NEW YORK (MainStreet) — While the Affordable Care Act prohibits life insurers from using pre-existing conditions as a basis for setting rates, the rule does not apply to long-term care insurance nor does it rule out the consideration of parental medical history.
“This can seem cruel but it in the insurance marketplace it has the effect of keeping the cost of policies for healthier people lower than it would be otherwise,” said Martin Bienstock, an attorney with Weisbrod Matteis & Copley.
Since 2006, Genworth has been asking questions about parental history that include the age of parents, whether they are alive and when they died as well as whether either was diagnosed with any kind of cognitive impairment, coronary disease or diabetes, and just last month, the long-term care insurer announced it was now rating applicants based on the medical histories of their parents.
“For our fully underwritten long-term care products, certain parental medical histories can impact an applicant’s final rate category,” said Ray Dinstel, chief underwriter with Genworth.
Genworth has four rating categories from most to least favorable. They are preferred best, preferred, select and standard. That’s because applicants could very well inherit certain medical conditions from their parents.
“Insurers are absolutely scrutinizing health conditions more, because they are paying a lot of money in claims,” said Jesse Slome, executive director with the American Association for Long-Term Care Insurance (AALTCI). “Their biggest risk is costly long- term claims so they are looking for occurrences that would spike claims.”
Dementia is another parental illness that’s under scrutiny.
“Parental history raises a flag for the insurer to review your medical records,” said long-yerm vare insurance sgent Arthur Rudnick. “At 50 years old and below, Genworth doesn’t go for medical records but if on the application, it says yes my parents have Alzheimer’s, then Genworth has a reason to request your medical records.”
A typical policy with no inflation growth for a male aged 55 years old and no parental history of early onset dementia or coronary heart disease would qualify for Genworth’s Preferred Best and pay $1,125 a year compared to $1,185 for an applicant of the same age and gender that has a family history of either medical condition.
“$60 is not that big of a difference, but it’s clear that there’s now medical evidence and studies proving that if your parent suffered a condition there’s a likelihood that you will suffer from it too,” Slome told MainStreet.
While long-term care insurance is typically regulated on a state-by-state basis, policies are underwritten on a case by case basis.
“The use of parental history is fairly common in the life insurance context, and I'm not aware of any state that bars insurers from underwriting long-term care based on family history,” Bienstock told MainStreet.
Not all long-term care insurers are following in Genworth’s footsteps yet.
“We do not inquire as to the applicant's parent or grandparent's medical history nor do we inquire about genetics,” said Tricia Burnett, director of marketing and communications with MedAmerica.
--Written by Juliette Fairley for MainStreet