When illness is chronic, costs and disputes mount

The virus struck Brian Tyson suddenly in 2003, forcing him off his sales position with Pitney Bowes Inc. that paid him $130,000 annually.

Years later, Tyson has sued the Stamford company renowned for its wellness benefits programs, claiming Pitney Bowes reneged on its long-term-care insurance policy in Tyson”™s name.

The case, filed last month in New Jersey federal court, illustrates the massive obligations companies face in providing long-term-care insurance for employees, whether through self-funded programs like that of Pitney Bowes or through policies obtained through standard insurance carriers.

At the same time, a pioneering long-term-care insurance program long offered by the state of Connecticut may soon be adopted by several other states ”“ creating the potential for reciprocal agreements if Connecticut policyholders move.

Long-term-care insurance covers care for chronic ailments over long periods, kicking in for care not covered by standard health insurance, Medicare or Medicaid.

With the 1992 establishment of the Connecticut Partnership for Long-Term Care, the state became the first in the nation to offer residents affordable long-term-care insurance with an “impoverishment” clause protecting members against their assets dwindling to nothing under the plan.

New York, California and Indiana followed Connecticut”™s suit in 1992 and 1993 before Congress effectively scotched the formation of such plans by requiring any new partnership programs to attempt to recover assets upon the death of a Medicaid member.

In February 2006, President Bush repealed that requirement, and more than 25 states are now exploring whether to develop a partnership program along Connecticut”™s model, according to David Guttchen, director of the Connecticut partnership.

More than 5,000 agents and brokers are licensed to sell policies in Connecticut from 10 participating carriers, including:

 

Ӣ American Network;

Ӣ Bankers Life and Casualty;

Ӣ CUNA Mutual;

Ӣ Genworth Life;

Ӣ Great American Life;

Ӣ John Hancock;

Ӣ MedAmerica;

Ӣ MetLife;

Ӣ Prudential; and

Ӣ State Farm.

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Great American Life is the only company selling a group policy under the plan, accounting for 15 percent of all plans sold under the partnership.

Last year, more than 43,000 Connecticut residents purchased long-term policies and some 7,000 were denied coverage. Policyholders had an average age of 58 years; the youngest policyholder in the plan was 20 years old. The state credits the program with raising overall awareness of long-term-care insurance in Connecticut.

The average benefit is $210,000, including both home care and nursing home care; two in three policyholders had assets of at least $200,000, according to a survey of 11,000 plan members.

Of course, long-term-care insurance payouts can vastly exceed those amounts. Consider Tyson, a longtime Pitney Bowes Inc. employee who lives in Morris Plains, N.J.

Pitney Bowes self-funds its plan, according to Tyson”™s suit, with the basic plan paying half of an employee”™s normal earnings. Tyson said at the time of the virus-fueled vision problems, he was making $130,000 annually.

Payments kick in if an employee is totally disabled for 22 weeks; in Tyson”™s case, he maintains he was eligible for payments for the next 11 years until he turns 55.

Pitney Bowes spokesman Matt Broder said the company does not comment on litigation.

Tyson claims he experienced sudden vision loss in June 2003 due to post-viral optic neuritis; after attempting to return to work in September, he then applied for and received a short-term-care benefit from Pitney Bowes after he said he could not drive.

He then applied for long-term-care benefits and has not returned to work since. That could leave Pitney Bowes on the hook for $700,000.

After quibbling with Tyson”™s doctors over the severity of his loss of vision, Tyson said Pitney Bowes denied his long-term-care benefits after spying him working at a Radio Shack, which he said should not have disqualified him from receiving benefits.