Because of mistake on a check, elderly woman loses her insurance

If you’re going to make a mistake when writing a check, don’t make it in the part where you write out the words, and don’t make it with an insurance company. They’re ruthless.

Just ask Madeleine Maldonado, of Concord, Mass., who sent AIG a check for $3,399.91, the premium for her long-term care insurance, the Boston Globe says today.

She wrote in the correct amount in the box for numbers, but she wrote out “three thousand three hundred and 99/100 dollars.” She was short $98.92.

The rules governing everyday business and banking transactions say if a check contains contradictory terms, words prevail over numbers, the Globe’s Sean Murphy writes.

With normal people, the mistake would be understandable, a phone call or message would be exchanged, and the difference would be submitted. But insurance companies aren’t normal people, so AIG canceled the 81-year-old woman’s insurance.

If you have long-term care insurance, your insurer hopes you drop dead of a heart attack or in a horrible, split-second accident. Just so long as it doesn’t have to pay while you linger in an expensive nursing home. It’s nothing personal. It’s a business calculation shared by AIG, one of the world’s largest and most notorious insurers. (See: financial crisis of 2008, $100 billion-plus bailout of AIG.)

Long-term care insurance has become a big loser for insurers. As the Globe’s Deirdre Fernandes recently reported, insurers badly miscalculated when they predicted the number of people likely to need nursing home care, versus the number likely to die before filing a claim. It’s a numbers game.

Carey Peabody, Maldonado’s daughter, appealed to AIG to accept a late payment and reinstate the policy. But instead of focusing on Maldonado’s obvious intent, AIG pointed to Maldonado’s failure to respond to an invoice for the past-due $98.92 or to a later notice of termination.

Peabody said her mother missed or misunderstood them. She said she doesn’t know if AIG refunded any portion of her mother’s premium. My thought: A rational person does not shell out thousands for a policy and then let it go, at her age, for lack of less than $100 — about the cost of one hour of nursing home care.

For a year, the woman’s daughter fought with the giant insurance conglomerate. No luck.

Maldonado now has dementia and no long-term-care insurance.

  • Mike

    Yep, we the taxpayers bailed out AIG in 2008 just so they could treat their customers this way. And yet people the say the welfare state is unsustainable. I guess it depends on who’s getting the welfare.

  • AL287

    AIG laughed all the way to the bank when the Treasury Department bailed them out in 2008 to the tune of 40 billion dollars with TARP funds.

    The Fed bailed them out to the tune of 52.5 billion dollars.

    AIG then turned around and paid out 165 million dollars in bonuses to its executives. For what? Giving bonuses to people who knew exactly what they were doing with their pyramid scheme?

    Nobody did anything about it. AIG wasn’t told to repay the money the taxpayers gave them ( Yes, gave them because they were not required to pay it back.) and now the Republicans want to loosen the regulatory reins. Again.

    Better to laugh all the way to the bank for a measly $99.

    A leopard doesn’t change its spots.

    I think I’ll reserve that ice floe now so the polar bears can take care of me when my body finally wears out or my mind fails me.

    On second thought, I need a Plan B. The ice floes might have disappeared and the polar bears along with it by the time I need nursing home care.

  • “The rules governing everyday business and banking transactions say if a
    check contains contradictory terms, words prevail over numbers …”

    Not always. I once wrote a check for $14.50; correctly wrote out the amount. Someone somewhere along the financial line incorrectly keyed in the number, though, and I was panicked to suddenly discovered a $14,500 debit had been made to my account.

  • L. Foonimin

    Remember the current Senate bill, the current House bill, and the ACA law are always about health care insurance … not about health care

    • jon

      Yes, and no.

      The insurance market is where the money and spending goes and comes from in the US, we all pay into the pot (many different pots) and we all take it out when we need it.

      If you can fix the problem at the insurance side then you can fix the costs because that is where the money is.

      The ACA’s push for universal coverage lowered costs by shifting people from emergency rooms that they couldn’t afford to lower cost preventative care they could (mostly) afford.

      And the ACA made an effort to control administrative costs (at the insurance companies) as well… but ultimately it was only a step in the right direction, certainly not the whole path. Universal coverage is a start (and the ACA wasn’t even universal coverage, just a step towards it) single payer is better, eliminates more administrative costs.

      death with dignity legislation will also reduce costs (a few percent according to the last study I saw on the topic) and end a lot of human suffering.

      Negotiating prices would also reduce costs (a few percent, but pennies add up to dollars).

      Of course the GOP bills seem to be aimed at reducing services, to reduce costs, not reducing expenses to reduce costs… They aren’t willing to find a cheaper bolt to make a car more affordable, but they are willing to sell you a car without wheels to make it more affordable.

      • Mark

        Reducing administrative costs is but a small portion of the problem of health care costs. The ACA curbed insurers administrative cost to about 15% of premiums and when health care costs have continued to rise, premiums also did and it was certainly NOT because of administrative costs. Single payer will be cheaper but only because they will begin to reduce payments to providers to draconian levels. The quality will suffer because of this. Yes single payer might be cheaper but it means the end of the American standard of care which is whatever care you want pretty much on demand. If we go to it, the complaints will only get worse.

        • jon

          I’ll give you certainly not ONLY because of administrative costs… but to suggest that administrative costs didn’t rise with the rest of the costs is naive.

          Though I hope we can “reduce” the standard of care to the level of other first world nations with better medical outcomes than the US, for substantially lower costs….

          Oh and the complaints will only get worse no matter what… People would complain if I gave them literally free healthcare from some magic box that cured what ails them… start claiming that it gave them mental anguish or pregnancy (like a toilet seat)… people are dumb, and will complain about anything.
          We literally used vaccines to cure small pox, and eliminate polio from the US, and measles… and people complained about that giving them autism and brought back measles!

          People being dumb is not a reason to opt not to act, it is instead a reason to act, an opportunity to improve things and an opportunity to give humanity a chance to build a better idiot to complain about them.

          • Mark

            I think overall administrative costs did rise because health care usage also rose dramatically. But the percentage of administrative costs is now capped by law so they can’t go any higher as a percentage.

          • jon

            No the percentage that insurance companies can put towards adminstrative costs is capped, there are still admin costs for hospitals/clinics/pharmacies/etc.

    • Mark

      Correct and its the increasing cost of the underlying health care (doctors, hospitals and medications) that is soaring out of control. The fact that insurers are raising prices is only because the cost of the care provided is going up so much. And all of the legislation referenced deal only with accessibility issue. Nothing is being done to address the affordability issue. A major failure with the ACA is it did absolutely nothing to lower the cost of care at all.

      • No, but the increase in healthcare spending slowed.

        As long as all health care reform starts with “the health insurance industry’s wishes must be accommodated as a first step”, nothing is ever going to change.

        A look at the FEC reports shows why.

      • Jack Ungerleider

        But the insurance companies play a role in the cost of the underlying healthcare because of the premiums they charge doctors, clinics, and hospitals for liability policies. This gets into a whole other mess with regard to tort reform and what people can sue over, etc. and that’s not the current topic.

        • Mark

          Medical malpractice premiums are only a very small part of healthcare costs. And I hope you realize that the medical malpractice insurance policies are sold by completely different companies than those that sell health insurance. You are correct in that part of the solution needs to be to tamp down on runaway juries and greedy trial lawyers.

  • Jake R.

    Most Long-Term Care insurance policies let you choose a third party, such as this woman’s daughter, to be notified in a case where the policy would lapse such as a case like this. The woman was notified at least two times per this article that she was 98$ short on her payment and that if she did not pay it, her policy would lapse. Nobody wants to take personal accountability for their actions these days. Being old and naive is not an excuse, I’m sorry. If you sign an insurance contract, make sure you read the fine print.

    • Angry Jonny

      This had all the PR potential to be one of those stories that would likely benefit AIG and endear them to consumers. Instead, they stuck to the protocols that underscore exactly why the public thinks so little of the insurance industry. I’m sure some actuary is sitting back in their office feeling good about this.

    • She’s 81 and has dementia and her husband is the one who put his wife down as the “backup” on the policy.

      Unanswered in ythis $98 short thing is what happened to the $3400 the company deposited.

      • Jake R.

        If she had dementia when this occurred, she would have been eligible to go on claim for reimbursement for any care she was receiving and her premium would have been most likely waived at this point (most policies work this way).

        From my knowledge of the industry and how most policies work, if her premium was $3,999.91 for the year, that is around 10.95$ of premium per day. If her payment was around 90$ short, her coverage for that year would only last for the fisrt 355 days and then lapse, while being notified of this lapse via mail as well.

  • Mark

    AIG paid back to the US Treasury not only the initial bailout money but also $22-billion additional so the Federal Government profited handsomely on the funds it temporarily floated the company. I’m not excusing its behavior in this case but I get the feeling this was one of those things where it was on auto pilot with the company. Computers noticing the shortfall and sending out notices. If the policyholder had been dealing with a real live human agent, rather than the company directly, it would have been easier to deal with. And by the way, the big mistake long term care insurers made wasn’t just that the people who buy the policies are incurring expensive care but if you read more about this you’ll see that insurers expected buyers to surrender their policies at a rate of about 15% on average when in reality only 2% surrender their policies. That’s a huge miss that is squarely on insurers and more specifically actuaries.

    • According to the story, the policyholder — her daughter, mostly — DID deal with a human but it got kicked to corporate and real live corporate people said no.

      BTW, Politifact on the $22 million profit. “Mostly true”
      Still, the New York Times editorial board and critics of the bailout point out that amount doesn’t take into account tax breaks the company got as part of the deal. Former members of an oversight panel said in March that a special tax exemption offered by the Treasury in 2008 amounted to a “stealth bailout.”

      It allowed AIG to count net operating losses against future tax bills, which “some estimate has contributed to $17.7 billion in profits for the company,” according to the group of former oversight panelists, including chair Elizabeth Warren, now a Democratic senator from Massachusetts.

      So, have the government’s loans been repaid, with a “positive return” of $22 billion for taxpayers? Yes. Was the entire U.S. bailout of AIG, including special tax provisions, that profitable? No.

    • AL287

      Anyone with modicum of intelligence and who was reading the health news headlines would have known that long-term care for dementia of any type was going to be a problem down the road

      Dementia units didn’t even exist 30 years ago. It is only recently that science has gotten a handle on what causes dementia in the first place.

      It’s already overwhelming LTC centers around the country with more need for care than there are beds.

      IF the Senate bill passes both houses of Congress and Trump signs it, there won’t be enough money to support what small amount of beds there are.

      Even with paying back the money, AIG and the rest of the Wall Street gang caused immeasurable harm to millions of taxpayers who lost jobs and homes.

      Many are still trying to recover from the Great Recession and have lost their retirement savings and will likely outlive what money they have left.

      • It’s the most horrible disease of all the horrible diseases.

        • AL287

          I watched my mother slowly die of it and I couldn’t agree with you more.

          I hope the corporate executives at AIG don’t plan on getting old.

          I know I won’t have any sympathy for insurance executives at any health insurance company when illness and old age overtakes them.

          • Jack

            I would add any disability insurance carrier too. My blood still boils when I think back to the struggle my spouse went through when he was recovering. Thank goodness I was there to intervene.

            Still the games they played to turn down his claim. Not exactly working in the insured’s best interest.

      • Mark

        The problem was actually a simple error. LTC insurers assumed 15% of the people would surrender their policies and only 2% did. That’s a huge problem that has to be made up for with increased premiums and/or lower benefits. The same bitter pill that will need to be swallowed by every American if Medicare is to be saved. The problems in the LTC market is a harbinger of what is to come in the next decade when we don’t have any money to pay for Medicare costs anymore.

  • Donovan Lambright

    A few years ago, we moved my Mom from one care facility to another and had a similarly frustrating experience. It was one nit-picky thing after another: this form wasn’t right or that assessment needed to be rerun, etc. We drained her savings paying for the facility while the insurance company threw out one obstacle after another. It eventually got resolved and we were made (mostly) whole but the experience was nightmarish.

  • AmiSchwab

    won’t trumpcare take care of all these problems?

    • AL287

      When the Republican leader of the Senate mentions the need to start working with the Democrats you know the repeal of Obamacare is getting more distant in the rear view mirror.

      The opposition to repealing Obamacare is growing daily much of it against repealing the expansion of Medicaid and the possibility that preexisting conditions could be reinstated. The Republicans are worried about the midterm elections. Their window of opportunity is closing quickly.

      They are not going to be able to ramrod Trumpcare like the Democrats did in 2010. It would make them look like Simon Legree.

      The American public has given them enough rope and now they are about to hang themselves with it.