7 Reasons New York's $26M John Hancock LTCI Action Matters for Advisors
4. Advisors and clients will tend to spend more time, money and energy researching bigger arrangements than smaller arrangements.
Advisors may find that, in some cases, assets come with what amounts to a financial rust charge, with the amount of rust correlating with the age, size and obscurity of the asset.
In practice, a client who certainly ought to be getting $50 from a trading stamp company might have no practical way to justify spending the time to locate the company’s current claim administrator.
A client with a 25-year-old $500,000 LTCI policy might get the full policy value but have to spend money on policy analysts and policyholder advocates to get that value. The net benefits value, in that scenario, would be the benefits paid, or available, minus the policy analysis and advocacy costs.
5. Advisors will want to use, and invest in, claim analysis and advocacy services.
Family Solutions for Care is an example of a company that has been in the LTCI claims advocacy market for years.
Advisors might have a financial incentive to team up to support similar types of for-profit and nonprofit advocacy services, for LTCI coverage and for life, annuity and investment products, to minimize the effects of financial rust on clients’ asset totals.
6. State insurance regulators will have an incentive to team up to conduct multistate policy administration reviews.
The National Association of Insurance Commissioners already coordinates many multistate market conduct reviews of insurers.
Multistate reviews of administration of policies that help older consumers could ramp up as more aging insureds need benefits, and regulators face the complexity of interpreting the terms of insurance policies and investment contracts prepared when Richard Nixon was president.
7. State Medicaid programs will have a strong financial incentive to support all kinds of investigations involving older Americans’ finances.
Medicaid is a program that pays for ordinary medical care for low-income people, and for nursing home care for frail or disabled Americans who meet program income and asset requirements.
States run Medicaid programs with a combination of state and federal money.
Researchers estimated in 2021 that about 9% of Americans in the top fifth in terms of lifetime income end up enrolling in Medicaid after age 65. Many do so because they use it to pay for nursing home care.
Medicaid programs’ role as nursing home care payers of last resort mean that they have a stake in protecting your clients against financial services provider mistakes or fraud that reduce your clients’ asset totals.
If Medicaid program managers around the United States notice the $2.2 million the New York state Medicaid program collected from John Hancock, they could end up investing more resources in investigating your clients’ asset-reducing financial problems, and then competing with your clients for restitution payments.
(Image: Shutterstock)
