Penn Treaty Network America LTC insurance company will now go into liquidation. A Pennsylvania court gave the PA Department of Insurance final approval to liquidate the LTCI company on March 1st. Benefits will still be payable if premiums continue to be paid on-time, but according to the PA DOI about 50% of policyholders may have their benefits limited.
Liquidation means that the claims liabilities now fall to individual states' insurance "guarantee funds" which most commonly limit total benefits to $300,000. A few states are slightly higher and a couple - including Missouri - have a cap of only $100,000 for LTC insurance. Note that in most cases you would be covered by your state of residence at the time of liquidation (March 1, 2017), NOT the state where you bought the policy.
While this insurance company failure is being reported as the largest financially in US history, it's important to note that Penn Treaty's policyholders account for only one-percent (1%) of all LTC insurance policyholders in-force, and that along with grossly under-pricing its overly-liberal policy benefits, Penn Treaty accepted people with health risks that no other insurance company would consider.
My general advice to Penn Treaty policyholders: Keep your coverage, especially if you are older or uninsurable and cannot replace your coverage. Even if you could qualify for a replacement, you may be better off keeping Penn Treaty on a limited basis.
Contact us for a policy/coverage review.
According to the PA DOI, Policyholders with questions about policies, claims, or related to liquidation should call Policyholder Services at: 1-800-362-0700.
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