Tuesday, March 04, 2008

John Hancock gives closed webinars on how its Long Term Care plans work: should be typical of industry

Today, March 4, 2008, John Hancock Life Insurance presented the Webinar on Long Term Care (to ING employees and retirees), which I had discussed prospectively on Feb. 20, here.

Technically, the presentation comprised a series of slides (like a grade school “film strip”), and the audio came from the phone; the visitor had to register first and call an 800 number to hear the audio commentary through phone. The “conferencing” was provided by Genesys. It lasted 22 minutes.

Much of the substance of the presentation was discussed Feb. 20. But there was additional information. For example, the average nursing home cost in the United States is $195 a day or $71000 a year (I thought it was already more). The average assisted living ranges $21600-$26300 a year, and home health care is actually more than assisted living, or about $31200. It was not clear if the home health number covered seven days a week and included live-in help, which normally requires its own room and now has to be immigration-checked.

The presentation covered the concept of a Daily Maximum Benefit, plus lifetime maximums, which can cover ten years and total to more than one million dollars. (By way of comparison, a typical high rise luxury condo in Manhattan with at least one bedroom is usually more than one million.)

The presentation discussed the lack of Medicare coverage for nursing home stays, which usually covers in full only the first twenty days, and then with a copay through one hundred days. 25% of all nursing home care in the US is out-of-pocket. Medicaid requires a spend down of assets, so, as the presenter explained, long term care insurance represents a capacity to protect assets. The presentation did not mention filial responsibility laws (or “poor laws”), but I believe that some states may start enforcing them.

A LTC policy is often a guaranteed issue to employees who are still working full-time (and can include career agents), but will require underwriting (which is often quite strict) once people have retired. A forty year old may be able to purchase it for $15 a month, and add in Future Benefits Options and Automatic Benefits Increase features, or, for example, Bed Reservation. Nonforfeiture options (when premium payments stop) are available. There are concepts like Commitment Based Professional Care, and Informal Care, which would allow reimbursement to friends and relatives who run errands or give informal care. Restoration of Benefits is possible after a lapse. A qualification period is required to start benefits, but this period accumulates lifetime in case the beneficiary gets better and does not need all of the benefits in one episode of care.

One point about qualification could really matter, however. The patient must meet two of six criteria to qualify for reimbursement under the LTC plan. It's possible that other adult relatives could experience considerable problems dealing with the person who does not quite qualify, and want to place the person in assisted living, when then, it would seem, the patient would still be paying out of pocket despite having paid premiums.

The concepts in the Webinar seem familiar to those who have started following the Long Term Care Insurance industry in light of the "demographic winter" crisis. When I was working, the concept was first presented to employees in 1999. When retirees are screened for beginning LTC later in life, however, they are likely to face close underwriting scrutiny, as I noted on previous posts about the AARP/Genworth plans.

Note: there is a current story today on the taxability (and social security issues) for poll workers' pay in the "major issues" blog; poll workers are often retirees. Link here.

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