Yet another study on why not to buy long term care insurance

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Browser
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Yet another study on why not to buy long term care insurance

Post by Browser »

According to researchers at Georgetown University and Pennsylvania State University, about 70% of individuals 65 and older will need some kind of long-term care—whether at home or in an assisted-living facility or nursing home.

But how many of them should purchase a long-term-care insurance policy? That number, it turns out, is far lower—at 19% of men and 31% of women, according to a new study published by Boston College’s Center for Retirement Research.
http://www.marketwatch.com/story/why-ma ... 2014-12-23

The study link:
http://crr.bc.edu/briefs/long-term-care-how-big-a-risk/
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dhodson
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Re: Yet another study on why not to buy long term care insur

Post by dhodson »

I dont plan to buy LTCi.

With that said, these studies dont really help people making decisions.

The main problem is that the data used to make decisions is poor and it may not get better any time soon at least within a time period that will matter in my personal life. Heck even the insurance companies still dont feel comfortable with the data.

The type of plan id be interested doesnt really exist which is something that would kick in after 2 years but pay all costs indefinitely. I personally doubt it will ever exist. Insurance companies for the most part have gotten rid of unlimited plans and the few that have them have priced them such that they might as well not exist. Limited pay polices are now also uncommon.

For most things that i purchase insurance for, i have some reasonable idea of the risk and the costs. Those arent known with LTCi. Its much harder to make an informed decision.
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Re: Yet another study on why not to buy long term care insur

Post by edge »

Browser wrote:
But how many of them should purchase a long-term-care insurance policy? That number, it turns out, is far lower—at 19% of men and 31% of women, according to a new study published by Boston College’s Center for Retirement Research.
http://www.marketwatch.com/story/why-ma ... 2014-12-23

The study link:
http://crr.bc.edu/briefs/long-term-care-how-big-a-risk/
The statement 'how many should buy' is really misguided. Insurance is about risk management, it is not possible to know beforehand that you fall into the 19% or 31%. How many people's homes burn down? Not many in my neighborhood. Does that mean none of us should have home insurance? Probably not. That being said, people with no assets have no reason to purchase LTC.

The study has several fatal flaws which make it almost useless. (1) It analyzes 'singles' who today, make up a minority of LTC purchasers. (2) It is rooted in nursing home care data, which has become the 'benefit of last resort' from LTC policies. The vast majority of claimants use home care services.
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Re: Yet another study on why not to buy long term care insur

Post by itstoomuch »

The reasons stem from a range of factors, including the fact that relatively few people have enough wealth to make it worthwhile to purchase protection against the potentially catastrophic costs of long-term care. Moreover, the authors found, due to the way Medicare and Medicaid work, many people can count on government-provided coverage for the vast majority of their needs.
Marketwatch article cited above

We don't ever want to be in the Medicaid category.
We want to avoid the Medicare portion as long as possible. I've seen how Nursing Homes "milk" the Medicare system and then have the claim denied by CMS.

Disclaimer. We have LTCi. Bought when we were in the early 50's (12-14 years ago?). We knew at that time that we were going to be in the zone where we will too much assets to qualify for Government assistance but will be too poor to skip LTCi should we need it. We also have an Only. We don't want to put the Only in a position where he would jeopardize his family's well being both financially and nonfinancially. We have cared for two parents consecutively, (10 years) with 2 more remaining plus an altruistic (58 yo) brother. The Insurance is a known expense. The LongTerm care is an unknown cost. We opted for the Known.
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Re: Yet another study on why not to buy long term care insur

Post by dpc »

We opted for the Known
My main concern with LTCI is the unknown of the future rates as well as the future solvency of the insurance provider. So far we've opted for the "unknown". I have little confidence in collecting expected LTCI benefits from a for-profit insurance company decades in the future. They are in business to find reasons and methods to avoid paying. Then there are the "unknown unknowns".... :happy
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Re: Yet another study on why not to buy long term care insur

Post by stan1 »

My maternal grandmother and my father both developed dementia in their last 5 years alive. I have LTCI.
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Re: Yet another study on why not to buy long term care insur

Post by obgyn65 »

After reading many threads here a couple of years ago I decided to get LTCI. So far so good.
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Re: Yet another study on why not to buy long term care insur

Post by itstoomuch »

we, know that the 3rd rate increase, occurring in 2015, will increase our premium ~30% ( I forgot the exact number but it will be substantial but affordable). We will be stretched in 2015. I am thinking in pushing the expense to DS who needs the deductible where we cannot use the deductible. He is a smart DS, he knows that a relatively small expense today will be COULD prevent a much larger commitment in the future. He's a truer BogleHead than me.

I understand peoples' attitude towards private insurance. I am just not comfortable with public insurance. :beer

GL
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
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Re: Yet another study on why not to buy long term care insur

Post by Blues »

We've had it for years (purchased early at a very competitive rate) and it'll be an expense I'll happily continue to pay while hoping I never, ever have to take out and dust off the policy.
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Re: Yet another study on why not to buy long term care insur

Post by Browser »

LTCi really isn't Long Term care insurance at all. It's insurance for a couple of years of care, and that's assuming you qualify for it when you might need it. As the studies show, it's improbable that you're ever going to need it at all. And if you do, then when it's used up you're right back where you started unless you have the good sense to kick the bucket before your "long term" insurance runs out. If it really was long term insurance, it would cover you as long as you are receiving care, perhaps with an exclusionary period so that it kicks in if you happen to fall into a category - such as Alzheimer's care - in which you might need care for many years. But, of course, the insurance companies don't offer that or plan to. In the meantime, if you have adequate financial resources, what's wrong with "self-insuring" by setting aside the same amount that represents the max payout of an LTCi policy? A good chunk of that will be the money you didn't spend on LTCi premiums.
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Re: Yet another study on why not to buy long term care insur

Post by ResearchMed »

DH's father had a long-term condition for quite a few years, and I'm not sure of the specifics about how his parents paid for the long term care (but it was complicated and not pleasant).

We had a "second chance" to get it, when our employer switched vendors, and as a condition, they had to offer coverage to everyone, not just those currently with LTCI.

Importantly, this meant that for employees, there was NO medical underwriting.
For spouses, there was limited medical underwriting.

MIL has a terrific policy. After something like one year of not using it, it "refills the bucket" and starts off with the full amount of coverage again.
She's used it for home health care for several months a couple of times, and is now back at full "value".
We would have preferred to get an "unlimited duration" policy, but those seem to be gone now (?).

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Blues
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Re: Yet another study on why not to buy long term care insur

Post by Blues »

Browser, I don't know what current premiums are for folks just applying (at various ages and health etc), but in our case, we pay under $1500 per year (jointly) with a top company for policies which include inflation protection, shared benefits and several other bells and whistles. If I invested that $1500 per year for 40 years (assuming no rate increases), I seriously doubt I would have amassed the amount necessary to pay for just a couple of years of care for one, let alone two individuals should that eventuality arise.

You pays your money and you take your chances. As long as you are satisfied with your decision and your financial situation (and your ability to pay the costs involved) you don't really need to convince anyone else that it's pretty much a black and white decision.

I know I agonized over the costs and probabilities back when I researched LTCI, but in hindsight, I've never regretted making the choice. It may not be the right choice for all but I prefer it over either self insurance or the much more dismal prospect of Medicaid. (I'd sooner opt for euthanasia than reliance on Medicaid.)
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Re: Yet another study on why not to buy long term care insur

Post by Levett »

Sorry. I find the title of the post bizarre at best.

19% of men and 31% of women is a huge number of human beings.

I also find it interesting that if one checks the "study's" bibliography it in no way challenges the comprehensiveness of the following detailed study:

http://www.allhealth.org/briefingmateri ... ct-461.pdf

I hope never to use my LTCI, but I sure do sleep well knowing I have it, particularly as I watch the cost of long term care rise with increasing longevity.

Lev
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Re: Yet another study on why not to buy long term care insur

Post by BruDude »

stan1 wrote:My maternal grandmother and my father both developed dementia in their last 5 years alive. I have LTCI.
^^^These studies should interview a subset of people that fall into this category and see how the numbers change on what they "should" do and what that subset of people thinks about that. Almost all of our LTCi sales are from people who have relatives that needed care and/or had dementia/Alzheimers. Most don't even care about the cost (which has gone up significantly in the past 5 years), they just don't want to end up in a Medicaid home or having their kids forced to take care of them. Let's not forget that people who bought LTCi over the past 10-15 years also got an incredible deal compared to what similar coverage costs today.
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Re: Yet another study on why not to buy long term care insur

Post by Random Musings »

Push me over a cliff (a big one). I have come to the conclusion that too much money is wasted on medical care where only the decline is being slowed down and quality of life is not improving. Yeah, there are some cases where this makes sense, but I'd rather give the money to my heirs than the medical/insurance industry.

Then, my heirs can use this money to invest in the healthcare fund. Ironic, isn't it.

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Re: Yet another study on why not to buy long term care insur

Post by nisiprius »

Yes, the insurance companies use misleading statistics about how many people go into nursing homes. Yes, most people who go into nursing homes have short stays, for either happy or sad reasons. But it is not rare to go into a nursing home for long periods of time. According to the CDC,, the good news is that the average stay is 835 days and the median stay is 463 days. But those number in themselves tell you there is a huge positive skew, and I can't find the chart now but it looks almost like an exponential distribution--there's almost no upper limit and the taper is very slow.

The bad news is that the CDC says 12% of all stays are for five years or more. 12% is not a negligible number. That's much higher than the chance of your house burning down, for example. The reason LTCi is so expensive is that long-term-care is expensive and extended stays are not a rare event.

It all seems pretty simple to me. If you can "afford" to pay for a nursing home stay of 5 years without any great impact on your finances, then you don't need to buy insurance. If you can't afford it but you can afford the insurance premiums, you should consider getting the insurance.

Long nursing home stays are not a myth. They happen. I've visited at least two people who had been in the nursing home, let me think--yes, both for over ten years. One is still alive, currently in her early sixties, mentally alert, and as far as I know healthy except for a spinal cord injury. She cannot move from bed to wheelchair without the help of a caregiver with a sort of miniature crane.

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stan1
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Re: Yet another study on why not to buy long term care insur

Post by stan1 »

Random Musings wrote:Push me over a cliff (a big one). I have come to the conclusion that too much money is wasted on medical care where only the decline is being slowed down and quality of life is not improving. Yeah, there are some cases where this makes sense, but I'd rather give the money to my heirs than the medical/insurance industry.

Then, my heirs can use this money to invest in the healthcare fund. Ironic, isn't it.

RM
Great idea in concept, but in the real world murder and suicide have other social and economic ramifications. I'm not expecting this obstacle to be overcome in my lifetime. The existing death with dignity laws in Oregon and other states are not set up to deal with dementia.
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Re: Yet another study on why not to buy long term care insur

Post by Blues »

nisiprius wrote: It all seems pretty simple to me. If you can "afford" to pay for a nursing home stay of 5 years without any great impact on your finances, then you don't need to buy insurance. If you can't afford it but you can afford the insurance premiums, you should consider getting the insurance.
$75,000 per year or so (on average) for five years is a chunk of change I personally wouldn't want to take out of our portfolio.

Hell, I spend a lot more on excellent medical insurance than I do on LTCI and I won't set foot in the doctor's office unless I need stitches though I'll go to the dentist twice yearly. :wink:
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Re: Yet another study on why not to buy long term care insur

Post by nisiprius »

P.S. Even bland statements like "many short-duration stays in nursing homes are covered by Medicare, which covers stays of 100 days or less following a hospital stay of more than 3 consecutive days" can be correct yet misleading. Short-term nursing home stays are not necessarily preceded by a hospital admission and a 3-day hospital stay.
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Re: Yet another study on why not to buy long term care insur

Post by richard »

From the linked articles, it appears long-term care insurance does not cover you for very long stays, just a fixed amount for a limited number of years. If so, if you need ten years of care, the LTCI policy won't cover it.
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Re: Yet another study on why not to buy long term care insur

Post by SpringMan »

Jim Cramer's story about his dad's LTCi.
When he had a stroke three years ago and needed round-the-clock help, we had to fight those sons of bitches who wrote the policies to get the money they owed him to pay the nurse. I hate those guys because they tried to beat their obligations. We wouldn't let them get away with it, but don't tell Pop, because getting them to keep their word cost us almost as much as what the reimbursement was worth. I won't mention the company's name, but it was a disgrace, and if you have that insurance or your loved ones do, be prepared for them to try to screw you. I hope they won't. But many will try. I know that now.
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Re: Yet another study on why not to buy long term care insur

Post by BruDude »

richard wrote:From the linked articles, it appears long-term care insurance does not cover you for very long stays, just a fixed amount for a limited number of years. If so, if you need ten years of care, the LTCI policy won't cover it.
Sure it can. You're buying a pool of money, not a set number of years. For example, if you buy a 5-year policy with a $6k/month benefit maximum, you have a pool of $360,000 to start with. If your care costs $3k/month, your policy would last 10 years. The monthly/daily benefit is only the maximum that you can use per month/day.
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Re: Yet another study on why not to buy long term care insur

Post by nisiprius »

When he had a stroke three years ago and needed round-the-clock help, we had to fight those sons of bitches who wrote the policies to get the money they owed him to pay the nurse.
Yes, and that is a very strange story because it sounds as if the care was being given at home, and 24x7 in-home care is very expensive, and AFAIK LTCi doesn't generally cover it. It generally covers 24x7 care in a facility. Ours, and I think this is typical, offers very limited in-home care. Cramer also doesn't say who the insurer was, and that's probably an important detail. It's pretty obvious that there are some very bad LTCi insurers, and I don't like the idea that it is caveat emptor and customers are somehow supposed to try to sort out the honest ones from the sleazebags. But it makes a difference if his insurer was one of the known high-complaint-rate companies, or one of the supposedly OK companies.
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Re: Yet another study on why not to buy long term care insur

Post by SamB »

dhodson wrote:

The type of plan id be interested doesnt really exist which is something that would kick in after 2 years but pay all costs indefinitely. I personally doubt it will ever exist. Insurance companies for the most part have gotten rid of unlimited plans and the few that have them have priced them such that they might as well not exist. Limited pay polices are now also uncommon.
This never seems to get advertised, but there are other options to LTC insurance. One of the best in my opinion is where the independent living/assisted living/nursing home assumes the actuarial risk for the price of the buy-in. You still have the basic monthly fees for food, housing, etc., but the living assistance/nursing expense is covered by the buy-in cost. If you own your own home plus meet your living expenses in all probability you can meet the buy in price. The catch is that you also need to make the buy while you are in reasonably good health. Reasonably good health may mean the ability to walk from your apartment to the dining room unassisted. Walkers are ok.

These option have always existed, but ten years ago when LTC insurance was the greatest thing since the flush toilet, they kept this option hidden. The only good thing about LTC insurance is the saleman's fee when you sign up for the policy. Here is one of many alternatives to LTC insurance, http://www.brandonoaks.net/ Search around for similar deals because they are out there.
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Re: Yet another study on why not to buy long term care insur

Post by Browser »

Maybe I'm missing something here -- if I am please correct me. I figure that nursing home care (at least in my part of the country) would cost about $80K per year. At least that was the rate for my mother recently when she had to stay in one for rehab for about a month. It is regarded as "as good a place as any other" in the Kansas City area, and the cost seemed to be about the norm in this region. So then, if I can afford to designate $240K of my retirement portfolio as my personal LTCi policy, and invest as such, is there a reason I would need to purchase LTCi from an insurance company instead?

However, even if I can't afford to set aside $240K, perhaps I can set aside $100K or $120K. That would cover me for the median stay from the CDC data shown by nisiprius. If I'm unfortunate enough to have to go into nursing care in the first place, and then unfortunate enough to last longer than the median resident, I'm not sure it would be a problem for me to go broke and throw myself on the mercy of the Medicaid system. Truth be told, if that safety net isn't there, a lot of us will be in the deep do-do since not many have the personal fortune to private pay for 5, 10 or more years of nursing care. LTCi, even if you have it, is only going to pick up 3 years of so of that tab. And that's assuming the insurance company hasn't gone out of business and you're not in the same boat as Jim Cramer's dad.
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Re: Yet another study on why not to buy long term care insur

Post by GerryL »

BruDude wrote:
richard wrote:From the linked articles, it appears long-term care insurance does not cover you for very long stays, just a fixed amount for a limited number of years. If so, if you need ten years of care, the LTCI policy won't cover it.
Sure it can. You're buying a pool of money, not a set number of years. For example, if you buy a 5-year policy with a $6k/month benefit maximum, you have a pool of $360,000 to start with. If your care costs $3k/month, your policy would last 10 years. The monthly/daily benefit is only the maximum that you can use per month/day.

Bought my plan, in my early 50s, and because of a family history of Alzheimer's I opted for unlimited duration coverage. So, yes, it is possible to get LTCi that would cover "very long stays" but you pay a lot more for it.

If I get well into my 80s and have not needed to use the LTCi -- and if I still have my wits about me -- I can adjust the policy to a limited plan. So if my finances are in order, I may decide to switch to a 3- or 5-year policy.
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Re: Yet another study on why not to buy long term care insur

Post by Browser »

SamB wrote:
dhodson wrote:

The type of plan id be interested doesnt really exist which is something that would kick in after 2 years but pay all costs indefinitely. I personally doubt it will ever exist. Insurance companies for the most part have gotten rid of unlimited plans and the few that have them have priced them such that they might as well not exist. Limited pay polices are now also uncommon.
This never seems to get advertised, but there are other options to LTC insurance. One of the best in my opinion is where the independent living/assisted living/nursing home assumes the actuarial risk for the price of the buy-in. You still have the basic monthly fees for food, housing, etc., but the living assistance/nursing expense is covered by the buy-in cost. If you own your own home plus meet your living expenses in all probability you can meet the buy in price. The catch is that you also need to make the buy while you are in reasonably good health. Reasonably good health may mean the ability to walk from your apartment to the dining room unassisted. Walkers are ok.

These option have always existed, but ten years ago when LTC insurance was the greatest thing since the flush toilet, they kept this option hidden. The only good thing about LTC insurance is the saleman's fee when you sign up for the policy. Here is one of many alternatives to LTC insurance, http://www.brandonoaks.net/ Search around for similar deals because they are out there.
Aren't you talking about Continuing Care Retirement Communities (CCRCs)? That is an alternative to LTCi policies, and probably a good one since you'll have lifetime care. Generally, you have to become a resident when you're still capable of independent living, and then as you age you move the the assisted living area, and finally the nursing care area. As with most senior living facilities you must pay a monthly fee, but the escalation in the monthly fee as you progress to assisted living and then nursing care is not as huge as otherwise. This is because the CCRC is absorbing the actuarial risk via screening and via the upfront "buy-in" amount - which is like a lump sum insurance premium. However, you have to be sure this kind of living arrangement is OK with you -- not everybody likes to live in senior retirement communities with all that bloody "groupiness" and the regimented schedules and lifestyle. Secondly, you need to try to determine if the place you choose is financially sound enough to be around long enough. Not sure how to do this. Once you're in -- you're in for better or for worse.
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Re: Yet another study on why not to buy long term care insur

Post by gerrym51 »

my wife and i each have 4year policies purchased 10years ago 5 percent inflation-now at about250 a day.

however our policy also covers homecare which canmakethe money lastlonger and also alternative type situations.


I hope neither of us have to use it.justbefore i die i'll say i guess i didn' tneed to buy it. :mrgreen:
matonplayer
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Re: Yet another study on why not to buy long term care insur

Post by matonplayer »

Why not just buy a SPIA at age 70 or so? That way you have the money coming in for the rest of your life to pay for LTC if you need it, and if you don't need it, you have the money coming in to spend anyway.
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Re: Yet another study on why not to buy long term care insur

Post by Browser »

matonplayer wrote:Why not just buy a SPIA at age 70 or so? That way you have the money coming in for the rest of your life to pay for LTC if you need it, and if you don't need it, you have the money coming in to spend anyway.
You'd need to buy one that pays out enough to cover your LTC, right? Let's say you have $20K/yr in social security, so you'd need an SPIA that pays about $60K, or $5K per month to cover annual LTC expenses of $80K. Using ImmediateAnnuties.com website, that would require a lump sum of about $800K currently for a single-life annuity starting at age 70. And then there's the matter of inflation. An inflation-indexed SPIA would be quite a bit more expensive than that. If I had that much money, why would I need the SPIA?
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Re: Yet another study on why not to buy long term care insur

Post by hoops777 »

We took out a policy with Genworth 3 years ago.It has an inflation rider and is identical to my brothers policy.It cost us 300 a month and I can write it off through my business.Right now we are 62 and 64 and hope we never use it.My brother is 69 with Parkinsons and has in home 24 hr care.It has been great for him.I forget the terminology but our policy has some kind of protection with the state.The agent told us if one of us had to go in long term to a home that we should put our house in the others name.If you run out of money they cannot take your house and Medicade will pay for the facility you are in...they cannot kick out and put you in a public dumping ground.
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Re: Yet another study on why not to buy long term care insur

Post by gerrym51 »

hoops777 wrote:We took out a policy with Genworth 3 years ago.It has an inflation rider and is identical to my brothers policy.It cost us 300 a month and I can write it off through my business.Right now we are 62 and 64 and hope we never use it.My brother is 69 with Parkinsons and has in home 24 hr care.It has been great for him.I forget the terminology but our policy has some kind of protection with the state.The agent told us if one of us had to go in long term to a home that we should put our house in the others name.If you run out of money they cannot take your house and Medicade will pay for the facility you are in...they cannot kick out and put you in a public dumping ground.

i have genworth also- however several things.

once your in a nursing home you can never be kicked out-even if you go on medicaid. it's a law. the key is not being on medicaid when you go in.

secondly the spouse thats in the home does not have to sell it even if the spouse is in a nursing home.that's a law also.

I think what your agent meant was the ltci medicaid partnership-which wehave in our state. basicallyif you have an ltci polic ymedicaid will exempt it's value and letyou keepit/
BruDude
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Re: Yet another study on why not to buy long term care insur

Post by BruDude »

hoops777 wrote:We took out a policy with Genworth 3 years ago.It has an inflation rider and is identical to my brothers policy.It cost us 300 a month and I can write it off through my business.Right now we are 62 and 64 and hope we never use it.My brother is 69 with Parkinsons and has in home 24 hr care.It has been great for him.I forget the terminology but our policy has some kind of protection with the state.The agent told us if one of us had to go in long term to a home that we should put our house in the others name.If you run out of money they cannot take your house and Medicade will pay for the facility you are in...they cannot kick out and put you in a public dumping ground.
I'm not a CPA, but if you're writing it off as a business expense, it would seem that the benefits could be taxable when paid out.
hoops777
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Re: Yet another study on why not to buy long term care insur

Post by hoops777 »

Good to know...thanks....concerning the taxes,if I get to that point I will not care :D
K.I.S.S........so easy to say so difficult to do.
HIinvestor
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Re: Yet another study on why not to buy long term care insur

Post by HIinvestor »

The LTCi that we were offered when H was a federal employee and the fed govt was heavily "suggesting" people purchase it did NOT have unlimited benefits--they were capped at a $$ amount as well as 2, 3 or 5 years. The premiums for the plan we wanted were too high for us to afford with the college tuitions, so we opted not to buy LTCi. At this point in our lives, we have assets that would cover our long term care, tho we didn't have these assets to pay the premiums when we were contemplating it.

We did go and talk to the LTCi agents to see if our understanding of when the policies were effective were correct. Basically, they cover when the insured can no longer perform a set amount (3 or 4), activities of daily living as described in the policy. You can be otherwise pretty disabled and in pain and need a lot of help, but if you can perform the activities of daily living, benefits do NOT start. My aunt was in great pain, dying from lung cancer. She paid a LTCi policy for decades. The policy didn't pay ANY benefits until the last month of her life, despite a year of excruciating pain because technically she COULD slowly and in great pain perform the activities of daily living.

H and I have opted to save our money so we can hire the help we want and need when we want and need it instead of fighting with an insurance company about whether or not we qualify for benefits to start. We are grateful that we have the assets to self-insure and sleep well at night.
FBN2014
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Re: Yet another study on why not to buy long term care insur

Post by FBN2014 »

There is an alternative way to get LTCI without worrying about premium increases. Its called asset based LTCI. Essentially you put a lump some into an account with the insurance company. The benefit would be say 4 times the amount you deposit. If you need the benefit you draw it out of this account until its depleted. If you never need it then your beneficiaries will be paid a death benefit at your death. And if you decide to cancel the policy, you get back 100% of the intial deposit.
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Browser
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Re: Yet another study on why not to buy long term care insur

Post by Browser »

FBN2014 wrote:There is an alternative way to get LTCI without worrying about premium increases. Its called asset based LTCI. Essentially you put a lump some into an account with the insurance company. The benefit would be say 4 times the amount you deposit. If you need the benefit you draw it out of this account until its depleted. If you never need it then your beneficiaries will be paid a death benefit at your death. And if you decide to cancel the policy, you get back 100% of the intial deposit.
I'm smelling another opaque fee- and commission-packed investment product cooked up by insurance companies. Anybody else?
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Scotttheking
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Re: Yet another study on why not to buy long term care insur

Post by Scotttheking »

Maybe 8 or 10 years ago I advised my mom to not get LTCi. Today I still stand by that decision. Many articles make care seem terribly expensive, throwing around #s such as $100k. Well, that's true, but the articles don't point out that if you are needing that level of long term care, your assorted fun budget (eating out, travel, shows, etc.) has probably decreased to about 0. The numbers suggested it approximately doubled the cost of living. Not worth it.
flyingaway
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Re: Yet another study on why not to buy long term care insur

Post by flyingaway »

Scotttheking wrote:Maybe 8 or 10 years ago I advised my mom to not get LTCi. Today I still stand by that decision. Many articles make care seem terribly expensive, throwing around #s such as $100k. Well, that's true, but the articles don't point out that if you are needing that level of long term care, your assorted fun budget (eating out, travel, shows, etc.) has probably decreased to about 0. The numbers suggested it approximately doubled the cost of living. Not worth it.
This point of view is important. If I have already budgeted $80K per year for my retirement up to any number of years, why that $80K cannot be used for long-term care?
HIinvestor
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Re: Yet another study on why not to buy long term care insur

Post by HIinvestor »

Agree that if we already have the means to pay for LTC, we basically self-insure and can get the help and care we can afford and need. My H's life insurer tried to sell us a policy that would give agent a $10K commission but could use $100K face value of the fully paid up life insurance as a $200K LTC policy and H would no longer receive his annual $2K return of excess premiums from insurer. We declined.
Carl53
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Re: Yet another study on why not to buy long term care insur

Post by Carl53 »

SamB wrote:This never seems to get advertised, but there are other options to LTC insurance. One of the best in my opinion is where the independent living/assisted living/nursing home assumes the actuarial risk for the price of the buy-in. You still have the basic monthly fees for food, housing, etc., but the living assistance/nursing expense is covered by the buy-in cost. If you own your own home plus meet your living expenses in all probability you can meet the buy in price. The catch is that you also need to make the buy while you are in reasonably good health. Reasonably good health may mean the ability to walk from your apartment to the dining room unassisted. Walkers are ok.

These option have always existed, but ten years ago when LTC insurance was the greatest thing since the flush toilet, they kept this option hidden. The only good thing about LTC insurance is the saleman's fee when you sign up for the policy. Here is one of many alternatives to LTC insurance, http://www.brandonoaks.net/ Search around for similar deals because they are out there.
We have been looking at a continuing care facility for my in-laws. It costs from about $70k to $130k upfront for the both of them and $2200 to $3600 per month thereafter depending upon the living arrangements. The only difference is for size of room or cottage. If both are living at the time one needs upgraded to a higher care level, the remaining one would still pay the single rate (only a modest amount less than the number for two). The individual requiring the additional care would not have any fee increase. The healthy individual could downsize to a smaller accommodation for substantial savings. There also is an endowment fund to cover the situation should the individuals outlive their funds.
dhodson
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Re: Yet another study on why not to buy long term care insur

Post by dhodson »

One of the problems wit those arrangements is that you assume it will still be in business and still well kept into the future. Additionally if big insurance companies can't price correctly then it's hard to have confidence with these smaller companies.
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Re: Yet another study on why not to buy long term care insur

Post by dhodson »

Browser wrote:
FBN2014 wrote:There is an alternative way to get LTCI without worrying about premium increases. Its called asset based LTCI. Essentially you put a lump some into an account with the insurance company. The benefit would be say 4 times the amount you deposit. If you need the benefit you draw it out of this account until its depleted. If you never need it then your beneficiaries will be paid a death benefit at your death. And if you decide to cancel the policy, you get back 100% of the intial deposit.
I'm smelling another opaque fee- and commission-packed investment product cooked up by insurance companies. Anybody else?
Definitely

These combo products are horrible. It's permanent insurance or an annuity. Funny how that wasn't mentioned.....
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dodecahedron
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Re: Yet another study on why not to buy long term care insur

Post by dodecahedron »

BruDude wrote:
hoops777 wrote:We took out a policy with Genworth 3 years ago.It has an inflation rider and is identical to my brothers policy.It cost us 300 a month and I can write it off through my business.Right now we are 62 and 64 and hope we never use it.My brother is 69 with Parkinsons and has in home 24 hr care.It has been great for him.I forget the terminology but our policy has some kind of protection with the state.The agent told us if one of us had to go in long term to a home that we should put our house in the others name.If you run out of money they cannot take your house and Medicade will pay for the facility you are in...they cannot kick out and put you in a public dumping ground.
I'm not a CPA, but if you're writing it off as a business expense, it would seem that the benefits could be taxable when paid out.
This is NOT true for qualified long term care insurance polices. They are treated similarly to payments for health insurance. The self-employed can deduct premiums but the benefits of insurance proceeds received for medical and/or longterm care when paid out will not be taxable.

BruDude's comment would be true if we were discussing disability insurance (i.e., benefits designed to replace labor income prior when a person is disabled prior to retirement.) But LTCI is treated very differently by the tax code.
Last edited by dodecahedron on Mon Jan 05, 2015 7:45 am, edited 1 time in total.
westie
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Re: Yet another study on why not to buy long term care insur

Post by westie »

My mother spent 3.5 years in a nursing home. It was a good facility. I wrote checks from her account to pay for it. 74% of residents at the facility were on Medicaid. Even now, I wouldn't buy LTCI.
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1210sda
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Re: Yet another study on why not to buy long term care insur

Post by 1210sda »

Browser wrote: if you have adequate financial resources, what's wrong with "self-insuring" by setting aside the same amount that represents the max payout of an LTCi policy?
This is the approach that we are taking....

1210
jstrazzere
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Re: Yet another study on why not to buy long term care insur

Post by jstrazzere »

So who should consider buying coverage? According to Anthony Webb, a senior research economist at the Center for Retirement Research and a co-author of the paper, those with significant assets—of a couple hundred thousand dollars or more—should look into a policy. The target market, he adds, is “people who have a sizable amount of household financial assets and would be unlikely to qualify for Medicaid.”
Per to this closing statement, I would assume that most of the readers here should consider buying coverage.

I just purchased mine.
Display
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Re: Yet another study on why not to buy long term care insur

Post by Display »

Both my elderly parents (94 and 89) lived with my wife and me for months until it became necessary to provide a nursing home care for them. In retirement, they basically had lived in their home of about 60 years and lived off their Social Security plus help from my brothers and me when major repairs or other help was needed. When admitted to the nursing home, my family sold their home. All the money went for their care until depleted. My father lived some seven months and mother longer. After their money was depleted, Medicaid picked up the cost. Needless to say, my wife and I purchased LTC for ourselves after our experience. These decisions to us are about more than premiums!

We did not want our adult children left with decisions (regardless of which way we decided) we should and could have made when we were able to do so. Based on study and discussions, we decided to purchase a joint LTC policy. Like other parts of life, this is obviously a personal decision for everyone. Without trying to get into a political debate, I find this quote in the article to be very important. How one reads it and what one thinks about the statement also may be a very important part of each person's decision: " Moreover, the authors found, due to the way Medicare and Medicaid work, many people can count on government-provided coverage for the vast majority of their needs." After depleting all of my parents funds for their care, Medicaid did pick up the cost for which we are grateful.

For us, we obviously do not know the future of our health, the health of the various insurance companies nor the future health of the government. We simply made the best decision we could at the time thinking not only of ourselves but of others. This does not mean, of course, our decision is right or wrong for anyone else.
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Re: Yet another study on why not to buy long term care insur

Post by skepticalobserver »

FBN2014 wrote:There is an alternative way to get LTCI without worrying about premium increases. Its called asset based LTCI. Essentially you put a lump some into an account with the insurance company. The benefit would be say 4 times the amount you deposit. If you need the benefit you draw it out of this account until its depleted. If you never need it then your beneficiaries will be paid a death benefit at your death. And if you decide to cancel the policy, you get back 100% of the intial deposit.
As noted by dhodson, these so-called "linked benefits" products are difficult to figure out. The ones I've seen are pretty much indexed annuity/ universal whole life policies. The credited indexed-based interest, after calculating caps and spreads, are minimal. Commissions, cost of insurance, etc. eat into principal. The "100% return of premium" is subject to lengthy back loads. The multiple payout for LTC care is paid for with expensive riders.

Even with plain vanilla LTC policies you have to know a lot about which contract provisions are important. Not all policies are the same. For example, in regard to the elimination period, it's essential to know the difference between a "service day" (bad) and a "calendar day" (better), or whether a policy will cover cognitive impairment (Alzheimer) alone without having to meet the 2 of the ADLs standard.
vested1
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Re: Yet another study on why not to buy long term care insur

Post by vested1 »

gerrym51 wrote:
hoops777 wrote:We took out a policy with Genworth 3 years ago.It has an inflation rider and is identical to my brothers policy.It cost us 300 a month and I can write it off through my business.Right now we are 62 and 64 and hope we never use it.My brother is 69 with Parkinsons and has in home 24 hr care.It has been great for him.I forget the terminology but our policy has some kind of protection with the state.The agent told us if one of us had to go in long term to a home that we should put our house in the others name.If you run out of money they cannot take your house and Medicade will pay for the facility you are in...they cannot kick out and put you in a public dumping ground.

i have genworth also- however several things.

once your in a nursing home you can never be kicked out-even if you go on medicaid. it's a law. the key is not being on medicaid when you go in.

secondly the spouse thats in the home does not have to sell it even if the spouse is in a nursing home.that's a law also.

I think what your agent meant was the ltci medicaid partnership-which wehave in our state. basicallyif you have an ltci polic ymedicaid will exempt it's value and letyou keepit/
Maybe it's the law in the State you live in, but not in California. When we were looking for a skilled nursing facility for my MIL we discovered what the rules really are. I asked up front if Medicaid was excepted once the money ran out. Only a couple of the numerous facilities we looked at would accept Medicaid at all, and only one guaranteed they would do so after assets were exhausted. Luckily it is a quality home, and should be at $8,500 a month.
SamB wrote:
dhodson wrote:

The type of plan id be interested doesnt really exist which is something that would kick in after 2 years but pay all costs indefinitely. I personally doubt it will ever exist. Insurance companies for the most part have gotten rid of unlimited plans and the few that have them have priced them such that they might as well not exist. Limited pay polices are now also uncommon.
This never seems to get advertised, but there are other options to LTC insurance. One of the best in my opinion is where the independent living/assisted living/nursing home assumes the actuarial risk for the price of the buy-in. You still have the basic monthly fees for food, housing, etc., but the living assistance/nursing expense is covered by the buy-in cost. If you own your own home plus meet your living expenses in all probability you can meet the buy in price. The catch is that you also need to make the buy while you are in reasonably good health. Reasonably good health may mean the ability to walk from your apartment to the dining room unassisted. Walkers are ok.

These option have always existed, but ten years ago when LTC insurance was the greatest thing since the flush toilet, they kept this option hidden. The only good thing about LTC insurance is the saleman's fee when you sign up for the policy. Here is one of many alternatives to LTC insurance, http://www.brandonoaks.net/ Search around for similar deals because they are out there.
We looked at a few of these as well, and you are correct in that the only seniors able to take advantage of this are the same ones who don't actually need it yet, and who may never need it. It was also curious that they all wanted to know the amount of assets available and it seemed that if assets weren't limitless the facility was mysteriously "full". Most wouldn't even consent to an interview because of the condition of my MIL. One said that if my MIL was accepted the cost would be $120,000 a year to start, excluding extras like prescribed medicine. It's probable that most residents would die suddenly of heart failure or stroke, or succumb quickly to cancer before ever benefiting from skilled nursing. Living the last 10 or 20 years of your life eating from a cafeteria and playing bingo on Saturday nights in the communal hall isn't that appealing to me.

Others who had a combination of residents who could function normally and those who needed skilled nursing wouldn't convert to Medicaid after assets ran out. They were very upfront at informing us that my MIL would be "evicted" when private pay was no longer possible.

Leaving politics aside, this situation is disgraceful for senior citizens who've followed the rules all their lives, saving diligently, only to become grist for the mill of the care industry.
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