Living Longer, Dying Slower

Long-term Care Insurance Fraud


All fraud examiners must know about this impending assault on both the global health care sector and the public’s financial reserves. 

FACT: People are living longer and are dying much slower. In frontier North America, one out of every 10 people lived to age 65. Today, 80 percent of U.S. citizens will live past age 65. In 1990, 54,000 U.S. citizens were older than 100. That number doubled in 2000.1 As of late 2002, more than 12 million U.S. citizens were receiving some form of long-term care, of which 40 percent were working age adults. In Canada, it was estimated in 2001 that 3.92 million were 65 or older – two-thirds more than in 1981.2

FACT: Statistics show that the insurance industry may not be prepared for what is sure to be the next wave of health care fraud – private long-term care insurance fraud. According to a Conning & Company study of insurance fraud in the United States, health care insurers detect a paltry 1 percent of fraud, compared to a 20 percent fraud detection rate in the property and casualty industry.3

As a result of growing need for long-term care and worldwide and higher life expectancy (See Figure 1), long-term care (LTC) insurance providers are seeing an explosion of interest in private LTC insurance products. Those of us responsible for protecting our insurance entities from fraud know all too well what increasing LTC insurance interest and sales may mean in both the short and long term: increasing incidents of LTC fraud schemes including fraud by (1) the individual insured (or family member or representative), (2) by the insurance agent/broker, and (3) by the medical or service provider. But all fraud examiners must know about this impending assault on the global health care section and the public’s financial reserves.

Here we will review the basics of private long-term care insurance, the three primary areas of LTC insurance fraud, and the indicators (or red flags) of LTC fraud.


Projected Distribution of the Elderly Population By Age 
Percent of Elderly Population 
Age Group  1985  2010  2035  2050 
65 to 69 32.2 29.9 24.0 24.6
70 to 74 26.6 21.8 21.0 20.0
75 to 79 19.6 17.4 21.0 17.1
80 to 84 12.2 14.0 14.8 14.6
85 and over 9.4 16.9 16.0 23.7
Source: U.S. Census Bureau, 1998 
Figure 1 


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