Penn Treaty: An Ohio Perspective
For many of us, one of our greatest fears is that we'll need long term care and be unable to afford it. When our assets run out, Medicaid (but not Medicare) can be a source of funds, but at the expense of almost everything we've worked so hard to build. Long Term Care insurance can help provide those funds, and a measure of financial independence.
If, of course, the company through which it was purchased is still around.
For a number of years, Penn Treaty (and its subsidiaries)marketed long term care insurance plans around the country, writing thousands of policies for folks who trusted that the company would be there to pay their claims. Unfortunately, Penn Treaty became over extended, and has been taken over ("put in rehabilitation"in insure-speak) by various state departments of insurance.
And it gets a bit more complicated still: Penn Treaty policies were actually underwritten and issued by both Penn Treaty Network America Insurance Company (PTNA) and the American Network Insurance Company(ANIC). Both of these carriers are now undergoing rehabilitation.
As an Ohio-based blogger, I've been asked by Insurance and Annuities' John Power to report on the efforts undertaken by the Buckeye State's commissioner of insurance, Mary Jo Hudson. Ohio, like all states, has a Life and Health Guaranty Fund which functions much like the FDIC; that is, when a carrier becomes insolvent (or looks to be heading that way), the fund steps in to make whatever arrangements are necessary to protect the policy holders. In this case, since PTNA and ANIC are Pennsylvania-domiciled carriers, that state's insurance department has taken the lead role.
According to the Ohio Insurance Department, there are just shy of 4,000 Ohio PTNA policy holders, and about 3 dozen who own ANIC policies.The Pennsylvania Department has asked that the companies be liquidated, and their assets sold off, and they'll need to find a "home" for the companies' policy holders. This will involve selling the books of business to another carrier (or carriers). The Ohio Guaranty Fund can assess other carriers to cover policy holder claims, up to certain limits. In Ohio, this means that claims of up to $100,000 (which could be several years' worth of long term care) are covered by the Fund. According to the Ohio Department of Insurance,"Claims not covered by a Guaranty Association, including any portion exceeding the Guaranty Association’s statutory limit, become claims against the estate of the company and will be paid to the extent funds are available. Policy holder claims have priority over most other claimants."
While this may not be the best news, it represents something very important: life insurance policyholders can count on the states' guaranty funds to protect them in the rare instances that a carrier becomes insolvent. In this case, it appears that the funds, and the insurance departments are doing everything they can to protect the interests of the folks who bought these policies, and counted on them to help pay for this crucial and expensive type of claim.
For more information, I strongly suggest clicking here for a bird's-eye view.
[Henry Stern, LUTCF, CBC is an independent insurance agenti n Dayton, OH. A licensed Continuing Education instructor for Ohio, Kentucky and Indiana, he has over 25 years of experience in “the biz.” He blogs everyday (or so it seems) at InsureBlog.]