What can be done if an insurance company reduces coverage without explanation?

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What can be done if an insurance company reduces coverage without explanation?

My mother, who is 87 years old, has been paying into a long term insurance plan for about 18 years. We have just moved her into an assisted living facility. During this time, I discovered that about 10 months ago, the company decreased her premiums and also her coverage. I don’t believe she understood what this meant. As of today, she says that she doesn’t know this happened. She went from being able to receive $190 per day to $66.50 per day due to this decrease in premium. Is there anything that can do to rectify this?

Asked on October 8, 2018 under Insurance Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

The issues are:
1) Did the terms of her long-term care insurance plan allow for a change or reduction like this? The company cannot violate the existing policy, which is a contract, so only if what happened is permissible under the plan (and they complied with any rules, requirements, procedures, etc. under the plan) could they do this.
2) Did they provide her notice of what they were doing before they did it? As  general matter, without any notice, they cannot change her plan even if they would  have had the authority or ability to do so if she'd had notice.
3) Was you mother mentally competent when the change was made--if she was not able to legally understand and agree to changes, that could affect their ability to make the change.
If she she is receiving around $120/day less than anticipated and she'd been paying for, that's $3,600/month, or around $44,000 per year. It is well worth to hire a lawyer to review the plan, any corresondence, your mother's situation and condition, etc. with you and her, to understand better what happened, her rights, and what she can do about this.


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