PA says Penn Treaty should liquidate

The Pennsylvania Insurance Department is moving to shut down an Allentown company that provides long-term care insurance to about 20,000 people in the Commonwealth and New Jersey. Seniors and others buy long-term care insurance so they can afford help when they need assistance with daily activities like dressing and bathing.

The Pennsylvania Insurance Department is moving to shut down an Allentown company that provides long-term care insurance to about 20,000 people in the Commonwealth and New Jersey. Seniors and others buy long-term care insurance so they can afford help when they need assistance with daily activities like dressing and bathing.

Listen: [audio:091006tecare.mp3]

Pennsylvania is seeking a court order to place Penn Treaty Network America Insurance into liquidation. Insurance department spokeswoman Rosanne Placey says that step would protect consumers, and move policyholder claims to the head of the line when the firm’s assets are distributed.

Placey: This company doesn’t have a cash flow issue, it has money in the here and now. But going forward the difficulty would be in paying these long-term insurance claims.

Placey says current claims are being paid. The insurance department has been on-site supervising operations at Penn Treaty for nine months. After reviewing the firm’s books, officials say Penn Treaty doesn’t have enough reserves to pay future claims without significantly increasing the insurance rates policyholders pay now.

Penn Treaty policies will not be canceled. If the liquidation is approved the company’s policies will be transferred and covered by state guaranty funds.

Jeff Marshall is a certified elder law attorney with offices in north east and north central Pennsylvania. He says many companies have stopped offering long-term care insurance.

Marshall: Another problem with long-term care insurance are the rate hikes that have been going on that are really hurting people who already have policies. Virtually all of the companies have asked for increases, and the increases are 20 and 30 and 40 percent, so this is beyond what people had budgeted.

Placey says people who are shopping for long-term care insurance should work with an independent financial adviser who can help them identify a financially stable insurer. She says the department keeps claims and complaint information that can help consumers determine if a company is serving its customer well.

Policyholders with questions on claims can call 800-362-0700, ext. 3270.