissioner is seeking an urgent court order to stop a Pennsylvania insurance company from dramatically increasing premiums and cutting benefits for Iowa seniors with long-term care policies.

Unless the courts intervene, Insurance Commissioner Douglas M. Ommen claims in a motion filed in Polk County District Court, Pennsylvania’s Senior Health Insurance Company will be allowed to ‘force vulnerable Iowans’ to pay confiscatory rate increases of 400% or more even if imposing “draconian” cuts to insured benefits.

Ommen is taking former Pennsylvania insurance commissioner Jessica K. Altman to Polk County District Court over the matter. Altman is the court-approved “rehabilitator” for the financially troubled Senior Health Insurance Company of Pennsylvania. In this role, Altman was granted full authority from the company’s directors, officers, and managers with the goal of making the company solvent.

In his lawsuit, Ommen argues he’s concerned that with Altman at the helm, Senior Health has already begun contacting policyholders in Iowa about ‘extreme’ premium increases and potential benefit reductions. .

According to the petition, Senior Health’s business consists almost entirely of long-term care policies that pay for nursing home care. Court records indicate that Senior Health has been insolvent since at least 2019, when it reported a deficit of around half a billion dollars. The company hasn’t written any new policies since around 2003, and only a small fraction of its original business remains active, the petition claims.

State records show that there are currently 881 Senior Health policyholders in Iowa. The average age of Senior Health policyholders is 86 and the average age of a policyholder with an active claim is 89, but the company is reportedly suffering from a $1.2 billion funding shortfall. dollars.

Ommen argues that despite Senior Health’s “disastrous financial situation”, Altman has decided not to place the company in liquidation – a process that would trigger coverage through state guarantee associations that protect policyholders when insurers go bankrupt. Altman instead placed Senior Health in rehabilitation, a process that allows the company to reduce expenses and increase revenue by changing the terms of its 39,000 active policies.

In May of last year, a Pennsylvania court approved a rehabilitation plan proposed by Altman. In December, Senior Health filed notice of a premium rate increase in Iowa, in accordance with the approved plan.

Ommen rejected the proposed rate increase, arguing that the rehabilitation plan circumvents not only state laws governing insurance rates, but also laws relating to the payment of claims made against insolvent insurance companies. The rehabilitation approach benefits large insurance companies at the expense of “policyholders who have paid premiums for many years,” Ommen says.

In his court petition, Ommen said, “The elderly policyholders of Iowa accepted the deal presented to them by (Senior Health): ‘If you pay the premium, we will accept the risk of future loss.’ It is unfair and contrary to Iowa law for defendants to now alter this bargain due to factors or events they wish the company had known or considered at the time the bargain was entered into, and transfer that risk to the policyholder.

Iowan, 69, facing a 403% rate increase

States other than Pennsylvania where policyholders reside, including Iowa, were given the option under the rehabilitation plan to opt-in or opt-out. Although Ommen opted to drop Iowa from the plan late last year, Senior Health later sought approval for rate increases on 215 Iowans-held policies, saying it planned to increase the average annual premium for these insureds from $2,307 to $4,648 per year, a 201% increase.

For some policyholders in Iowa, “even more drastic premium increases” are planned, according to the petition. For example, one Iowan is an 89-year-old woman who has been paying premiums since November 1990. The plan calls for her premiums to increase by 234%, Ommen alleges.

A 91-year-old Iowa woman who has been paying premiums since March 1991 would see her premiums increase by 256%. A 69-year-old woman from Iowa who has been paying premiums since March 1990 would see her premiums increase by 403%.

The largest proposed premium increase is $1,642 per year to $12,727, an increase of 675%, the petition states.

In total, Altman and Senior Health have requested an increase of 100% or more for 90 of their Iowa policyholders, the petition states. If policyholders refuse to pay those rates, Ommen says, the plans ask Senior Health to simply reduce the benefits associated with those policies.

Even if policyholders decide to pay the premium increases outlined in the first phase of the rehabilitation plan, they will still face “draconian benefit reductions”, Ommen says, despite the fact that they may already be in nursing homes and rely on police benefits to pay for their care.

Court records indicate that Senior Health Assistant Rehabilitator Patrick H. Cantilo argued that the company’s policyholders enjoyed an unreasonably low premium rate and that it is not fair that taxpayers, by the through state guarantee associations, foot the bill for financial losses. incurred by Senior Health.

“The question we were debating is, is it reasonable, if an insured person has been paying a quarter for a dollar for insurance for decades, to adopt, as a recovery plan, a plan in which the ratepayers step in to pay the 75 cents left?” Cantilo testified at a hearing.

In response to this argument, Ommen says that the Iowa Legislature, in creating a state guarantee fund, determined that it was “reasonable to apportion the loss resulting from the insolvency of the insurer” and not to place this burden solely on the backs of the insured.

Ommen is asking the court to issue a temporary injunction preventing the defendants from carrying out their rehabilitation plan in the state of Iowa.

Altman resigns as Pennsylvania insurance commissioner

The defendants in the case have not filed a response and a hearing into the matter is scheduled for March 9. However, lawyers in Ommen’s office filed a motion asking for more immediate action, noting that the matter is “urgent” and that under civil procedure rules, a court can grant a temporary injunction without taking any notice. hearing beforehand.

“Defendants have stated that they will not follow Iowa law in their plan,” the petition reads. “The court does not need additional information to determine that the defendants violate Iowa law and should be ordered to protect Iowa policyholders.”

The court has not yet ruled on this request.

In January, a South Carolina court issued an order granting that state’s insurance commissioner’s request for a temporary injunction that blocks the implementation of Senior Health’s rehab plan in that state. Earlier this month, a Louisiana did the same, blocking implementation in that state.

As for Altman, who helped craft the rate hike plan, she resigned as Pennsylvania’s insurance commissioner on Friday, with Gov. Tom Wolf praising her for “protecting access to health care.” affordable and of high quality by holding insurance companies accountable”.

Altman will soon begin serving as CEO of Covered California, a free service that provides Californians with financial assistance to purchase health insurance while guiding others to coverage through the Medi-Cal program operated by the state. The service is sponsored in part by the State Department of Health Services.

Iowa Capital Dispatch is part of States Newsroom, a grant-supported network of news outlets and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Managing Editor Kathie Obradovich with questions: [email protected] Follow Iowa Capital Dispatch on Facebook and Twitter.

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