None of this is cast is stone, but some very good things are likely to happen regarding LTC in 2017!
The new administration is likely to make changes that will affect LTC financing. First of all is the good news that the feds plan several interest rate increases next year. Insurance companies make their money not off the premiums they collect, but from the billions they must keep on deposit for claims. They have not been earning s**t lately, but that will change. For LTCi, this means the end of, or a significant slowdown on pressure to raise rates. Hey, they’ve been promising 5% compound inflation and only earning 3%, they can’t go on like that.
Many states would like to make changes to how Medicaid (which pays for the majority of LTC) is divied up. Most Medicaid dollars go toward LTC costs. By block granting Medicaid to the states and letting them determine how to best use those dollars, a lot of abuse can be stopped.
Right now, your spouse can have $2,000,000 in an IRA or 401k and it is not a countable asset in determining if you get Medicaid for your LTC. We are giving Medicaid to millionaires – literally!!! We also let the at home spouse keep the home equity and perhaps, maybe, if we are lucky, recover some of it later. Does this make sense, let’s give Medicaid to people who have money to pay their bills and then see if they will pay it back if they want to later? Really?
If the general public realizes they will need to use up their nest egg, and spend the house equity first, before they get government Medicaid, they will line up to buy LTCi – assuming they are still healthy enough to get it. There will be wailing and gnashing of teeth by those who are no longer eligible to buy such coverage. Don’t let your clients be among the wailers and gnashers, ask them NOW, how will you pay for care when your health changes. Or, Would an extra bill of $40,000 to $120,000 every year, be a problem in your retirement?
Things are going to change, you can only kick the can down the road so far before your toe, the can, or the road runs out.
Once interest rates come back up, LTC insurance companies will re-enter the market. They will have leaner products (remember the lifetime benefits sold years ago?). They will have products that limit their exposure and increase your clients’ exposure. Companies are getting killed by dementia and Alzheimer’s as those claims go on for years and years and years….. Yes, Alzheimer’s does tend to run in families, have you asked your clients about their family history and exposure to this?
I still have LTCi available with a 10 year benefit. And 5% compound automatic built in inflation on that benefit. Get some while the getting is good.