BOSTON, Nov. 13 Americans may realize that they have a significant chance of needing long-term care (LTC), but they greatly underestimate the cost of care, believe government programs cover more than they actually do, and haven't developed a plan to deal with their own potential care. A national survey of 935 people ages 21 to 75, released today as part of LTC Awareness Month (November) and John Hancock's "Know Your Options" campaign, found that most respondents only knew the answer to six out of 10 basic LTC "quiz" questions.
Additional survey questions about people's ability to pay for long-term care showed that the vast majority can only afford to pay a fraction of what LTC costs on their own, and 83 percent have made no personal or financial plan to cover those costs in the future.
Long-Term Care Quiz Highlights
John Hancock's quiz results revealed that more than 80 percent knew that the average lifetime chance of needing long-term care for an individual 65 years or older is more than 40 percent. But people significantly underestimated the cost of nursing home care with seven in 10 thinking the average is $30,000 a year, which is less than half the actual national average cost of $75,000.
"Americans are still in need of information on long-term care, particularly when it comes to how they would cover the costs if they ever face the need for care," said Marianne Harrison, president, John Hancock Long Term Care. "We are hopeful that educational efforts, like this campaign, will provide individuals with the facts they need to realistically evaluate their own situations. We've found that planning ahead can make what undoubtedly is a difficult situation -- providing and paying for care -- much more manageable."
The quiz also revealed that many respondents have an incomplete understanding of government-based programs. While more than 70 percent did know that people generally have to spend almost all of their assets to get Medicaid benefits for care, they held a number of misconceptions about what the programs actually cover:
"It is important for all of us to know the requirements and limitations and of Medicare and Medicaid," said Harrison. "While these programs do provide some long-term care benefits, they do not represent a safety net that all of us can depend on."
In addition, the results highlight the difficulty that many would have if forced to self-fund a long-term care event. Nearly 70 percent (69.2%) of respondents said they'd only be able to pay between $1,000 and $14,000 out-of-pocket annually for care, which is a fraction of the average annual cost of a nursing home and less than half of the $35,000 annual cost of care in an assisted living facility.
When asked about long-term care insurance, about 85 percent (84.6%) of respondents said they did not have it. Of greater concern was that more than half of those respondents either didn't know when they would plan (36%) or didn't plan on having a plan (15.7%). Nearly twenty percent (18.3%) said they were more likely to look into long-term care insurance as a result of the recession, though slightly more than a third (37.7%) said they'd be less likely.
Harrison noted that John Hancock has paid over $2 billion dollars in LTC insurance claims.(1) "We have seen the positive impact that LTC insurance has had on the lives of our claimants and their family members, by protecting their savings and giving them more choices about their care. We believe that LTC insurance is an important component of any prudent financial plan," she said.
Long-Term Care Insurance Options and Benefits
A current focus of many long-term care insurance carriers is to offer consumers ways to manage the potential cost of premiums. The survey found that these options are not well-known in general: an inflation option that tracks CPI is only known by roughly a third of respondents, increasing the elimination period, which was most familiar, was only known by 44 percent.
Consumers also aren't aware of some of the general benefits of long-term care insurance:
"The need for LTC can impact individuals and their family members physically, emotionally, and financially. LTC Awareness Month presents a great opportunity for people to learn about LTC issues and the benefits of purchasing LTC insurance in the process of planning for a secure future," said Harrison.
The survey was conducted on-line by Synovate, a leading research company based in Chicago, Ill. A sample of 935 Americans ages 21-75 responded to the survey. The sample is balanced to be representative of the general population based upon region, gender, age, and household income data from the U.S. Census Bureau.
About John Hancock Long-Term Care Insurance
John Hancock is one of the largest providers of LTC insurance overall with more than 1,000,000 LTC insurance clients and $1.5 billion of in-force LTC insurance premium.(2) The company holds $9.4 billion in LTC insurance reserves for future claims(3) and has paid $2.2 billion in LTC claims.(4) Having entered the retail LTC insurance market in 1987, John Hancock is one of the largest carriers of individual coverage in the country.(5) John Hancock began selling group LTC insurance in 1988 and today is the largest provider of employer-sponsored group LTC insurance in the U.S.(6) More information about long-term care issues and insurance products can be found at www.johnhancockLTC.com.
About John Hancock and Manulife Financial
Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 22 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$436.5 billion (US$407.1 billion) as at September 30, 2009.. Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers a broad range of financial products and services, including life insurance, fixed and variable annuities, fixed products, mutual funds, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at www.johnhancock.com.
Long-term care insurance is underwritten by John Hancock Life Insurance Company, Boston, MA 02117 and in New York by John Hancock Life & Health Insurance Company, Boston, MA 02117.
(1) Based on John Hancock internal data as of 09/30/09. Total includes individual and group long-term care insurance and 50% of the Federal Long Term Care Insurance Program.
(2) As of December 31, 2008, according to internal financial records.
(3) As of December 31, 2008, according to internal financial records inclusive of active and claims reserves for individual and group long-term care insurance.
(4) Based on John Hancock internal data as of 09/30/09. Total includes individual and group long-term care insurance and 50% of the Federal Long Term Care Insurance Program.
(5) LIMRA International, U.S. Individual Long-Term Care Insurance Sales Survey, Fourth Quarter YTD 2008.
(6) LIMRA International, U. S. Group Long-Term Care Insurance Sales Survey, Fourth Quarter YTD 2008.
-- Roughly 45 percent (44.6%) incorrectly thought Medicare is the primary funding source for most seniors' LTC -- Almost 45 percent (42.4%) incorrectly thought Medicare covers nursing home expenses for individuals with Alzheimer's disease -- A little more than one-third (37.9%) incorrectly thought Medicaid covers LTC at home, when in most states it only covers care in a nursing home
SOURCE John Hancock