Insurance Giant…John Hancock Leaves
Long Term Care Market
Dear Toni:
On Thursday, I read an insurance alert that John Hancock is leaving the long term care market in December. My husband is retiring next year and we are now in the process of planning for our retirement years. We need to rethink how we will pay for long term care when that situation arrives.
A few months ago, you wrote about other options for long term care. Now that LTC companies are leaving the insurance market, what is one to do to pay for a long term care need?
Thank you for all you do to help us understand these complicated issues…Charla from Clear Lake Area.
Hello Charla:
You are right! Another one bites the dust…. John Hancock is joining other insurance companies and leaving the long term care market. Seniors and baby boomers are faced with fewer options for their retirement needs.
Most Americans do not realize that Medicare won’t pay for long-term nursing home or home care. Medicare typically pays only for short stays in a skilled nursing or rehabilitation facility to recover after a hospitalization.
Boomers need to be aware that the cost of long term care is projected to rise from an average of $87,600 per year in 2016 to over $123,000 per year in 10 years. Amazingly, the estimated yearly cost for a long term care need in 20 years appears to be $174,000 per year.
Many baby boomers are not concerned with long term care planning because many feel they have enough in their 401K to pay for a catastrophic illness. They do not realize that in 20 years when their health is failing that their savings and/or 401K could be wiped out because they failed to do proper long term care planning.
There is light at the end of the tunnel because with 10,000 baby boomers turning 65 everyday for the next 15+ years. Traditional Long Term Care policies are either raising their premiums or leaving the market as John Hancock has done.
In recent years, the insurance industry has designed new products for those concerned about long term care issues and who do not want to spend their hard-earned retirement dollars on a long term care policy that is raising premiums, unaffordable or that they may never use.
And so, life and annuity policies with accelerated benefits were born.
Below are different ways to solve your Long Term Care retirement needs:
- Hybrid Life and Annuity Policies: Many life/annuity insurance policies have a provision if you need long term care; you can receive a certain amount of long term care with your life/annuity policy’s face amount. These policies include accelerated benefits with chronic, critical or terminal illness benefits to assist in a long term care need.
- Aid and Attendance Benefits: The VA can help Veterans with Long Term Care issues. There is over $20 Billion dollars available for long term care pension money just waiting for Veterans to apply for their Aid and Attendance benefits. You need to have a Long-Term Care issue to qualify. (you must be a veteran to receive benefits and both you and your spouse could qualify.)
- Medicaid: Check to see if you can qualify for Medicaid. Many must “spend down” to qualify.
Toni King, author of the new Medicare Survival Guide® with a “Thank You, Houston” discount available for Houston Chronicle/HCN readers at https://tonisays.com/reader-special . Medicare consultations are available at the Toni Says office or email questions to info@tonisays.com or call 832/519-TONI (8664).
