THOMAS J. VILSACK THERESE M. VAUGHAN
GOVERNOR COMMISSIONER OF INSURANCE
SALLY J. PEDERSON
TO: All Companies Issuing or Administering Long-term Care Insurance Policies in Iowa
FROM: Therese M. Vaughan, Commissioner
DATE: August 5, 2002
RE: Long-term Care Insurance
It has come to the attention of the Iowa Insurance Division that there are problems with claims
payment in the long-term care insurance market. Consumers who buy long-term care insurance
in one state and try to make use of it in another state find they are not able to get the same kind
of care they had previously received or care that they thought they could receive when they
purchased the policies. In some cases licensing standards or terminology have changed since
consumers bought their long-term care insurance. These policies would have covered the type
of care the consumers now need at the time the policies were purchased but, due to the
changes, do not now. These are changes not contemplated by either the company or the
consumer at the time of application and underwriting.
The Iowa Insurance Division believes that the underwriting standards used by the companies
take into account the likelihood that a person is going to need a particular kind of care, which is
not affected by changes in the licensing structure of the long-term care industry over time or
across states. Therefore, it is the position of the Iowa Insurance Division that licensing
technicalities should not be used as a reason to avoid payment of benefits.
For these reasons, the Iowa Insurance Division takes the position that benefits should be paid
under a long-term care policy if the insured individual is receiving the type of care covered by the
policy, regardless of the type of authorization (licensure, certification, etc.) issued by the state
and regardless of the name the facility uses or the name the issuing state uses to describe the
330 MAPLE STREET / DES MOINES, IOWA 50319-0065 / 515-281-5705 / Facsimile 515-281-3059
IID Bulletin 02-03
August 5, 2002
Here is an example. A person has a long-term care policy which will pay benefits for a nursing
home stay if the nursing home meets a list of qualifications that includes being licensed as a
The person enters a facility which is properly authorized by the appropriate agency under Iowa
law. The person has met the benefit triggers under the policy. The facility meets all other
conditions under the policy except that it is not licensed as a nursing home. In this situation, the
Iowa Insurance Division would take the position that long-term care benefits should be paid.
Under the example given, or other similar situations, it is the position of the Iowa Insurance
Division that a denial of the claim due to the lack of a nursing home license constitutes an unfair
claims settlement practice under Iowa Code chapter 507B.
Questions regarding this Bulletin may be referred to Ann Outka via e-mail at:
firstname.lastname@example.org or by telephone: 515-281-5705.