Read The Fine Print: A Case Study In Getting The Insurance That You Paid For


Medicare supplement coverage—often called Medigap—has often bewildered elderly patients and their caregivers. Should one choose to join an HMO or a PPO? Should one purchase from the large menu of standardized policies? Once the final decision is made, the insurance company commends the senior citizen's judicious choice, promising to provide the required security should a health problem arise. In the case of an elderly woman convalescing in a Connecticut nursing home, the system broke.

Dorothy E. Morrison, aged 90 years, has been in continuous convalescence at the Lord Chamberlain Nursing and Rehabilitation Center in Stratford, Connecticut, since May of 1997. She holds two insurance policies from the Bankers Life and Casualty Company. One is an indemnity policy that pays $50 per day when the insured is confined to a nursing home. The other is a pre-standardized Medicare supplement policy. On top of appropriate Medicare supplement benefits, Bankers had been paying the indemnity benefit continuously since 1997. The pre-standardized policy included additional benefits beyond the basic supplemental coverage. This was to be paid after Dorothy had exhausted Medicare's limit for skilled nursing home care benefits. It was listed separately from the Basic Coverage of the plan and was to be paid on a per calendar year basis.

Neither Mrs. Morrisson nor any of her caregivers had noticed this particular benefit. In June of 2001, I was asked to review Mrs. Morrison's policies. I immediately identified this compensable benefit and proceeded to file the claim. Bankers' response was to pay the benefit for calendar year 1997. It was Bankers' position that this additional skilled nursing home benefit was based on a "benefit period," even though the wording of the coverage specifically referred to "calendar year". Accordingly, I initiated an appeal of Bankers' decision to deny additional benefits. What transpired during this appeal process affects both Bankers' policyholders' plan of care and the nursing homes where those policyholders reside.

Before writing the formal appeal letter to Bankers, I contacted the Connecticut State Department of Insurance. The Insurance Department's Associate Examiner agreed with my position and instructed me to appeal the claim with Bankers, and to initiate a formal inquiry with the Insurance Department. Bankers' claims department responded to the appeal by reiterating its position that the benefit was to be paid per "benefit period". Bankers then responded directly to the Insurance Department's inquiry. After being so supportive of my position, the Insurance Department's Associate Examiner agreed with Bankers' determination of benefits. Needless to say, I was shocked; however, I felt that the only alternative was to contact Bankers' legal department.

My initial contact with Bankers' legal department was simply to ask for a review of the policy, as well as of all of my correspondence with the company. Though initially receptive to my request, Bankers' Managing Attorney soon reiterated the claims department's previous position and again denied the additional benefits. He did, however, promise to consider any new information that I might provide. Seizing that opportunity, I formulated a hypothetical case based upon my position regarding the benefit. When the Managing Attorney responded to this hypothetical case by essentially agreeing with my original position, I contacted the company's Executive Office.

The Assistant Vice President of Claims for Bankers reviewed the entire appeal file. She then concluded that the additional skilled nursing home benefits should be paid. A payment was sent to the Lord Chamberlain Nursing Home in the amount of five additional years of benefits. The corresponding explanation of benefits, however, reflects payment for three months in 2002.

How significant is Mrs. Morrison's case? There were 12 to 14 thousand of these policies sold in Fairfield County alone. It is conceivable that several of these policies were converted to the lesser standardized Plan "F." How many of Bankers' policyholders either were not made aware of this benefit—thereby curtailing their plan of care—or were simply denied the benefit when they did file the claim? How many Bankers' policyholders currently residing in nursing homes have never even filed a claim for this benefit?

We'll never know. The moral of the story, however, is crystal clear: you and you alone are ultimately responsible for your financial future and quality of life. If you purchase an insurance policy, you owe it to yourself to know the benefits to which you are entitled. If you are unfairly denied benefits, hold your insurer to account and don't let go! In the long run, a well-informed and self-motivated consumer base benefits both insurance companies and their customers.

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