LTCi becoming more of a target for fraud

An aging population combined with increased usage of long-term care insurance means more opportunity for misuse of funds and fraud, waste and abuse.

That was the word from Jeff Ferrand, vice president of fraud services at illumifin, who spoke before the National Association of Insurance Commissioners Senior Issues (B) Task Force.

Long-term care insurers paid $14.1 billion in benefits to claimants in 2023, Ferrand said, with LTCi benefits projected to increase to a high of about $40 billion by 2042. Coalition Against Insurance Fraud statistics show an estimated 5% of claims involve some type of fraud, meaning that the LTCi industry could be the victim of as much as $2 billion in fraud over the next 20 years.

“Fraudsters look for the vulnerable and LTCi often involves vulnerable adults,” he said.

A lack of industry standards

Growing concern around LTCi fraud is the result of several factors, he said. Those factors include a high rate of self-reporting on claim triggers, such as ability to perform activities of daily living. A lack of industry standards on provider services and pricing also contributes to concern around fraud.

Types of LTCi fraud, Ferrand said, include billing for services that were not performed and exaggeration of a policyholder’s need for care.

He called for greater industry collaboration, education and training to combat LTCi fraud.

The annual cost of insurance fraud across all types of insurance is more than $308 billion, said Michelle Rafeld, Coalition Against Insurance Fraud executive director. Putting that number in perspective, she said, that $308 billion could fund 12.3 million college educations or build 134 Empire State Buildings.

“It is truly the crime that we’re all paying for,” she said.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.