Sometimes you do everything right and it still goes wrong.
Michael Pirron runs a technology consulting company in Richmond, Va. For some time, he fretted about his parents, about what would happen if, like most older Americans, they needed expensive care as the years passed. They were still young-ish and comparatively healthy, but his father's mother had lived to be 105.
So in February 2001, when David Pirron was 67 and his wife Anne was 59, Michael helped them buy joint long-term care insurance policies, with benefits that rose annually, from John Hancock. When the time came, it would provide up to $600,000 to pay for home care, adult day care, assisted living or a nursing home.
"I'm an only child," Mr. Pirron told me. "I'm not independently wealthy. This was the way I could be sure they had care when they needed it."
The older Pirrons gave him their power of attorney, as experts perennially urge. They signed the form making their son the third party designee that John Hancock would notify of policy changes or anything that could cause the policies to lapse. But, to ensure that they remained in force, Michael Pirron made arrangements with his parents' bank. "I made sure my dad had auto-pay so that the premiums got paid every month," he said.
In the years that followed, the couple downsized from a house in Washington to a condo in Fredericksburg, Va., an hour away from Michael. They faithfully paid about $50,000 in long-term care premiums over a decade, Michael estimates, and never made a claim.
But the crisis arrived, as it often does. By 2012, Mrs. Pirron was falling and had developed psychiatric symptoms, and her husband had become too confused and forgetful to remain her caregiver. Michael Pirron called John Hancock to ask about the care options covered by his parents' insurance.
"Their answer was, essentially, 'What policy?'" he said. The policies had lapsed eight months earlier, and it was too late to send in the past due amount and get them reinstated.
The insurer had sent the couple warnings that their insurance was about to be terminated, but they didn't understand the letters, which Michael eventually found stuffed in a drawer. He also figured out why the bank stopped paying premiums: His father had gone to his branch — without telling him — to stop auto-payments on a different insurance policy and had mistakenly turned off payments to John Hancock instead.
But what about the third-party notice the insurer was supposed to send Michael Pirron? John Hancock insisted its records showed it had sent the required letter; he says he never received one.
In a June 2012 letter, John Hancock officials said the company would not reinstate the policy. "We believe this action to be consistent with both our business model and regulatory obligations," the company wrote. It added, "We sincerely regret any personal distress resulting from our decision."
There was plenty of that. Instead of tapping their insurance benefits to pay for assisted living, the Pirrons sold their condo at a loss and moved to a small apartment in Richmond, Va., where Mrs. Pirron receives care from a PACE program through Medicaid.
Michael Pirron complained to the state Bureau of Insurance, which investigated but ultimately took no action; insurers aren't required to prove they have contacted third parties. He had attorneys look into the matter, but decided he couldn't undertake the six-figure cost of a lawsuit.
So he turned to the Virginia legislature, where Representative Jennifer McClellan has introduced HB719, which would require insurers to send lapse or termination notices to both policyholders and third parties via certified mail or commercial services like FedEx or UPS. That would provide proof that companies notify customers, or don't.
"It's too late for my parents, but I want to make sure this doesn't happen to anyone in Virginia, or anywhere, ever again," Michael Pirron said.
The state AARP chapter has lobbied for the bill and the state Alzheimer's Association has endorsed it. David DeBiasi, advocacy director for AARP Virginia, thinks the bill has a shot, partly because "it will make sense to those trying to limit the size of entitlement programs and the escalating cost of Medicaid."
Had John Hancock spent a few dollars for certified mail, taxpayers might not be footing the bills the Pirrons intended to handle themselves. Insurance industry lobbyists don't seem to be opposing the measure, Mr. DeBiasi said.
But they could if, as Michael Pirron hopes, this idea takes off nationally.
"Ultimately, policyholders will pay the cost, and the cost is not just the postage," said Jesse Slome, who heads the American Association for Long-Term Care Insurance. He points out that of the roughly 300,000 policies sold annually, more than 9 percent lapse the first year and another 6 percent the second, so that companies would need workers and systems to send and track thousands of certified letters.
"When you don't pay your credit card bill, you don't get a registered letter," Mr. Slome said. But of course, credit card companies don't target people whose age brings increasing risk of dementia.
Insurance regulation falls mostly to individual states, so even if legislatures or insurance commissioners adopt this requirement, years will pass before most policyholders have such protection.
In the meantime, cases like this demonstrate anew how vigilant families need to be. If your older relative has a long-term care policy, photocopy the page listing the company, policy number and claims contact information. Keep the insurance company updated on new addresses, yours (if you are the third-party designee) and your relative's. It wouldn't hurt, if the policyholder is becoming forgetful, to check bank statements or call the company to be sure premiums are paid.
Now, Michael Pirron is worrying about care for his father, recently diagnosed with early dementia.
Paula Span is the author of "When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions."
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