When Every Day Counts: Why LTC Insurers Must Modernize Claims Processing Now

I’ve spent over two decades in the insurance industry—first as an agent, now on the insurtech side, working to modernize claims processing. I’ve seen firsthand how outdated, manual workflows don’t just slow things down—they have real consequences for the people who rely on long-term care (LTC) benefits. One experience sticks with me to this day.

A few years ago, I had a client named James, a retired school principal in his early 70s. James had always been independent, but after a severe fall that resulted in hip surgery, he suddenly needed in-home care while he recovered. The good news? He had an LTC insurance policy that covered home health services. The bad news? Actually getting his claim approved was a nightmare.

James’ daughter, Lisa, took on the role of his caregiver and advocate. From the moment they submitted the claim, they ran into obstacles:

• Endless paperwork – The insurer required multiple forms, medical documentation, and invoices—all sent via fax or mail.
• Unclear status updates – Every time Lisa called, she got different answers. Some reps said the claim was under review, others claimed they were missing documents (which she had already submitted).
• Payment delays – James’ home health aide wasn’t getting paid on time, forcing Lisa to cover expenses out of pocket while they waited for reimbursement.
• 45+ day turnaround times – Even after everything was “approved,” James waited over six weeks for his first benefit payout.

James was lucky—his daughter had the time and patience to fight for his claim. But what about seniors who don’t have that kind of support? How many policyholders give up on the benefits they paid for simply because the process is too complicated?

This is why modernization isn’t optional—it’s essential.

A System Under Strain: The Perfect Storm in LTC Claims

James’ situation isn’t unique. The numbers paint a stark picture:

• By 2030, the U.S. Census Bureau estimates 73 million baby boomers will be 65 or older, drastically increasing demand for LTC benefits.
• Claim processing times average 45+ days (McKinsey & Company, 2023), frustrating policyholders and inflating operational costs.
• 85% of insurers cite compliance as a top operational challenge (Gartner, 2023), yet many lack automation to manage ever-evolving state regulations.
• 80% of LTC policyholders prefer digital claims filing, but fewer than 40% of insurers have fully automated workflows (Aite-Novarica, 2023).

The gap between what policyholders expect and what insurers can deliver has never been wider.

Why Legacy Systems Are Failing Insurers

LTC insurers still rely on outdated claims systems riddled with inefficiencies:

• Slow Payout Cycles – Policyholders wait six weeks or more for claims to be processed (Celent, 2023).
• Skyrocketing Administrative Costs – 30-40% of operating budgets are spent on labor-intensive claims management (Datos Insights, 2023).
• Regulatory Exposure – Without automation, insurers are at greater risk of fines due to compliance errors (International Claims Association, 2023).
• Burnout and Talent Shortages – Repetitive, inefficient processes drive high turnover among claims professionals (Claims Journal, 2023).

A senior analyst at Datos Insights put it plainly:

“The LTC insurance market is at a breaking point. Without automation, insurers will struggle with efficiency, compliance, and customer satisfaction—all of which are critical to remaining competitive.”

A Smarter, AI-Enabled Approach to LTC Claims

What if an insurer could reduce claim processing time while lowering operational costs?

With AI-enabled claims automation, that’s not just possible—it’s happening. A modern claims platform can provide:

• Seamless Claim Initiation – Intelligent intake forms, automated eligibility verification, and real-time status tracking streamline the process for policyholders and caregivers.
• Automated Invoice Processing – Eliminating manual backlogs and ensuring faster payments to providers.
• Accelerated Claims Resolution – Cutting cycle times, improving customer satisfaction.
• Automated Compliance Tracking – Ensuring real-time adherence to state-specific LTC regulations.
• Lower Administrative Costs – Reducing overhead and allowing insurers to scale without adding headcount.

Had James’ insurer implemented this type of modernization, his experience would have been drastically different:

• Claim submitted online with automated document verification.
• Real-time status updates, eliminating guesswork.
• Direct payments to caregivers, avoiding financial strain on families.
• Faster claim resolution, getting James the care he needed—without the stress.

The LTC Industry Has An Obligation to Better Serve Policyholders During a Critical, Time-sensitive Period

I know firsthand that claims processing isn’t just about data and workflows—it’s about people. When policyholders need long-term care, every day matters. They shouldn’t have to fight through layers of inefficiency just to receive the benefits they’ve paid for.

I share James’ story because it’s a reminder of why we must modernize. The LTC industry has an opportunity—not just to improve operations, but to truly serve policyholders in their moments of need. Let’s not wait until another James or Lisa has to fight through a broken system.

His story is a wake-up call for the industry. LTC insurance is supposed to provide peace of mind for policyholders—not bureaucratic roadblocks. Insurers that modernize now will gain a competitive edge, delivering faster, frictionless claims experiences that build long-term policyholder trust. Those that delay will struggle to keep pace as digital-first providers set new industry standards.

The question isn’t if insurers should modernize—it’s how fast they can move to avoid being left behind.
Are you ready to future-proof your claims process?

Sources

U.S. Census Bureau (2023). Aging Population Projections.
McKinsey & Company (2023). Insurance Industry Trends and Challenges.
Gartner (2023). Compliance Challenges in Long-Term Care Insurance.
Aite-Novarica (2023). Consumer Preferences in Digital Claims Processing.
Celent (2023). The State of LTC Insurance Technology.
Datos Insights (2023). Operational Costs in Claims Management.
International Claims Association (2023). Compliance and Automation in LTC.
Claims Journal (2023). Workforce Challenges in Insurance Claims.