"The dangers of long-term care insurance"

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Re: "The dangers of long-term care insurance"

Postby VictoriaF » Sun Feb 09, 2014 8:56 pm

It seems that the endowment effect is at play here. Those who have already purchased LTCI feel much more positive about it than those who have not.

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Re: "The dangers of long-term care insurance"

Postby edge » Sun Feb 09, 2014 10:26 pm

dhodson wrote:
edge wrote:http://www.forbes.com/sites/howardgleckman/2013/12/04/genworth-stays-in-long-term-care-insurance-but-seeks-a-new-premium-design/

Here is the first one to pop up. The market has consolidated to just a few providers as many has dropped out due to losses. One of the remaining players has about 40 percent market share and only stayed in because the ICC allowed 100 percent rate increases just to break even.

http://www.bankrate.com/finance/insuran ... cey-1.aspx

"Some companies like MetLife and others have gotten out of the (LTC) business because they just couldn't price it properly," says Blazzard, who serves on the MetLife board. "They were losing their shirts"

Not saying that this product is attractive for everyone but for people who are going to buy it, waiting is the worst advice possible. All the remaining providers are releasing products in 2014 that will be less attractive than the current generation.



None of that says the industry has lost billions....

Everyone following this thread understands that the industry has consolidated and that this isnt a good thing.

Frankly if your statement were true then that alone would be a good reason not to buy since those companies would be going under before paying claims.

Waiting isnt the worst possible advice. It has risk to it for sure primarily that you wont be able to purchase coverage in the future but the fact that products coming out are less attractive doesnt mean anything. The old products still can have rate increases to make them even less attractive then that.



Hah, pedantic backpedaling. Nice work.

The old products require state insurance regulators to agree to rate increases which have to be justified by verifiable models and forecasted projections. Also, the actual benefits/exposure cannot be changed. So your statement that the old products can be made less attractive than the new ones is a near impossibility.

All of the rate actions have been to get the old blocks of business to profit/loss neutrality to ensure that the carriers do not go under. I am not sure, but it seems you are speaking from nearly complete ignorance.
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Re: "The dangers of long-term care insurance"

Postby dhodson » Sun Feb 09, 2014 10:54 pm

Again you can't back your claim even with your insult

They are allowed to request increases if the assumptions they used turned out to be false. Some states approve others do not since again they haven't lost billions. They may or may not bc they actually still don't know if they have the correct assumptions in regards to lapse rates, investments, and. % who file claims and for how much . Also the benefits can be changed in particular clients are given the option for decreased inflation options.

Again nice try.
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Re: "The dangers of long-term care insurance"

Postby SnapShots » Sun Feb 09, 2014 11:29 pm

cowboysFan wrote:
SnapShots wrote: We could make the decision to withhold antibiotics for such things like pneumonia and let nature take it's course.


You really withheld antibiotics? At that point, you might as well have withheld food and water to speed up the process.


It's letting nature take it's course. Of course, you provide palliative care. "Palliative care is specialized medical care for people with serious illnesses. It focuses on providing patients with relief from the symptoms, pain, and stress of a serious illness—whatever the diagnosis. The goal is to improve quality of life for both the patient and the family."


Late stage Alzheimer's is a nightmarish existence for the person and family, made worst by living in an institution. Your response is why families need support and education, to help them through the dying process. Doctors can prolong life for a very long time, which maybe more harmful than letting go.

Go visit a nursing home and hang around for a day. Or, I can email you a photo of a bed sore that exposes the bone. It's from a 91-yr-old husband whose taking care of his bedridden wife with Alzheimer's. She's incontinent, no longer can speak, doesn't where she is, has a hard time swallowing, can't feed her self...this has been going on for a long while.
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Re: "The dangers of long-term care insurance"

Postby SnapShots » Mon Feb 10, 2014 12:02 am

dhodson wrote:Again you can't back your claim even with your insult

They are allowed to request increases if the assumptions they used turned out to be false. Some states approve others do not since again they haven't lost billions. They may or may not bc they actually still don't know if they have the correct assumptions in regards to lapse rates, investments, and. % who file claims and for how much . Also the benefits can be changed in particular clients are given the option for decreased inflation options.

Again nice try.


This is a 2012 list of LTCi insurance companies noting whether they have or have not raised LTCi premium rates. NY Life recently applied in Connecticut to raise rates for policies sold in 1997 and early 2000s. Request was denied because the company could not show it had lost money on these polices. As of 2012, NY Life and several others have never raised premium rates on LTCi. However, other companies have.

http://www.tdi.texas.gov/consumer/cpmltchistory.html
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Re: "The dangers of long-term care insurance"

Postby bluemarlin08 » Mon Feb 10, 2014 12:07 am

snapshots gave a very informative view of custodial care. In addition, the docs that service these places are mostly losers, and very poor care. But they are cheap. What a joke.
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Re: "The dangers of long-term care insurance"

Postby desiderium » Mon Feb 10, 2014 1:22 am

Unfortunately, there are important conversations about diminished capacity and end of life that occur too infrequently in our culture. Bogleheads preach the gospel of the IPS. It goes equally for end of life planning. As articulated in this thread, these issues have important and messy financial implications for individuals and their families.

There is a very good program called 5 wishes, that offers a way for people to articulate their preferences http://www.agingwithdignity.org/five-wishes.php.

We also need to get over the language about "withholding" care. All medical interventions should be undertaken carefully and intentionally. All too often these efforts take place in the absence of an overall goal for care, or worse, as part of a system that has its own incentives (revenue, fear of lawsuits, etc). Depending on the context, pneumonia can be seen as a treatable threat to life, or "the old man's friend".
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Re: "The dangers of long-term care insurance"

Postby Browser » Mon Feb 10, 2014 10:51 am

Go visit a nursing home and hang around for a day. Or, I can email you a photo of a bed sore that exposes the bone. It's from a 91-yr-old husband whose taking care of his bedridden wife with Alzheimer's. She's incontinent, no longer can speak, doesn't where she is, has a hard time swallowing, can't feed her self...this has been going on for a long while.

It's incredible how strongly the body clings to life -- it is an incredible machine. I think a lot about the "end of life" stage these days and wonder what my own fate will be. I think it would be great to know how to program your lifestyle so that you live a relatively capable life and pass away quickly and easily. A good friend of mine had a 96- year old father who was in great condition, exercised and walked daily as he had done for years. He said his goal was to live to at least 100 and it looked like odds-on. Then suddenly he caught a stomach bug or something and was taken to the hospital for some fluids and rest. In just 5 days, he died comfortably in his sleep shocking everyone. A stomach bug FGS! But after the shock and sadness wore off everyone began to realize that was exactly the kind of endgame we should all be so lucky to have.
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Re: "The dangers of long-term care insurance"

Postby tadamsmar » Mon Feb 10, 2014 11:17 am

desiderium wrote:Regarding the "long tail", it is to a large extent reflective of successful ongoing medical care, which interrupts fairly routine but otherwise fatal events that can occur when one is frail (e.g. urinary tract infections, pneumonia,etc). My own personal philosophy (please don't take this as critical of anyone else) is that I do not wish to continue living under most circumstances where I would qualify for LTCI benefits. If and when I get into this situation, I wish to forgo all other medical care, except that which is needed strictly for my comfort. My family knows how I feel and it is all carefully written down. From an investment standpoint, I feel this reduces my long tail risk.


You might want to compare what you have with the Advanced Directive form for your state. You can download it here:

http://www.caringinfo.org/i4a/pages/ind ... ageid=3289

Perhaps the most reliable way to provide an advanced directive is to use your state's form. That's what my lawyer had my wife and I do. We also both have Heath Care POAs that designates a decision maker prior to the point where the Advance Directive takes effect.

Note that there are 3 phases: (1) you have the capacity to make your own decisions (2) your physician judges that you have lost capacity to make decisions and your Health Care POA takes effect (3) you reach a point where, according to the specifications in you advanced directive, your physician judges that your advanced directive takes effect.

My state, NC, has an online registry for advanced directives.
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Re: "The dangers of long-term care insurance"

Postby fposte » Mon Feb 10, 2014 11:20 am

dhodson wrote:The old products still can have rate increases to make them even less attractive then that.


That was my major sticking point. My state has approved 90% increases for policyholders in the past. If the state caps such raises (there's a bill in committee that might try), that might be a different ball game, but it was currently impossible for me to measure the value of something whose price was so completely unpredictable and yet demanded me to unshakeably commit for up to five decades. There really doesn't seem to be a value premium on getting in early in such an environment (and the quotes didn't reflect one, either).
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Re: "The dangers of long-term care insurance"

Postby Browser » Mon Feb 10, 2014 11:41 am

According to the OP's linked article, the average premium for a 65-year old is $2761/yr. for a LTC policy providing a benefit of $150/day for 3 years with a 90-day exclusionary period. If the policy holder lives to age 85 before needing LTC, he would have paid $55,220 in premiums (assuming the premiums aren't increased, which seems unlikely). His maximum benefit would be $164,250 (assuming the insurance company pays). So, he paid out 33% of his maximum benefit amount in premiums, meaning that his net maximum benefit would be $109,000. He'll only collect that if he's in nursing care for at least 3 years. Then, the policy benefit is fulfilled and if he's still living he's on his own. OK, I'm listening. Speak slowly so I can understand, and explain to me why this is a good deal for the policy holder who is unfortunate enough to not need nursing care until late in life. It is a better deal if you purchase LTCi and then need to go into a nursing home the next day; at least you didn't have to pay out a bunch of premiums before you got to collect. But for self-insurers, they're more likely to have sufficient funds anyway to cover the costs of their own care if they need it earlier rather than later.
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Re: "The dangers of long-term care insurance"

Postby bluemarlin08 » Mon Feb 10, 2014 11:47 am

Most all policies have some type of benefit increase, usually 5% per year either simple or compound interest. When someone goes on claim they recoup all premiums in just a few months. Still, its not for everyone, but those that go on claim are very glad they bought.
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Re: "The dangers of long-term care insurance"

Postby pshonore » Mon Feb 10, 2014 11:49 am

Browser wrote:According to the OP's linked article, the average premium for a 65-year old is $2761/yr. for a LTC policy providing a benefit of $150/day for 3 years with a 90-day exclusionary period. If the policy holder lives to age 85 before needing LTC, he would have paid $55,220 in premiums (assuming the premiums aren't increased, which seems unlikely). His maximum benefit would be $164,250 (assuming the insurance company pays). So, he paid out 33% of his maximum benefit amount in premiums, meaning that his net maximum benefit would be $109,000. He'll only collect that if he's in nursing care for at least 3 years. Then, the policy benefit is fulfilled and if he's still living he's on his own. OK, I'm listening. Speak slowly so I can understand, and explain to me why this is a good deal for the policy holder who is unfortunate enough to not need nursing care until late in life. It is a better deal if you purchase LTCi and then need to go into a nursing home the next day; at least you didn't have to pay out a bunch of premiums before you got to collect. But for self-insurers, they're more likely to have sufficient funds anyway to cover the costs of their own care if they need it earlier rather than later.

Wouldn't his benefit at 85 be around $435K with 5% compounded inflation benefit. I doubt many policies are sold without that these days.
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Re: "The dangers of long-term care insurance"

Postby Iorek » Mon Feb 10, 2014 11:55 am

Browser wrote:According to the OP's linked article, the average premium for a 65-year old is $2761/yr. for a LTC policy providing a benefit of $150/day for 3 years with a 90-day exclusionary period. If the policy holder lives to age 85 before needing LTC, he would have paid $55,220 in premiums (assuming the premiums aren't increased, which seems unlikely). His maximum benefit would be $164,250 (assuming the insurance company pays). So, he paid out 33% of his maximum benefit amount in premiums, meaning that his net maximum benefit would be $109,000. He'll only collect that if he's in nursing care for at least 3 years. Then, the policy benefit is fulfilled and if he's still living he's on his own. OK, I'm listening. Speak slowly so I can understand, and explain to me why this is a good deal for the policy holder who is unfortunate enough to not need nursing care until late in life. It is a better deal if you purchase LTCi and then need to go into a nursing home the next day; at least you didn't have to pay out a bunch of premiums before you got to collect. But for self-insurers, they're more likely to have sufficient funds anyway to cover the costs of their own care if they need it earlier rather than later.



A good policy will have an inflation adjustment-- preferably compound. So if you purchase the policy at age 65 with a $150 daily benefit, at age 85 when you need it the daily benefit will have increased to something like $300-400 (depending on the rate of inflation adjustment and whether it is simple or compound), so the maximum total benefit will be something like $400,000 (to be fair, you might want to do a time value adjustment to premiums paid as well). If you a person who can bear that cost without significant disruption to you and your family then I think you are a good candidate to self insure.

edited to add: do I get a bronze medal for being third to point that out?
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Re: "The dangers of long-term care insurance"

Postby ChrisC » Mon Feb 10, 2014 12:35 pm

Browser wrote:According to the OP's linked article, the average premium for a 65-year old is $2761/yr. for a LTC policy providing a benefit of $150/day for 3 years with a 90-day exclusionary period. If the policy holder lives to age 85 before needing LTC, he would have paid $55,220 in premiums (assuming the premiums aren't increased, which seems unlikely). His maximum benefit would be $164,250 (assuming the insurance company pays). So, he paid out 33% of his maximum benefit amount in premiums, meaning that his net maximum benefit would be $109,000. He'll only collect that if he's in nursing care for at least 3 years. Then, the policy benefit is fulfilled and if he's still living he's on his own. OK, I'm listening. Speak slowly so I can understand, and explain to me why this is a good deal for the policy holder who is unfortunate enough to not need nursing care until late in life. It is a better deal if you purchase LTCi and then need to go into a nursing home the next day; at least you didn't have to pay out a bunch of premiums before you got to collect. But for self-insurers, they're more likely to have sufficient funds anyway to cover the costs of their own care if they need it earlier rather than later.


So, riddle me this: why is it a better deal to self-insure rather than have LTCi when the risk of long-term care actually occurs? Isn't this all about risk tolerance, balancing the risk and gravity of the harm against your comfort level in going naked (self-insured). By the way, self-insurers say they have this risk covered; but few really set-up a reserve for it -- and most basically say the coverage comes out of their net worth. Yet, it would appear to me that if you were really serious about self-insuring, wouldn't it be prudent to set up and pay into your own reserve account?
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Re: "The dangers of long-term care insurance"

Postby Chicken lady » Mon Feb 10, 2014 12:52 pm

Hello, I've been lurking for some time but have never felt the urge to post until now. LTC insurance makes a lot of sense for people with the means to pay the premiums who have small (no) family members to lend a hand as a person needs intensive assistance. That describes me and my husband. No kids, no sibs, all other family live on the other side of the country and are disengaged. After studying the LTC possibilities for several years, talking to numerous LTC insurance sales people, talking to our state insurance commission LTC specialist (who can tell you a lot about each company's track record of complaints and rate hikes in your state), we took the plunge and purchased a Genworth policy several years ago. Since then I've noticed that Genworth keeps 'adjusting' their offerings to make it more difficult to qualify with less benefits for a higher cost.

We came to the decision to purchase LTC insurance after stepping out finances in a spreadsheet for the next 30 years. We're both in our early 60's. I included all our current assets, anticipated SSA, investments, the works. I conservatively estimated a low return on our investments and low cost of living updates to SSA and my pensions (which are life-long). Recent events in the financial world convinced me that expecting regular and robust increases in COLA payments could be dangerous to my projections and our financial health when we are at our eldest. In short, I intentionally stepped out a very financially depressed course over the long haul - just wanted to be sure that we were not deluding ourselves about great returns (which we hope for) that could cover self-payment for LTC. So, insurance covers the "what if's" many times while we're hoping we won't meet that situation. I can't say I like paying for auto insurance since I never have an occasion to make a claim, nor homeowners since we are also claim-free in that respect but we maintain them regardless.

An important event that convinced us that this was the right step for us was that our mother/mother-in-law were both the recipients of hospice care for the last months of their lives. They each lived in our home until the end (thankfully not at the same time). I was the primary caregiver for each of them BUT having hospice intervene (and for my mother it was for about 9 months) gave us an opportunity to see how ending one's life in a place they considered 'home' was such an improvement over ending it in a hospital, nursing home, or other more 'clinical' setting. It also let us see how having people in and out of the house to provide different daily care functions for our mom's worked - yes it was an adjustment yet one we adapted to without much difficulty. Both my husband and I were partial to staying at home and dying at home if at all possible so in a way, we had the opportunity to see how that 'plan' could work - two times with very different life threatening issues.

My thoughts of what to pursue if considering the end and LTC are:

1. Investigate what Palliative care is and know that this is a medical resource that's focus is care and comfort instead of relentless interventions/treatments. It can help people, who are receptive, develop and live an end of life plan that allows people to pass away on their own terms.
2. Google long term care insurance - the WSJ and Kiplingers have each published numerous articles (which may be a tad old at this point) that breaks down every aspect of this type insurance and the dollars and cents. The analysis is true even if the articles were published several years ago.

Best wishes.
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Re: "The dangers of long-term care insurance"

Postby dhodson » Mon Feb 10, 2014 1:49 pm

ChrisC wrote:
Browser wrote:According to the OP's linked article, the average premium for a 65-year old is $2761/yr. for a LTC policy providing a benefit of $150/day for 3 years with a 90-day exclusionary period. If the policy holder lives to age 85 before needing LTC, he would have paid $55,220 in premiums (assuming the premiums aren't increased, which seems unlikely). His maximum benefit would be $164,250 (assuming the insurance company pays). So, he paid out 33% of his maximum benefit amount in premiums, meaning that his net maximum benefit would be $109,000. He'll only collect that if he's in nursing care for at least 3 years. Then, the policy benefit is fulfilled and if he's still living he's on his own. OK, I'm listening. Speak slowly so I can understand, and explain to me why this is a good deal for the policy holder who is unfortunate enough to not need nursing care until late in life. It is a better deal if you purchase LTCi and then need to go into a nursing home the next day; at least you didn't have to pay out a bunch of premiums before you got to collect. But for self-insurers, they're more likely to have sufficient funds anyway to cover the costs of their own care if they need it earlier rather than later.


So, riddle me this: why is it a better deal to self-insure rather than have LTCi when the risk of long-term care actually occurs? Isn't this all about risk tolerance, balancing the risk and gravity of the harm against your comfort level in going naked (self-insured). By the way, self-insurers say they have this risk covered; but few really set-up a reserve for it -- and most basically say the coverage comes out of their net worth. Yet, it would appear to me that if you were really serious about self-insuring, wouldn't it be prudent to set up and pay into your own reserve account?


The answer to your riddle would be when/if the insurance company goes under and cant pay the benefit, when premiums paid are actually more than what is paid out in benefits, and possibly although not definitely when you exhaust your insurance benefits and still need to use additional funds(this would depend on the return on the investments you could have made with the premiums).

People who wont put aside money for this are the same people who drop/lapse the policy with a rate increase or any other life event. I think it would be prudent to have a separate account if your current accounts are insufficient. What i mean by this is lets say that with your 401k, ira, etc contributions you can wont likely get to a number that provides for retirement including long term care costs then you likely need a seperate taxable account to save/invest. If you are someone who still has unused room in these accounts then i dont think one normally should have a seperate account.
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Re: "The dangers of long-term care insurance"

Postby Browser » Mon Feb 10, 2014 2:34 pm

Wouldn't his benefit at 85 be around $435K with 5% compounded inflation benefit. I doubt many policies are sold without that these days.

Yes, but that doesn't change the math because we're talking about real dollars here. $150/day now might cost triple that in 20 years, depending on the rate of inflation, but your LTCi will still pay just 3 years of nursing home care at whatever the inflation-adjusted amount is then. Your maximum benefit will still be ~ $160K in today's dollars. I'm assuming that your premiums are going to rise. I hardly think that an insurance company is going to assume the risk of unexpected inflation. Even if they don't, all I have to do to match those LTCi benefits is to set aside a contingency fund of ($160K - expected premiums) and invest that to produce a real (inflation-adjusted) return of zero. There's some risk that I won't be able to do that if inflation gets out of hand, but there's also the risk that if that happens my LTC insurance company will go bankrupt, raise premiums to the moon, or fight my claim when I'm too old to fight.
If we have data, let’s look at data. If all we have are opinions, let’s go with mine. – Jim Barksdale
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Re: "The dangers of long-term care insurance"

Postby dhodson » Mon Feb 10, 2014 3:21 pm

In regards to that last part

http://www.insurance-forums.net/forum/l ... 61930.html

In essence make sure you have a plan to make sure payments are made on time. If you don't make payments with early dementia or whatever then you easily could have a fight on your hands.
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Re: "The dangers of long-term care insurance"

Postby dowse » Mon Feb 10, 2014 3:36 pm

WSJ had a column today on this topic: http://stream.wsj.com/story/latest-head ... -2-450158/ .
What's interesting, is that this adviser used to co-host a financial talk show in the Boston area for a number of years. For a long time, she recommend LTC insurance to callers. I guess the recent turmoil in the industry has caused her to change her tune. I would add a cautionary note - she was never particularly boglehead-like in her fund recommendations.
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Re: "The dangers of long-term care insurance"

Postby dcnut » Mon Feb 10, 2014 3:48 pm

I would set aside at least $2M to cover LT care for my wife and I in the Chicago suburbs. The rate of inflation in LT care is ridiculous. Both my mother and mother-in-law spent several years in a nursing home here. In 1995 the cost was a little over $3K per month. In 2010 the cost was over $12K per month.

Once the boomer generation starts needing LT care, there will be a shortage of good nursing homes, and most of these will accept very few Medicaid patients.

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Re: "The dangers of long-term care insurance"

Postby fposte » Mon Feb 10, 2014 4:21 pm

bluemarlin08 wrote:When someone goes on claim they recoup all premiums in just a few months. Still, its not for everyone, but those that go on claim are very glad they bought.


Let's not forget the people who couldn't afford to continue paying the premiums after rate hikes, though, and who lost the premiums they paid when they had to let their policies lapse.
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Re: "The dangers of long-term care insurance"

Postby ChrisC » Mon Feb 10, 2014 4:25 pm

dhodson wrote:
ChrisC wrote:
Browser wrote:According to the OP's linked article, the average premium for a 65-year old is $2761/yr. for a LTC policy providing a benefit of $150/day for 3 years with a 90-day exclusionary period. If the policy holder lives to age 85 before needing LTC, he would have paid $55,220 in premiums (assuming the premiums aren't increased, which seems unlikely). His maximum benefit would be $164,250 (assuming the insurance company pays). So, he paid out 33% of his maximum benefit amount in premiums, meaning that his net maximum benefit would be $109,000. He'll only collect that if he's in nursing care for at least 3 years. Then, the policy benefit is fulfilled and if he's still living he's on his own. OK, I'm listening. Speak slowly so I can understand, and explain to me why this is a good deal for the policy holder who is unfortunate enough to not need nursing care until late in life. It is a better deal if you purchase LTCi and then need to go into a nursing home the next day; at least you didn't have to pay out a bunch of premiums before you got to collect. But for self-insurers, they're more likely to have sufficient funds anyway to cover the costs of their own care if they need it earlier rather than later.


So, riddle me this: why is it a better deal to self-insure rather than have LTCi when the risk of long-term care actually occurs? Isn't this all about risk tolerance, balancing the risk and gravity of the harm against your comfort level in going naked (self-insured). By the way, self-insurers say they have this risk covered; but few really set-up a reserve for it -- and most basically say the coverage comes out of their net worth. Yet, it would appear to me that if you were really serious about self-insuring, wouldn't it be prudent to set up and pay into your own reserve account?


The answer to your riddle would be when/if the insurance company goes under and cant pay the benefit, when premiums paid are actually more than what is paid out in benefits, and possibly although not definitely when you exhaust your insurance benefits and still need to use additional funds(this would depend on the return on the investments you could have made with the premiums).

People who wont put aside money for this are the same people who drop/lapse the policy with a rate increase or any other life event. I think it would be prudent to have a separate account if your current accounts are insufficient. What i mean by this is lets say that with your 401k, ira, etc contributions you can wont likely get to a number that provides for retirement including long term care costs then you likely need a seperate taxable account to save/invest. If you are someone who still has unused room in these accounts then i dont think one normally should have a seperate account.


Perhaps, I framed the riddle too generally. I was assuming insurance carrier solvency (as most of the big players left in the game are highly rated, LTCi is a small sliver of their insurance business, and besides many carriers would mitigate and manage risk in various ways, including reinsurance). And I don't see how one can restrict carrier insolvency to this separate line of insurance -- are there reported cases of insurance carrier insolvency due to LTCi or is this just a red herring? I was also assuming that, as is typical with covering the precise risk that you're insuring against, that the precise risk when it occurs will financially cost you more than premiums you've paid to the insurer. If there isn't a strong probability that the insurance pay-out would be greater than the financial drain in paying premiums, then that makes the case for not taking any type of insurance, let alone LTCi.

Your answer, for the most part, appears to be simply an answer to never taking out any form of insurance.
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Re: "The dangers of long-term care insurance"

Postby dhodson » Mon Feb 10, 2014 5:14 pm

ChrisC wrote:
dhodson wrote:
ChrisC wrote:
Browser wrote:According to the OP's linked article, the average premium for a 65-year old is $2761/yr. for a LTC policy providing a benefit of $150/day for 3 years with a 90-day exclusionary period. If the policy holder lives to age 85 before needing LTC, he would have paid $55,220 in premiums (assuming the premiums aren't increased, which seems unlikely). His maximum benefit would be $164,250 (assuming the insurance company pays). So, he paid out 33% of his maximum benefit amount in premiums, meaning that his net maximum benefit would be $109,000. He'll only collect that if he's in nursing care for at least 3 years. Then, the policy benefit is fulfilled and if he's still living he's on his own. OK, I'm listening. Speak slowly so I can understand, and explain to me why this is a good deal for the policy holder who is unfortunate enough to not need nursing care until late in life. It is a better deal if you purchase LTCi and then need to go into a nursing home the next day; at least you didn't have to pay out a bunch of premiums before you got to collect. But for self-insurers, they're more likely to have sufficient funds anyway to cover the costs of their own care if they need it earlier rather than later.


So, riddle me this: why is it a better deal to self-insure rather than have LTCi when the risk of long-term care actually occurs? Isn't this all about risk tolerance, balancing the risk and gravity of the harm against your comfort level in going naked (self-insured). By the way, self-insurers say they have this risk covered; but few really set-up a reserve for it -- and most basically say the coverage comes out of their net worth. Yet, it would appear to me that if you were really serious about self-insuring, wouldn't it be prudent to set up and pay into your own reserve account?


The answer to your riddle would be when/if the insurance company goes under and cant pay the benefit, when premiums paid are actually more than what is paid out in benefits, and possibly although not definitely when you exhaust your insurance benefits and still need to use additional funds(this would depend on the return on the investments you could have made with the premiums).

People who wont put aside money for this are the same people who drop/lapse the policy with a rate increase or any other life event. I think it would be prudent to have a separate account if your current accounts are insufficient. What i mean by this is lets say that with your 401k, ira, etc contributions you can wont likely get to a number that provides for retirement including long term care costs then you likely need a seperate taxable account to save/invest. If you are someone who still has unused room in these accounts then i dont think one normally should have a seperate account.


Perhaps, I framed the riddle too generally. I was assuming insurance carrier solvency (as most of the big players left in the game are highly rated, LTCi is a small sliver of their insurance business, and besides many carriers would mitigate and manage risk in various ways, including reinsurance). And I don't see how one can restrict carrier insolvency to this separate line of insurance -- are there reported cases of insurance carrier insolvency due to LTCi or is this just a red herring? I was also assuming that, as is typical with covering the precise risk that you're insuring against, that the precise risk when it occurs will financially cost you more than premiums you've paid to the insurer. If there isn't a strong probability that the insurance pay-out would be greater than the financial drain in paying premiums, then that makes the case for not taking any type of insurance, let alone LTCi.

Your answer, for the most part, appears to be simply an answer to never taking out any form of insurance.


Not at all. You tried to ask a question which you thought had no real answer and i gave you an actual answer and those ideas arent impossible. LTCi is not a small sliver for genworth who is the biggest player in the ltci market. Genworth's stock a few years ago got pretty close to zero in 2009 if im not mistaken. GE used to own that business but spin it off to genworth. Im not sure why you think insolvency cant be restricted to this line of insurance. Of course investments would likely be across the board but lapse rates and claims data is completely different then in other forms of insurance and they just dont have the data to make as good of guesses as they can with other forms of insurance and this can hurt them severely even when off by just a few percent. This is actually one of the big problems, they assumed lapse rates would be similar to permanent insurance and when that turned out to be false (fewer people lapse ltci) then it messed up their models. Additionally if you keep all things constant except returns on the investment piece then a policy today is based on a low interest rate environment. If rates go way up and thus conservative investments do a lot better then you are locked into your previous rate if your health has changed since you likely cant get a new policy (fortunately rate increases should be very unlikely then). If it hasnt then you can possibly apply for a new policy. This would make it more difficult to guess if the financial drain is too much vs investing on your own. Now if you purchased the policy from a mutual then one might guess dividends would be credited. Genworth, however, is a stock company. One has to also consider the delay between benefits and the need for ltc. Not only arent you getting coverage until post this time period, it costs you money as well. Finally the full tail is not covered with currently available and affordable insurance. Unlimited polices arent available like in the past and thus you could find yourself still spinning down the medicaid route delayed by a few years.

I have no idea how you came up with the thought that i implied that one should never take out any form of insurance. The big problem with ltci is that the insurance company doesnt have enough skin in the game. They can increase rates (some states very easy and some not so) until they get the lapse rate necessary to make this work for them without a loss. This makes it very difficult for the individual to determine the value.
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Re: "The dangers of long-term care insurance"

Postby bsteiner » Mon Feb 10, 2014 7:05 pm

dhodson wrote:...they assumed lapse rates would be similar to permanent insurance and when that turned out to be false (fewer people lapse ltci) then it messed up their models....


A term policy has lower premiums in the early years. A whole life policy has level premiums (ignoring dividends), but if you drop the policy, you get the cash value.

Most long-term care insurance has level premiums, but if you drop the policy, you give up the right to continue it at the same premium (ignoring general rate increases), and you don't get the "cash value" (the amount needed to compensate you for paying more than needed in the early years for the right to continue the policy at the same premium in the later years). That may give policyholders an incentive to keep the policy.
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Re: "The dangers of long-term care insurance"

Postby bertilak » Mon Feb 10, 2014 7:40 pm

bsteiner wrote:
dhodson wrote:...they assumed lapse rates would be similar to permanent insurance and when that turned out to be false (fewer people lapse ltci) then it messed up their models....


A term policy has lower premiums in the early years. A whole life policy has level premiums (ignoring dividends), but if you drop the policy, you get the cash value.

Most long-term care insurance has level premiums, but if you drop the policy, you give up the right to continue it at the same premium (ignoring general rate increases), and you don't get the "cash value" (the amount needed to compensate you for paying more than needed in the early years for the right to continue the policy at the same premium in the later years). That may give policyholders an incentive to keep the policy.

My LTCI rates are based on "age of issue" so since I have had it for 12 years I have reasonably low rates. It is a company-sponsored group plan which had good rates to begin with. I could never replace it with anything close. This does give me an incentive to stick with it. When I turned 65 I was besieged by insurance people wanting to sell me lots of different insurance products, including LTCI. Just showing them my policy cut those conversations short.

The only rate increases I have seen are the ones I get to authorize every three years to get an inflation bump. I take 'em all.

My LTCI gives me pro-rated cash-back up to age 70. Not much left of that!
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Re: "The dangers of long-term care insurance"

Postby ChrisC » Mon Feb 10, 2014 7:54 pm

dhodson wrote:
Not at all. You tried to ask a question which you thought had no real answer and i gave you an actual answer and those ideas arent impossible. LTCi is not a small sliver for genworth who is the biggest player in the ltci market. Genworth's stock a few years ago got pretty close to zero in 2009 if im not mistaken. GE used to own that business but spin it off to genworth. Im not sure why you think insolvency cant be restricted to this line of insurance.


You peaked my interest here. Genworth stock is now trading at $15. http://finance.yahoo.com/news/genworth- ... 04791.html. Reports indicate Genworth has 33 percent of the LTCi market, but I can't find out how much of its operations or revenues are derived from LTCi. I can't imagine that LTCi product for Genworth represents such a huge part of its operations or revenues, though it could drag down earnings if very unprofitable. I tried looking at its SEC filings and I can't decipher the information about its lines of insurance business operations.

I never said that insolvency can't be caused by dire financial consequences in a line of business that constitutes a significant part of its revenue or operations. I was saying that I thought LTCi wasn't a big part of the major players insurance product line such that dire consequences there wouldn't plunge it into insolvency.

Do you have information that LCTi operations on its balance sheet could expose it to insolvency if its LTCi product line blew up?
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Re: "The dangers of long-term care insurance"

Postby bluemarlin08 » Mon Feb 10, 2014 8:39 pm

My brother has worked for Genworth for 25 years and they are diversifying their portfolio of insurance products. As a career agent for them their sales force realizes LTCi has a diminishing market as currently structured.
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Re: "The dangers of long-term care insurance"

Postby LH » Mon Feb 10, 2014 9:28 pm

Taylor Larimore wrote:Bogleheads:

If you are thinking about buying long-term care insurance, this PBS article will help you decide what to do:

An economist explains the dangers of long-term care insurance

Best wishes.
Taylor


Kudos. Kudos. Kudos.

It good to see this on this board. More critical actual thought, more looking at what actually happens expectantly with these plans.

Versus just "guaranteed" its guaranteed what? what exactly happens. who guarantees it? How? with what money? How will they do it for 40 years come hell or high water?

anytime one sees

risk free
guaranteed
structured
annuity
LTCI

hold onto your hat, and check those words very very very closely. first see what exactly is promised like the article above. Then if much really is promised, see if its really doable in the real world.

The mere words "guaranteed" and "risk free" wont mean a thing 10-40 years hence. Just like detroit, there will have to be cold hard wealth available, to meet the promises.

Check social security, where is the wealth to meet the promises expectantly? Its not there. Promises will be broken almost certainly by the biggest financial entity with the largest army and the biggest money creation machine in the world. But somehow, a private company will "guarantee" something for 30-40 years, "risk free".
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Re: "The dangers of long-term care insurance"

Postby dhodson » Mon Feb 10, 2014 9:53 pm

ChrisC wrote:
dhodson wrote:
Not at all. You tried to ask a question which you thought had no real answer and i gave you an actual answer and those ideas arent impossible. LTCi is not a small sliver for genworth who is the biggest player in the ltci market. Genworth's stock a few years ago got pretty close to zero in 2009 if im not mistaken. GE used to own that business but spin it off to genworth. Im not sure why you think insolvency cant be restricted to this line of insurance.


You peaked my interest here. Genworth stock is now trading at $15. http://finance.yahoo.com/news/genworth- ... 04791.html. Reports indicate Genworth has 33 percent of the LTCi market, but I can't find out how much of its operations or revenues are derived from LTCi. I can't imagine that LTCi product for Genworth represents such a huge part of its operations or revenues, though it could drag down earnings if very unprofitable. I tried looking at its SEC filings and I can't decipher the information about its lines of insurance business operations.

I never said that insolvency can't be caused by dire financial consequences in a line of business that constitutes a significant part of its revenue or operations. I was saying that I thought LTCi wasn't a big part of the major players insurance product line such that dire consequences there wouldn't plunge it into insolvency.

Do you have information that LCTi operations on its balance sheet could expose it to insolvency if its LTCi product line blew up?


What kind of information are you looking for?
You dont think that a company that has 33% of the market could be taken down if LTCi blew up?
You believe the other companies that left the market made a mistake (and typically were charging higher premiums at the time from my observation)?
Have you looked what happened in Japan after a longer period of low interest rates?
Nobody knows what the future holds but the risks just arent the same as they are with other products. Guarantee is based on the ability of the company to pay that guarantee period.
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Re: "The dangers of long-term care insurance"

Postby ChrisC » Mon Feb 10, 2014 11:17 pm

dhodson wrote:
ChrisC wrote:
dhodson wrote:
Not at all. You tried to ask a question which you thought had no real answer and i gave you an actual answer and those ideas arent impossible. LTCi is not a small sliver for genworth who is the biggest player in the ltci market. Genworth's stock a few years ago got pretty close to zero in 2009 if im not mistaken. GE used to own that business but spin it off to genworth. Im not sure why you think insolvency cant be restricted to this line of insurance.


You peaked my interest here. Genworth stock is now trading at $15. http://finance.yahoo.com/news/genworth- ... 04791.html. Reports indicate Genworth has 33 percent of the LTCi market, but I can't find out how much of its operations or revenues are derived from LTCi. I can't imagine that LTCi product for Genworth represents such a huge part of its operations or revenues, though it could drag down earnings if very unprofitable. I tried looking at its SEC filings and I can't decipher the information about its lines of insurance business operations.

I never said that insolvency can't be caused by dire financial consequences in a line of business that constitutes a significant part of its revenue or operations. I was saying that I thought LTCi wasn't a big part of the major players insurance product line such that dire consequences there wouldn't plunge it into insolvency.

Do you have information that LCTi operations on its balance sheet could expose it to insolvency if its LTCi product line blew up?


What kind of information are you looking for?
You dont think that a company that has 33% of the market could be taken down if LTCi blew up?
You believe the other companies that left the market made a mistake (and typically were charging higher premiums at the time from my observation)?
Have you looked what happened in Japan after a longer period of low interest rates?
Nobody knows what the future holds but the risks just arent the same as they are with other products. Guarantee is based on the ability of the company to pay that guarantee period.


You're the one who posited the idea that carriers with a product line of LTCi could be insolvent and not pay claims. And yes, I don't think that a company with 33 percent of the market could be taken down if LTCi blew up unless its business model was predicated substantially on that product line. I asked before do you know how much of Genworth's operations or revenues are based on LTCi? Again, with the recency of the product, I doubt its more than a "sliver" of its operations or revenues. I'd be surprised if it's more than 15 percent but I could be wrong. Genworth seems to doing well on its mortgage insurance and life insurance product lines.

Let's not conflate its market share with its base of operations and revenues. Johnson Controls might dominate market share in automotive batteries, but even if that segment blew up, it would likely absorb that shock as it has multiple business and product lines. Moreover, I doubt the insurance regulators would permit over concentration by any carrier in LTCi in light of the product.

I don't believe other companies left the market made a mistake; there are so many factors as to why companies exit a particular business line; nonetheless, uncertainty over underwriting and pricing the product, with faulty actuarial considerations (like underestimating lapse rates), might have caused some to exit. Evidently, others who remain might see gold where some others see fool's' gold or didn't like the fit for them.
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Re: "The dangers of long-term care insurance"

Postby dhodson » Mon Feb 10, 2014 11:56 pm

Those same regulators approved the previous assumptions/pricing.

You do realize insurance companies have gone under in the past and this is without any of the ltci issues mentioned in this thread and some people have lost money?

I can't recall who posted it but a while back someone posted a link indicating that when insurance companies needed the state insur guaranty, clients were made whole 94% of time for annuities and 96% for insurance.

Obviously in these cases the regulators didn't prevent the problem from happening and couldn't make everyone whole. Why do you think this just can't happen for this type of insurance.
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Re: "The dangers of long-term care insurance"

Postby Browser » Mon Feb 10, 2014 11:57 pm

I thought insurance was supposed to provide some peace of mind. But if you have to wonder about the viability of the insurance product, stability of the premiums, and the ability of the insurer to pay where is the peace of mind in that? Frankly, I worry a lot less about my own ability to "self insure", at least to the level of what is currently available from insurance carriers. If I had a legacy policy that was more generous I might feel different, but that ship has sailed.
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Re: "The dangers of long-term care insurance"

Postby dhodson » Tue Feb 11, 2014 12:25 am

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Re: "The dangers of long-term care insurance"

Postby dhodson » Tue Feb 11, 2014 12:31 am

Might also want to read what that link says about their mortgage business although I believe the data is a couple years old.
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Re: "The dangers of long-term care insurance"

Postby Diogenes » Tue Feb 11, 2014 1:12 am

Beck49 wrote:Again, am I completely misguided here? LTCI might cover the probability aspect of the long tail (very rare events), but my understanding is that they all have a maximum total payout. You have a policy with a total maximum payout of $400,000 and go into a nursing home for 20 years, that policy not going to be covering you those 20 years unless the daily payment so low you wouldn't notice it. If you could get that kind of catastrophic LTCI, it would actually be more appealing in my view.


You have it correct. From my research, there are three different camps in this game.

The first, of course, are the insurance agents who push the product with the emotional 'fear of financial ruin. They want to sell the policy.

The second are those that have purchased a policy, perhaps long ago, and are still trying to justify it to themselves and others. Mostly they are insuring against fear but are concerned that they may not break even. This is similar to the dental insurance quandary, but with higher stakes. Many have anecdotal stories from someone they know, or from their insurance agent. These stories are just that, interesting but not really meaningfull in the decision process.

The third are those like you and me, trying to figure out why it is worth it. All of the risk is born by the purchaser since the pool is so small. Having looked the numbers I find it hard to believe most people will actually break even, if they use the policy at all. Low payouts, no cap on premium increases, and so on. The economics do not seem to be there. Many insurers have exited this market and I believe those remaining have passed along huge premium increases. With a bigger pool at hand, the insurers could perhaps take more risks - such as covering 80 percent of the actual future cost, without a low daily limit.
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Re: "The dangers of long-term care insurance"

Postby Browser » Tue Feb 11, 2014 1:41 am

Diogenes wrote:
Beck49 wrote:Again, am I completely misguided here? LTCI might cover the probability aspect of the long tail (very rare events), but my understanding is that they all have a maximum total payout. You have a policy with a total maximum payout of $400,000 and go into a nursing home for 20 years, that policy not going to be covering you those 20 years unless the daily payment so low you wouldn't notice it. If you could get that kind of catastrophic LTCI, it would actually be more appealing in my view.


You have it correct. From my research, there are three different camps in this game.

The first, of course, are the insurance agents who push the product with the emotional 'fear of financial ruin. They want to sell the policy.

The second are those that have purchased a policy, perhaps long ago, and are still trying to justify it to themselves and others. Mostly they are insuring against fear but are concerned that they may not break even. This is similar to the dental insurance quandary, but with higher stakes. Many have anecdotal stories from someone they know, or from their insurance agent. These stories are just that, interesting but not really meaningfull in the decision process.

The third are those like you and me, trying to figure out why it is worth it. All of the risk is born by the purchaser since the pool is so small. Having looked the numbers I find it hard to believe most people will actually break even, if they use the policy at all. Low payouts, no cap on premium increases, and so on. The economics do not seem to be there. Many insurers have exited this market and I believe those remaining have passed along huge premium increases. With a bigger pool at hand, the insurers could perhaps take more risks - such as covering 80 percent of the actual future cost, without a low daily limit.

You've been reading my thoughts again. I don't mind the idea of a high probability of never collecting on insurance, as long as the insurance is to protect me from a catastrophic event. That's the fundamental idea of insurance -- risk pooling in which the small percentage of insureds who are unfortunate enough to experience a catastrophic event and collect are subsidized by the large majority who never will. But the flaw in LTCi is that it doesn't actually protect you from the catastrophic event - which I'd define as winding up needing nursing care for an indefinitely long time. It only covers the "deductible"; the front-end cost of that catastrophic event, or the first part of the "long tail". So you're not out of the woods with LTCi because you still have to cover the balance of the costs of the actual catastrophic event yourself (the longest part of the long tail) or have a plan for Uncle Sugar to cover it. It's kinda like buying fire insurance that will only pay the cost of replacing the living room if your house burns down.
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Re: "The dangers of long-term care insurance"

Postby Iorek » Tue Feb 11, 2014 9:31 am

I think the people LTCI makes the most sense for are the people where trying to come up with the insured amount would be a financial catastrophe. I don't think the purpose of LTCI as it's currently structured is to pay for the long tail of 20 years of nursing home stays, and I wouldn't buy it if I thought I could self-insure. However, there are plenty of people who will incur LTC costs of $100-300k and paying for that out of pocket would wreak havoc on their finances (or the finances of their family). A partnership policy, which protects assets from medicaid claims, may make sense for these people, assuming the premiums aren't so high as to be unaffordable.
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Re: "The dangers of long-term care insurance"

Postby castlemodesto » Tue Feb 11, 2014 10:34 am

it seems to me that a single person owning their own home could self insure for a few years of LTC by taking out a reverse mortgage. For a couple it is different. They need to have an adequate amount ( depending on how long they want to avoid using Medicaid) set aside at retirement for when the first spouse may need LTC ( it seems like $160,000 bucket would be a reasonable amount for 3 years coverage). For a couple without enough savings to set aside then if they want to avoid Medicaid as long as possible and they can afford LTCi payments then LTCi may their best (or only) option. It all depends on how desperately one wants to avoid Medicaid for as long as possible. How big a financial priority it is to avoid Medicaid is purely personal. Therefore there can never be a right way to go about this: LTCi / self-insure .It is purely preference.
One thing I know : I am very grateful that Medicaid is there to save us from abject poverty . It may have many inadequacies as a long tail insurance, but still it is an extremely valuable Plan B.
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Re: "The dangers of long-term care insurance"

Postby bertilak » Tue Feb 11, 2014 11:00 am

Iorek wrote:I think the people LTCI makes the most sense for are the people where trying to come up with the insured amount would be a financial catastrophe. I don't think the purpose of LTCI as it's currently structured is to pay for the long tail of 20 years of nursing home stays, and I wouldn't buy it if I thought I could self-insure. However, there are plenty of people who will incur LTC costs of $100-300k and paying for that out of pocket would wreak havoc on their finances (or the finances of their family). A partnership policy, which protects assets from medicaid claims, may make sense for these people, assuming the premiums aren't so high as to be unaffordable.

This.

Morningstar has some interesting statistics about Long Term Care: http://news.morningstar.com/articlenet/ ... ?id=564139

A few numbers:
  • 40%: The percentage of individuals who reach age 65 who will enter a nursing home during their lifetimes.
  • 892 days (2.44 years): Average length of stay for current nursing-home residents, 1999.
  • 272 days (8.94 months): Average length of stay for discharged nursing-home residents, 1999.
  • 38%: Percentage of nursing home patients who will eventually be discharged to go home or to another setting.
  • 10%: The percentage of people who enter a nursing home who will stay there five or more years.
  • 65%: The percentage of people who entered a nursing home who died within one year of admission.
  • Five months: The typical length of nursing-home stay for patients who eventually died in the nursing home.

I think the above means that MOST Long Term Care needs will be adequately covered by typical LTCI policies.
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Nursing home care vs. home care?

Postby Taylor Larimore » Tue Feb 11, 2014 11:19 am

Bertalik:

Thank you for posting Morningstar data about nursing homes. Very informative.

I believe that a large percentage of claims are from patients who receive nursing care in their home. My best friend (whom I take to lunch in his wheelchair every Wednesday) is a Parkinson disease patient who receives round the clock care at home and is partially reimbursed from a Genworth policy purchased many years ago.

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Re: "The dangers of long-term care insurance"

Postby Browser » Tue Feb 11, 2014 12:07 pm

Iorek wrote:I think the people LTCI makes the most sense for are the people where trying to come up with the insured amount would be a financial catastrophe. I don't think the purpose of LTCI as it's currently structured is to pay for the long tail of 20 years of nursing home stays, and I wouldn't buy it if I thought I could self-insure. However, there are plenty of people who will incur LTC costs of $100-300k and paying for that out of pocket would wreak havoc on their finances (or the finances of their family). A partnership policy, which protects assets from medicaid claims, may make sense for these people, assuming the premiums aren't so high as to be unaffordable.

That was one point of the OP's linked article. Those who can't afford to set aside a fund for possible LTC might be the best candidates for insurance. However, you have to factor in the premium costs: if the couple is age 65, the average annual cost (according to the article) is about $5500, and it will go up. That's on top of the annual costs of medical insurance. How many people with modest retirement nesteggs and income are realistically likely to be able to pay those premiums? If you can't afford to self-insure, you probably can't afford to buy LTCi either. It would be interesting to learn who actually buys LTCi. Besides the people who bought it years ago when it seemed more affordable and don't want to lose their sunk costs, I'll bet the ones buying it now, if they're affluent enough to afford the premium, are ironically affluent enough to self-insure by setting aside a lump sum earmarked for LTCi.
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Re: Nursing home care vs. home care?

Postby bertilak » Tue Feb 11, 2014 12:24 pm

Taylor Larimore wrote:Bertalik:

Thank you for posting Morningstar data about nursing homes. Very informative.

I believe that a large percentage of claims are from patients who receive nursing care in their home. My best friend (whom I take to lunch in his wheelchair every Wednesday) is a Parkinson disease patient who receives round the clock care at home and is partially reimbursed from a Genworth policy purchased many years ago.

Taylor


How does in-home care and reimbursement work out? In my case they will pay less for in-home care, half I think. Is in-home care cheaper than moving into some sort of care facility? We have been assuming that would be the case, if it came down to it.

Is your friend able to stretch out the length of time his his coverage will last by submitting claims for less than the full amount? Bottom line, does in-home care work out best from a money perspective? (I'm guessing it works out best from a preference perspective.)
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Re: "The dangers of long-term care insurance"

Postby Leesbro63 » Tue Feb 11, 2014 12:55 pm

bertilak wrote: A few numbers:
  • 40%: The percentage of individuals who reach age 65 who will enter a nursing home during their lifetimes.
  • 892 days (2.44 years): Average length of stay for current nursing-home residents, 1999.
  • 272 days (8.94 months): Average length of stay for discharged nursing-home residents, 1999.
  • 38%: Percentage of nursing home patients who will eventually be discharged to go home or to another setting.
  • 10%: The percentage of people who enter a nursing home who will stay there five or more years.
  • 65%: The percentage of people who entered a nursing home who died within one year of admission.
  • Five months: The typical length of nursing-home stay for patients who eventually died in the nursing home.

I think the above means that MOST Long Term Care needs will be adequately covered by typical LTCI policies.


Yeah, but for many (most?) of us Boglehead types...with nice sized nest eggs....isn't the BIG risk a long term stay, which is not dependent on the averages shown? And you can no longer buy unlimited-stay coverage. So dithering about whether to buy the 3-year-limit policies sold today or not is really besides the point. Kinda like deciding whether to add rental car coverage to your auto policy, but being unable to buy liability coverage.
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Re: "The dangers of long-term care insurance"

Postby bertilak » Tue Feb 11, 2014 1:08 pm

Leesbro63 wrote:Yeah, but for many (most?) of us Boglehead types...with nice sized nest eggs....isn't the BIG risk a long term stay, which is not dependent on the averages shown? And you can no longer buy unlimited-stay coverage. So dithering about whether to buy the 3-year-limit policies sold today or not is really besides the point. Kinda like deciding whether to add rental car coverage to your auto policy, but being unable to buy liability coverage.

Well, I say let everyone decide on his or her own where they line up with those statistics and what they can afford, or want, to self-insure.
No-one really listens to anyone else, and if you try it sometime you will see why. | -- Mignon McLaughlin
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Re: "The dangers of long-term care insurance"

Postby Browser » Tue Feb 11, 2014 1:10 pm

Leesbro63 wrote:
bertilak wrote: A few numbers:
  • 40%: The percentage of individuals who reach age 65 who will enter a nursing home during their lifetimes.
  • 892 days (2.44 years): Average length of stay for current nursing-home residents, 1999.
  • 272 days (8.94 months): Average length of stay for discharged nursing-home residents, 1999.
  • 38%: Percentage of nursing home patients who will eventually be discharged to go home or to another setting.
  • 10%: The percentage of people who enter a nursing home who will stay there five or more years.
  • 65%: The percentage of people who entered a nursing home who died within one year of admission.
  • Five months: The typical length of nursing-home stay for patients who eventually died in the nursing home.

I think the above means that MOST Long Term Care needs will be adequately covered by typical LTCI policies.


Yeah, but for many (most?) of us Boglehead types...with nice sized nest eggs....isn't the BIG risk a long term stay, which is not dependent on the averages shown? And you can no longer buy unlimited-stay coverage. So dithering about whether to buy the 3-year-limit policies sold today or not is really besides the point. Kinda like deciding whether to add rental car coverage to your auto policy, but being unable to buy liability coverage.

How do you know that? The linked article states that you can buy unlimited coverage.
According to the American Association for Long Term
Care Insurance, the cost of a policy that pays benefits for
an unlimited amount of time is only about a third more
expensive than a standard policy that pays for just three
years of care. You can even pay for nearly a third of that
added cost by increasing the elimination period on your
policy from the standard 90 days to 180 days
If we have data, let’s look at data. If all we have are opinions, let’s go with mine. – Jim Barksdale
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Re: "The dangers of long-term care insurance"

Postby orlandoman » Tue Feb 11, 2014 1:45 pm

Here’s the problem with using summary statistics to help make a decision about LTC:
- there are 6 ‘Activities of Daily’ living, eating, bathing, etc.
- in every detailed/complete report on LTC needs, U.S. Gov’t, etc., they say they include anyone who needs help in 1 or more activities of daily living
- every LCT Insurance policy I have seen, only covers people who need help with 2 or more activities of daily living

So, although the statistics may be correct they do not reflect an equal number of people who will be able to collect on a LTC policy. Check it out .
"If You Are The Smartest Person In The Room ... You Are In The Wrong Room"
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Re: "The dangers of long-term care insurance"

Postby dhodson » Tue Feb 11, 2014 1:47 pm

Browser wrote:
Leesbro63 wrote:
bertilak wrote: A few numbers:
  • 40%: The percentage of individuals who reach age 65 who will enter a nursing home during their lifetimes.
  • 892 days (2.44 years): Average length of stay for current nursing-home residents, 1999.
  • 272 days (8.94 months): Average length of stay for discharged nursing-home residents, 1999.
  • 38%: Percentage of nursing home patients who will eventually be discharged to go home or to another setting.
  • 10%: The percentage of people who enter a nursing home who will stay there five or more years.
  • 65%: The percentage of people who entered a nursing home who died within one year of admission.
  • Five months: The typical length of nursing-home stay for patients who eventually died in the nursing home.

I think the above means that MOST Long Term Care needs will be adequately covered by typical LTCI policies.


Yeah, but for many (most?) of us Boglehead types...with nice sized nest eggs....isn't the BIG risk a long term stay, which is not dependent on the averages shown? And you can no longer buy unlimited-stay coverage. So dithering about whether to buy the 3-year-limit policies sold today or not is really besides the point. Kinda like deciding whether to add rental car coverage to your auto policy, but being unable to buy liability coverage.

How do you know that? The linked article states that you can buy unlimited coverage.
According to the American Association for Long Term
Care Insurance, the cost of a policy that pays benefits for
an unlimited amount of time is only about a third more
expensive than a standard policy that pays for just three
years of care. You can even pay for nearly a third of that
added cost by increasing the elimination period on your
policy from the standard 90 days to 180 days



If you follow the ltci discussions here you will find that most companies have eliminated them. Maybe one of the agents like blue above will comment again on this.
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Re: "The dangers of long-term care insurance"

Postby Beck49 » Tue Feb 11, 2014 2:49 pm

"How do you know that? The linked article states that you can buy unlimited coverage."

This is a good question. But does unlimited coverage just mean unlimited days up to a maximum total cap? Or does it really mean that there is no cap on the total expenditures the policy will pay? Obviously if it's the former, the extra coverage is of limited value
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Re: "The dangers of long-term care insurance"

Postby bertilak » Tue Feb 11, 2014 3:14 pm

Beck49 wrote:"How do you know that? The linked article states that you can buy unlimited coverage."

This is a good question. But does unlimited coverage just mean unlimited days up to a maximum total cap? Or does it really mean that there is no cap on the total expenditures the policy will pay? Obviously if it's the former, the extra coverage is of limited value

My policy, although not an unlimited policy, lists dollars per day benefits (several rates depending on type of care) and maximum lifetime benefit. The policy says that it is the lifetime benefit that determines when coverage ends. There is no mention of a time limit.

The maximum lifetime benefit and maximum daily benefit work out to five years.
No-one really listens to anyone else, and if you try it sometime you will see why. | -- Mignon McLaughlin
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