Long Term Care Insurance Coverage Rejected? Here's What to Do

If you have recently applied for long term care insurance and been denied, you are not alone. Industry data suggests that approximately 20% to 30% of applicants for traditional long term care insurance are declined due to health conditions or other underwriting factors. Being rejected can be discouraging, especially when you understand the importance of protecting yourself and your family from the potentially devastating costs of long term care.

The good news is that a rejection from one carrier or one type of policy does not mean you are out of options. This guide will help you understand why your application may have been denied, what steps you can take next, and how alternative products, including hybrid long term care insurance, may offer a path to the coverage you need.

Common Reasons for Long Term Care Insurance Denial

Insurance companies use underwriting to assess the risk of insuring each applicant. Long term care insurance underwriting tends to be more stringent than life insurance underwriting because the probability of filing a claim is relatively high. Here are the most common reasons applications are declined:

Cognitive Conditions

Any diagnosis related to cognitive impairment is typically an automatic decline for LTC insurance. This includes:

• Alzheimer's disease or any dementia diagnosis
• Mild cognitive impairment (MCI)
• Parkinson's disease with cognitive symptoms
• Multiple sclerosis with significant progression
• Any condition that has resulted in cognitive testing by a physician

Cognitive conditions are the leading cause of long term care claims, which is why insurers are particularly cautious about these diagnoses.

Neurological Conditions

Neurological conditions that may affect mobility, coordination, or cognitive function are frequently flagged during underwriting:

• Parkinson's disease
• Multiple sclerosis (MS)
• Amyotrophic lateral sclerosis (ALS)
• Stroke with residual effects
• Traumatic brain injury
• Epilepsy (depending on severity and control)

Musculoskeletal and Mobility Issues

Conditions that impair your ability to perform activities of daily living (ADLs) such as bathing, dressing, and transferring can result in a decline:

• Severe arthritis requiring assistance with daily activities
• Recent hip or knee replacement (may need to wait until recovery is complete)
• Chronic pain conditions requiring ongoing opioid use
• Use of assistive devices (wheelchair, walker) for daily mobility
• Fibromyalgia with significant functional limitations

Cardiovascular Conditions

• Congestive heart failure
• Recent heart attack or stroke (typically within 1 to 2 years)
• Uncontrolled high blood pressure
• Advanced peripheral artery disease
• History of multiple cardiac events

Other Common Decline Reasons

• Diabetes: Particularly insulin-dependent diabetes with complications such as neuropathy, retinopathy, or nephropathy. Well-controlled Type 2 diabetes without complications may still be insurable with some carriers.
• Mental health conditions: Severe depression, bipolar disorder, or schizophrenia may result in declines, particularly if there have been recent hospitalizations
• Obesity: Extreme obesity (BMI above 40) is often an automatic decline; moderate obesity may result in rated premiums
• Current or recent cancer treatment: Active cancer treatment is typically a decline. Cancer survivors may be insurable after a waiting period (often 5+ years for certain cancers)
• Age: Most carriers have maximum issue ages, typically between 75 and 80. Some carriers stop issuing at 70.
• Activities of daily living: Already needing assistance with any ADL is grounds for automatic decline

Steps to Take After Being Rejected

If your LTC insurance application has been declined, do not give up. Here is a systematic approach to exploring your remaining options:

Step 1: Understand the Specific Reason for Your Decline

Request a detailed explanation from the insurance company about why your application was denied. Under federal law, insurers are required to provide you with the specific reasons for any adverse underwriting decision. Understanding the exact reason will help you determine whether the issue is something that can be addressed or worked around.

If your decline was based on medical records, you have the right to review the records the insurer obtained. Sometimes errors in medical records, such as an incorrect diagnosis code or a misrecorded test result, can trigger an unwarranted decline.

Step 2: Consider an Appeal

If you believe the decline was based on inaccurate information or if your health condition has improved since the records were obtained, you may be able to appeal the decision. To support an appeal:

• Obtain a letter from your physician clarifying your current health status
• Provide updated test results or medical records
• Submit documentation showing that the condition is well-controlled with medication
• If there was a records error, have your physician correct it and resubmit

Step 3: Apply with a Different Carrier

Underwriting standards vary significantly between insurance companies. A condition that results in an automatic decline at one carrier may be accepted (perhaps with a rating or exclusion) at another. This is one of the most important reasons to work with an independent agent or broker who represents multiple carriers and understands each company's underwriting guidelines.

Some carriers are known for being more lenient with certain conditions. For example, one carrier might decline all applicants with Type 2 diabetes while another will accept well-controlled Type 2 diabetes with an A1c below 7.5. Similarly, some carriers are more accommodating of controlled mental health conditions or past cancer diagnoses.

Step 4: Explore Hybrid LTC Products

Hybrid long term care insurance products, which combine life insurance with long term care benefits, sometimes have more lenient underwriting than standalone LTC policies. This is because the insurance company is primarily underwriting for life insurance risk, and the LTC benefit is an accelerated or extended benefit on the life insurance policy.

Some hybrid products offer simplified underwriting or modified underwriting that may accept applicants who have been declined for traditional LTC insurance. While the health questions and requirements still exist, the threshold for approval may be lower.

Step 5: Look into Simplified Underwriting Products

Some insurance products offer simplified underwriting with fewer health questions and no medical exams. While these products typically come with higher premiums or lower benefit amounts to compensate for the increased risk to the insurer, they can provide some level of long term care coverage for people who cannot qualify through standard underwriting.

Step 6: Consider Guaranteed Issue Life Insurance with LTC Riders

Guaranteed issue life insurance policies do not require medical underwriting. Some of these policies offer long term care or chronic illness riders that allow you to accelerate the death benefit to pay for care. While these products typically have lower benefit amounts and higher costs per dollar of coverage, they represent an option of last resort for people who cannot qualify for any other form of coverage.

How Hybrid LTC Insurance May Offer Easier Underwriting

One of the significant advantages of hybrid long term care products is that they are fundamentally life insurance policies with LTC benefits attached. This distinction matters for underwriting because:

• Different risk calculation: The insurer is assessing mortality risk (when will the death benefit be paid) in addition to morbidity risk (will the person need long term care). This dual-risk assessment can work in the applicant's favor.
• Built-in safety net: Because the policy pays a death benefit regardless, the insurer's total financial exposure is more predictable, which can lead to more flexible underwriting.
• Chronic illness riders: Some hybrid products include chronic illness riders rather than traditional LTC riders. Chronic illness riders may have even simpler underwriting requirements.
• Multiple carrier options: The hybrid LTC market has more carriers competing for business, which drives some carriers to offer more flexible underwriting to win market share.

Alternative Options When Insurance Is Not Available

If you have explored all insurance options and still cannot qualify for any form of long term care coverage, you are not without recourse. Consider these alternative strategies:

Self-Insurance with Earmarked Assets

If you cannot obtain insurance, you may need to self-insure by earmarking specific assets for potential long term care costs. This requires setting aside $300,000 to $500,000 or more in accessible assets. While this is a significant commitment, it may be the only option for people with serious health conditions that prevent them from qualifying for any insurance product.

Medicaid Planning

For people with limited assets, Medicaid can serve as a safety net for long term care costs. However, Medicaid eligibility requires spending down assets to very low levels (typically $2,000 for an individual in most states), and the quality and choice of care available through Medicaid may be limited compared to private-pay options. Working with an elder law attorney to understand Medicaid planning strategies can help you preserve some assets while still qualifying for benefits.

Veterans Benefits

Veterans and their surviving spouses may qualify for Aid and Attendance benefits through the U.S. Department of Veterans Affairs. This benefit provides a monthly cash payment to help cover the cost of care for veterans who need assistance with activities of daily living. The benefit amounts can be substantial and can help offset care costs.

Home Equity Strategies

For homeowners, a reverse mortgage or home equity line of credit can provide funds to pay for long term care while allowing you to remain in your home. While these strategies involve borrowing against your home equity and reducing the inheritance you can leave, they can provide a critical funding source for care.

Timing Matters: Apply Before Health Changes

One of the most important lessons from the LTC insurance underwriting process is that timing matters enormously. Health conditions that develop in your 60s or 70s can make it difficult or impossible to obtain coverage. If you are currently in your 50s and in reasonably good health, now is the time to explore your options before any health changes could affect your eligibility.

Even if you have a health condition that may complicate underwriting, it is worth applying sooner rather than later. A condition that is well-controlled today may be insurable, whereas the same condition after further progression may not be. Some carriers also offer pre-screening or informal inquiry processes that allow you to gauge your insurability before submitting a formal application, so a potential decline does not appear on your insurance record.

Working with a Specialist Makes a Difference

Navigating the long term care insurance landscape after a rejection requires expertise and access to multiple carriers. An independent specialist who focuses on long term care insurance can:

• Review your specific health situation and identify carriers most likely to approve your application
• Submit informal inquiries to multiple carriers simultaneously to gauge your insurability without formal applications
• Help you understand the differences between traditional LTC, hybrid LTC, cash indemnity, and other product types
• Guide you through the appeal process if your decline was based on inaccurate information
• Recommend alternative strategies if insurance coverage is not available

Do not let a single rejection discourage you from exploring your options. Many people who have been declined by one carrier ultimately find coverage through another carrier, a different product type, or a hybrid approach.