Seniors' fear of going broke paying for long-term care is an opportunity for crooks selling bogus contracts for home health care. Among the victims is Florida resident Eva Muller. Several years ago, says her friend, Ingrid Eglsaer, Muller "started having trouble with her memory." So Eglsaer helped Muller go through the unopened mail she had hoarded.
Eglsaer found a canceled check for $3,500 and asked Muller what it was for. She didn't remember. Digging through Muller's paperwork, Eglsaer discovered that the money had gone to a home-health-care plan that was supposed to provide Muller with discounts on services. But when Eglsaer contacted the company after Muller broke her arm, "the company was evasive and kept avoiding me," she says.
Eglsaer persisted over the next several months. "Once they saw that I was digging in my heels, they refunded the $3,500," she says.
She also complained to the Florida Department of Children and Families, which notified the state financial-services department. After receiving similar complaints from a number of people (or their family members and friends) who had paid $2,000 to $4,000 for home-health-care plans that allegedly didn't pay off, the department subpoenaed the company's records and found 44 victims — many in their eighties and nineties and suffering from dementia — who had bought the policies.
"It would have been hard for many of them to comprehend what they were purchasing at the time," says Barry Lanier, chief of the bureau of investigation for the Florida Department of Financial Services. The department suspended the licenses of two agents for two years. Now Lanier, "we're going to do everything we can to try to get restitution."
He recommends that before buying any plan for home health care, you contact your state insurance department to check up on both the agent and the policy (find links to your state's department on the insurance page at Kiplinger.com). "We've seen cases in which an agent who sold a legitimate policy comes back later and persuades the victim to drop that policy and buy a bogus one," says Lanier.
Lanier encourages either an adult child or a very close friend to take a strong role as a senior's advocate. Paul Greenwood, head of the elder-abuse prosecution unit for the San Diego District Attorney's Office, says elders should consider allowing their bank to send a duplicate copy of their monthly statement to a trusted family member or professional adviser. "That would help spot suspicious activity early," says Greenwood.
Kimberly Lankford is a contributing editor to Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.