Americans Ignore Need for LTC Planning Despite Knowing More About the Risks

BOSTON, Jan.10, 2012 /PRNewswire/ -- According to a recent national survey of 1,000 Americans, more know the basics of long-term care (LTC) and LTC insurance than five years ago and a majority believe they will someday need some LTC (60%). However, fewer have planned for the possibility in their own lives, and many said they'd rely on Medicaid despite admitting they did not understand how the program worked.

A majority of respondents answered seven out of 10 basic LTC quiz questions correctly compared to four out of 10 in 2006. Despite the increase in general LTC knowledge, fewer people today than in 2006 said they've made financial calculations for what they'll need in retirement (66% vs 72%). Of those who have calculated for retirement, only 41 percent included LTC needs in the equation, compared to 51 percent in 2006. Fewer still, 22 percent, said they've made plans specifically to finance potential LTC needs, compared to 31 percent in 2006.

"While it is encouraging to see an increase in general knowledge," said Marianne Harrison, president of John Hancock LTC Insurance, "the survey's overall results are a cause for concern because most consumers appear to be making long-term care plans by default, thinking they'll rely on government programs, which already are showing signs of strain."

Planning and LTC Insurance Seen Positively

A large majority of respondents, 82 percent, agreed that it is irresponsible not to plan for the cost of LTC needs. Among a number of options, LTC insurance was cited as the best way to plan by the greatest number of respondents (61%). Additionally, a number of the benefits of LTC insurance were seen as important by vast majorities – with some growing by more than 10 percent since 2006: 

• LTC insurance helps individuals receive care where they choose (93% in 2011 from 79% in 2006)
• LTC insurance ensures one receives high quality nursing home care (93% in 2011 from 74% in 2006)
• LTC insurance ensures the individual is in control of overall care (92% in 2011 from 80% in 2006)

Although most respondents said they thought LTC insurance would be the best way to cover long-term care needs (61%), only 11 percent reported having purchased it. More than half of those who hadn't bought LTC insurance (53%) said they plan to cover their LTC costs by qualifying for Medicaid.

However, more detailed survey questions about Medicaid revealed a lack of knowledge about how the program worked and a feeling that it would be cut back in the future. By their own admission, few Americans understand how Medicaid works – less than a third (30%) reported being knowledgeable about it in general. When asked specific questions about Medicaid, almost four in 10 respondents (37%) incorrectly thought that Medicaid covered LTC services received at home and nearly half (46%) didn't know that people generally needed to spend down almost all their assets to qualify.

In addition, three-quarter of all respondents (75%) said they believed Medicaid would be cut back in the next decade, with 44 percent believing it would be cut back a lot.

Economy Seen Affecting LTC Insurance Purchase

Roughly one-third of respondents (32%) say they have been less likely to purchase long-term care insurance because of the economy. Consumers are more likely this year to say they agree that a long-term care policy is an extra cost they do not want to spend right now (92% vs. 80% in 2006) and that they simply cannot afford to pay for it (80% vs. 66% in 2006).

Americans Can't Afford Much Care

When asked how much they would be able to afford annually to pay for the cost of care (in today's dollars), the majority said between $1,000 and $14,000 (70%). Another one in five said they would be able to spend between $14,000 and $35,000 (20%). Very few feel they would be able to afford any more.

When given the approximate cost per year for a semi-private room in a nursing home, the majority of respondents said they do not think they could even afford to pay this amount for a full year (62%)

Lack of Planning May Cost Them High Quality Care They Desire

Not surprisingly, 96 percent of respondents expressed that if they ever needed care in a nursing home, it was important that they receive high quality care; 71 percent of respondents reported it was very important and 25 percent considered it somewhat important.

However, in the absence of buying LTC insurance, more than half  (53%) said they planned to qualify for Medicaid, despite the fact only a quarter of respondents feel they'd receive care that was good or better on Medicaid.

"There is a disconnect between the care Americans would like to receive should they need it and the actions they would need to take to prepare for it," said Harrison. "Although the current economy may discourage individuals from planning ahead for their potential long-term care needs, the purchase of long-term care insurance can help ensure that they get the kind of care they would hope for in their future, while helping to protect their assets."

Survey Methodology

The 2011 John Hancock Long-Term Care Survey was conducted online from September 15th through the 20th by Mathew Greenwald & Associates. A sample of 1,000 individuals 21 – 75 responded to the survey. The sample was stratified to obtain an accurate representation of Americans based on age, education and gender. The total results were then weighted to ensure appropriate representation. Many of the questions used in this survey were repeated from a 2006 survey with similar objectives.

About John Hancock Financial and Manulife Financial Corporation

John Hancock Financial is a unit of Manulife Financial Corporation, a leading Canada-based financial services group serving millions of customers in 21 countries and territories worldwide. In 2012, John Hancock celebrates 150 years of serving clients across the United States, while Manulife celebrates its 125th anniversary. Operating as Manulife Financial in Canada and in most of Asia, and primarily as John Hancock in the United States, Manulife Financial Corporation 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 C$492 billion (US$473 billion) as at September 30, 2011. 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 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 johnhancock.com.

Long-term care insurance is underwritten by John Hancock Life Insurance Company (U.S.A.), Boston, MA 02117 (not licensed in New York) and in New York by John Hancock Life & Health Insurance Company, Boston, MA 02117.

SOURCE John Hancock Long-Term Care