New York state regulators are imposing a $2.5 million penalty on John Hancock Life & Health Insurance Co. for problems with 156 long-term care insurance policy terminations.
The Boston-based Manulife Financial unit will also have to pay $2.2 million to the New York state Medicaid program, and $21.6 million in extra benefits to policyholders and beneficiaries, in connection with the LTCI policy termination errors, according to a consent agreement posted online by the New York State Department of Financial Services.
John Hancock found that it miscalculated policy termination dates because it failed to extend benefits periods when insureds used less than the maximum daily benefits on a given day while on the claim, officials said Thursday.
What It Means
Advisors who have clients who are using long-term care insurance or other types of coverage for long-term care may want to work with policy analysts and policyholder advocates to verify that clients are getting the benefits promised.
Long-Term Care Partnership Policies
The New York announcement involves the New York State Partnership for Long Term Care policies.
Consumers who have Partnership LTCI policies and exhaust private benefits can exclude some or all assets from eligibility calculations if they end up applying for Medicaid nursing home benefits.
New York state set up its Partnership program in 1993. Insurers stopped writing new Partnership program LTCI policies in the state in January 2021.
It's not clear how many Partnership program policies that John Hancock or other insurers have in force in New York state.
The Policy Terminations
New York department officials say they contacted John Hancock about Partnership policy terminations after a consumer complaint regarding a benefits termination decision that the department received in May 2019.
John Hancock resolved the first complaint, then agreed to search its records to see whether it had also ended the benefits of other Partnership insureds early, according to the consent agreement.
