Fla. Dept. Advises Conseco Policyholders on Options

Reportedly in response to numerous calls from seniors who have a home health care policy with Conseco Senior Health Insurance Company, the Florida Department of Financial Services is alerting them that notices are now arriving in their mailboxes with options regarding their policies. Conseco Senior has approximately 18,650 policies in force.

On April 20, the Office of Insurance Regulation denied a rate increase request of 212 percent and ordered the company to continue honoring the policies, along with offering the following options to policyholders who had a policy in force as of Feb. 22, 2004.

Option 1 – Retain the current policy with no benefit changes but be subject to a maximum 50 percent rate increase the first year with no caps on increases in future years. The rate increase would take effect on the next premium due date after receiving a notice from the company.

Option 2 – Choose a replacement policy. The policy will have a maximum 25 percent increase the first year with a 15 percent maximum increase per year for the lifetime of the policy. There will be four changes on the replacement policy: 1) the removal of the restoration of benefits; 2) eligibility of benefits will require a Licensed Health Care Practitioner to certify the insured is unable to perform at least two activities of daily living (ADLs) for a period of 90 days or suffers from severe cognitive impairment; 3) minimum 20-day elimination period, and 4) lifetime benefit period policies will be converted to seven years.

Option 3 – Select the contingent non-forfeiture benefit option, which is a “paid up” policy that equals 100 percent of the sum of all premiums paid. This option is a set dollar amount held by Conseco Senior to pay an individual policyholder’s future claims. It is not a cash refund of premiums paid. Claims will be paid until the insured’s pool of benefits have been exhausted. The policyholder will no longer be obligated to pay any premiums for their home health care policy.

If a policyholder fails to make an election by the deadline, the default election will be Option 1. If the policyholder fails to make an election by the deadline and the home health care policy thereafter lapses for any reason, the policyholder will be entitled to a contingent non-forfeiture benefit.

Conseco Senior was also ordered by the Office of Insurance Regulation to address claims handling concerns after the company reportedly admitted during a public hearing that there has been poor management of finances and claims.

Conseco Senior Health Insurance Company has experienced $510.8 million in operating losses and reserve increases since 1999. The home health care policies currently involved have generated losses of $337 million in Florida.