You might have recently read about the jump in LTC insurance premiums for the Federal Government LTC program. The increase, which will take effect in November will average 83%, but could go up as high as 126%. This is not a product that is subsidized by the Government. Federal employees pay the full charge to John Hancock (the LTC insurance provider). The price increase adjusts for changing trends in morbidity (how sick we are) and mortality (how long we live) rates, as well as expected return on investments. Want to know one of the effects of extremely low interest rates? Insurance companies rely on interest rate earnings to meet future claims. The unprecedented low rates are killing insurance companies.
These price increases are alarming for retirees. This isn't a one time expense. These are premiums that must be paid every year you are alive. Furthermore, this doesn't mean that LTC premiums can't go up in the future.
What do you do? Here's the the first thing you do. You conduct a comprehensive analysis of your retirement income, assets, and expenses, and evaluate the impact of long term care expenses in a variety of scenarios. Every person should have one goal, to be reasonably prepared to address a long term care situation without running out of money. Its especially important for a couple to consider that one spouse can not exhaust their resources for long term care expenses and leave the second spouse destitute (or significantly degrade their lifestyle).
I think many people are unsure what long term care looks like. What kind of expenses are incurred. How care is provided. I've talked to some of you that have experience in this through providing care to your parents. I have this experience for my mom. Long term care is not a bogeyman. It's just another type of healthcare expense that needs to be factored into our retirement planning.
These price increases are alarming for retirees. This isn't a one time expense. These are premiums that must be paid every year you are alive. Furthermore, this doesn't mean that LTC premiums can't go up in the future.
What do you do? Here's the the first thing you do. You conduct a comprehensive analysis of your retirement income, assets, and expenses, and evaluate the impact of long term care expenses in a variety of scenarios. Every person should have one goal, to be reasonably prepared to address a long term care situation without running out of money. Its especially important for a couple to consider that one spouse can not exhaust their resources for long term care expenses and leave the second spouse destitute (or significantly degrade their lifestyle).
I think many people are unsure what long term care looks like. What kind of expenses are incurred. How care is provided. I've talked to some of you that have experience in this through providing care to your parents. I have this experience for my mom. Long term care is not a bogeyman. It's just another type of healthcare expense that needs to be factored into our retirement planning.
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