When Ron Sergent's father died six years ago, the family did not think to ask for a refund of the remaining months of his long-term care insurance policy. The $2,500 annual premium had been paid upfront.
That money might have helped with expenses for his mother, who is in her mid-80s now and needs additional insurance coverage.
On Jan. 1, a new law will provide legal protection to consumers in cases like Sergent's father.
The law requires that insurance companies issuing long-term and medigap policies return money on already-paid premiums when a policy is no longer needed or when an insured person or the company cancels coverage. For example, if a consumer pays a full year's premium on a policy and does not use three months of it, that portion would be refunded.
The requirement is like that of other canceled policies, such as auto insurance. The law says refunds must be issued within 20 days of the date of cancellation notice.
"This law is important because we know that in the next 15 years, the state's senior population is expected to grow to nearly 1.5 million individuals, many of whom will purchase long-term or supplemental Medicare insurance plans," said Norma Collins, AARP Missouri associate state director for advocacy.
The Missouri Department of Insurance estimates that there are now about 180,000 long-term care policies and 360,000 medigap policies statewide. The state has no estimate of how much money might be refunded to policyholders.
A policyholder who cancels coverage doesn't need to do anything in order to receive a refund. However, next of kin must notify the insurance company if the policyholder dies.
Companies must update their policies with the new law at the first of the year, said John Huff, insurance department director.
"Before, they were not entitled [to the refund]," he said. "This is a great senior protection."
Huff said the idea for the law came from consumer complaints to the insurance department. He credited retiring Sen. Norma Champion, R, for steering it through the legislature.
"It underscored the importance, when consumers have questions and concerns," that positive change can occur, he said.
Spokespersons for two of Missouri's larger insurance providers, Bankers Life and UnitedHealthcare's AARP-branded Medicare supplement, said their companies are already in compliance with the spirit of the law.
"We simply documented the law change in our state requirements file," spokeswoman Barbara Ciesemier of Bankers Life said.
While some companies provide refunds of unused premiums, the state receives many complaints that others do not, said Travis Ford, the insurance department spokesman.
Sergent, who is a volunteer legislative advocate and a member of the AARP Executive Council in Missouri, said the law opens the door for older people to shop around for policies without fear that they might lose money by canceling existing policies. Consumers can manage their health plans more effectively and know that what they spend goes to an appropriate service.
"It's a wonderful idea," said Sergent, 63, of Columbia. "It's a simple idea. And in this particular situation for seniors, the cost saving is significant."
If you have questions about the new law, go online to the Missouri Department of Insurance website or call their hotline at 1-800-726-7390.
Traci Angel is a freelance writer based in Kansas City, Mo.