Insurance policy's fine print trumps 96-year-old's good faith

On her 96th birthday earlier this month, Elaine Tollefson celebrated with a visit from out-of-town grandkids to her home, an assisted living center in central Nebraska.

But there's one birthday present she still wants from Minneapolis-based Thrivent Financial: Checks to help defray the cost of that home.

Tollefson has paid the monthly premiums on her long-term care insurance policy for 26 years. In April, Thrivent told Tollefson that she cannot collect any benefits because she did not follow her policy's protocol of spending three days in the hospital first.

It's a requirement no longer allowed in Nebraska, but policies that predated that law change are still valid. Like many people with long-term care policies, Tollefson learned the hard way that the help wasn't there when she needed it.

"I thought if I had to go on long-term care, I would have that insurance, plus my Social Security, that would take care of most everything," Tollefson said.

As America's population ages, the number of those making claims on their long-term care insurance policies is surging. Insurers paid $7.5 billion in benefits in 2013, a 13 percent jump over the previous year, and payments are expected to quadruple by 2032, according to the American Association for Long-Term Care Insurance.

There's nothing simple about it, though. "People don't understand when buying that the policy language governs everything," said Jesse Slome, the trade association's executive director.

For Tollefson, the insurer was more than just another company. When her husband bought their policies in 1988, he was actively involved in what was then known as Lutheran Brotherhood. Though Thrivent Financial dropped "for Lutherans" from its name earlier this year, it remains a not-for-profit membership organization, despite its Fortune 500 listing and $6.9 billion surplus generated last year. Its motto is "Connecting faith and finances for good."

After growing up in southwestern Minnesota, Tollefson married a man named Aad (pronounced "odd"), though everyone called him Tolley. He was a chemist who worked on the Manhattan Project and then for DuPont, which transferred him all over the country. The Tollefsons had four daughters and settled in Gothenburg, Neb., a little town on the Platte River.

In 1990 and 1991, the Tollefsons got letters from Thrivent offering to upgrade their long-term care policy in a way that eliminated the three-day hospitalization requirement. They declined the offer, and continued to pay the premiums of about $46 a month.

Thrivent said it could not comment on individual policies, but stated that a "change in the law does not negate previously purchased policies. Some states still allow the sale of such products. However, we stopped selling this type of product in all states. …"

Aad Tollefson died in 2002, having never made a claim on his policy. His widow went into the hospital for kidney failure in February 2013, but decided to move back home afterward until she could no longer make it work. That moment came in April, when she moved into the Stone Hearth Estates assisted living housing, which costs about $3,400 per month. The long-term care insurance would pay $40 a day, a little over a third of the cost, or so she thought.

Her grandchildren contacted her insurance agent and got the bad news. Their appeal to Thrivent's appeal panel was rejected last month.

"The panel acknowledged your long-term association with Lutheran Brotherhood/Thrivent as well as your determination to stay in your house and remain independent as long as possible," Thrivent wrote in its denial letter. "Your actions are indeed commendable; however, these actions cannot supersede the contract requirements."

"Thrivent members look for and expect Thrivent to provide benefits according to the policy," the company said in its statement to the Star Tribune.

Tollefson's grandson, Aaron Vap of Minneapolis, said he understands Thrivent's decision. But he would like Thrivent to consider the circumstances: His grandmother actually saved them money by going back home from the hospital, instead of checking into assisted living right away.

"She's not trying to get around what the spirit of the policy is," Vap said.