John Hancock settles with NY state after long-term care insurance probe

John Hancock Life & Health Insurance Co. will pay nearly $21.6 million to consumers and their beneficiaries after a New York state probe found the company had terminated the long-term care policies of 156 residents before the policyholders had exhausted the benefits to which they were entitled.

John Hancock will also pay $2.2 million to the New York State Medicaid Program and a $2.5 penalty to New York state for violating the state's insurance law.

The insurer acquiesced to the New York state Division of Financial Services' findings and signed a consent order as part of its agreement, according to a statement from the department.

“When New Yorkers get older, many will need long-term care services which are often not covered by regular insurance and can be costly. It is critical that these companies operate in full compliance with the law to provide New Yorkers with the care and benefits they deserve,” Adrienne A. Harris, the state's superintendent of financial services, said in a statement.

The state's Department of Financial Services “will continue working alongside the New York State Medicaid Program to protect the financial health of consumers and ensure long-term care insurance products are administered in full compliance with New York law and regulations,” Harris added.

After receiving a consumer complaint, the Department of Financial Services and the state's Department of Health investigated and determined that John Hancock had prematurely terminated the 156 NYS Partnership LTC policies between February 2001 and July 2019, resulting in 27,161 days of unpaid benefits.

The DFS also found that John Hancock miscalculated lifetime maximum benefits in cases when the insureds used less than the maximum daily benefits under their policies.

Because the insurer prematurely terminated policies, policyholders may have had to pay long-term care expenses out of their own pocket; they may also have been forced to access Medicaid prematurely instead of being covered by the LTC policy.

“The New York State Medicaid Program is responsible for protecting our most vulnerable, while preserving the integrity of State taxpayer dollars," Amir Bassiri, the director of New York state's Medicaid program, said in the statement. "We are pleased with the outcome of this investigation and commend the Division of Financial Services for securing $21.6 million for the New Yorkers who were wrongfully terminated from their long-term care insurance.”

[More: Long-term care settlement to cost CalPERS as much as $2.7B]