How State Guarantees Work For Current LTCI Claimants

I dutifully explained how there are safeguards and guarantees in place that consumers are not aware of and that rarely, if ever, are included in any of the media coverage: Specifically, the existence of state guaranty associations designed to protect individuals in all 50 states and the District of Columbia.

The associations protect consumers who have purchased life, health and long-term care insurance policies in the very rare instance that an insurance company goes out of business and is unable to pay claims.

What I didn't know was how the guaranty associations worked for policyholders already on claim. Thankfully, information from the National Organization of Life & Health Insurance Guaranty Associations (NOLHGA) sheds light on this important topic.

The guaranty association coverage limit for LTCI benefits is now at least $300,000 per covered policyholder in all states. That is the maximum benefit a policyholder could receive under the state guaranty association laws in those states should an insurer fail.

Benefits paid up to the date when the guaranty association is 'triggered' would not count against the $300,000 in the guaranty association coverage.  In such an instance, the person already on claim would be eligible for continuing coverage of contract benefits up to the entire $300,000 of guaranty association coverage.

— Read Firm Proposes Long-Term Care Insurance Run-Off Program on ThinkAdvisor.

Jesse R. Slome is executive director of the American Association for Long-Term Care Insurance.