Long-Term Care Insurance Is Failing Some—Safe Harbor Offers More Options

Have you heard the recent local Minnesota news coverage about long-term care insurance companies delaying or denying claims—often when families need care services most? For many Minnesotans, this is more than just a headline. It’s a frustrating and frightening reality, especially for those who have planned carefully and paid into their care insurance policies for decades.

If you or a loved one are depending solely on qualified long-term care insurance, these recent stories are a wake-up call.

The Promise of Long-Term Care Insurance

In the 1990s, long-term care insurance was seen as a proactive and responsible way to plan for the future—particularly to cover the rising costs of nursing home care and long-term care services for aging adults. Thousands of Minnesotans purchased policies from long-term care companies, paying more than $32 million in premiums, more than any other state.

Insurance Companies Prioritize Profits Over People

Now, some of these companies are facing a class-action lawsuit alleging the company prioritized profits over people—delaying or denying claims and trying to recoup financial losses at the expense of policyholders who were counting on their coverage when they needed it most. This could potentially violate the federal anti-kickback statute if proper safe harbor requirements are not met and may constitute fraud and abuse.

You may have seen Fox 9’s recent reports, uncovering troubling practices by Transamerica Insurance, one of the nation’s largest providers of long-term care insurance. According to the reports, Transamerica was fined $600,000 by the Minnesota Department of Health and Human Services for delaying or outright denying legitimate long-term care claims—leaving vulnerable policyholders and their families scrambling for help.

What’s Happening?

• Many long-term care insurance policyholders, who paid premiums for decades, were denied or delayed coverage when they needed it most—often while in the middle of care transitions or nursing home admissions, despite having a valid plan of care from a licensed health care practitioner.
• Some were offered buyouts worth far less than what they had paid in or were owed for services provided.
• Affected Minnesotans were left to cover thousands of dollars in long-term care services and personal care out-of-pocket, even though their policies should have covered these health services.

Why It Matters to You

At Safe Harbor Estate Law, we’ve seen this before: families who believe their policy guarantees coverage, only to find out that what they really needed was a Medicaid Asset Protection Plan that meets all of the requirements under the safe harbor regulation.

Long-term care is expensive, and the rules around how to pay for it—especially when it comes to Medicaid—are complicated. Most people don’t realize how quickly they can fall into what we call the Medicaid Spend-Down Spiral.

What is the Medicaid Spend-Down Spiral?

It’s when families are forced to use up nearly all of their savings to qualify for Medicaid coverage. Without the right legal planning, people are often required to spend down to just $3,000 in assets (for a single person in Minnesota), leaving little to nothing for their spouse or loved ones.

What is the Medicaid Lookback Period?

Medicaid looks back 5 years at your finances and may penalize gifts, transfers, or other financial decisions if they weren’t structured properly. This makes timing, documentation, and legal strategy incredibly important.

How Safe Harbor Can Help

At Safe Harbor Estate Law, we build comprehensive Medicaid Asset Protection Plans for long-term care planning designed to help families:

• Safeguard their legacy while ensuring access to quality care services
• Preserve 40-80% of their savings and avoid the spend-down spiral
• Prepare for the cost of long-term care, whether insurance follows through or not
• Navigate the tricky Medicaid rules and safe harbor regulations

We also review long-term care insurance policies to make sure you know exactly what services are included—and what’s missing.

Note: if you are already in the middle of a dispute or denial, we’ll connect you with Elizabeth Wrobel, a trusted attorney who helps families fight for the long-term care benefits they deserve.

This Is Why Elder Law Month Matters

The need for proactive, compassionate, and trustworthy elder law guidance is growing every day. As a firm committed to protecting Minnesota families, we’re here to help you navigate these uncertain waters with clarity and confidence.

Have questions or want to learn more? Attend one of our upcoming seminars or schedule a Life and Legacy Session to explore your options.

Together, we can build plans that protect what matters most—because peace of mind shouldn’t come with fine print.