Long term care insurance

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vsparz
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Long term care insurance

Post by vsparz »

I am wondering about peoples thoughts on long term care insurance?
I have concerns regarding the survivability of the underlying company, rate increases that occur by class, the very restricted definitiion of medical need based on "activities of daily living?

Does anybody plan on funding for this possible event with their own savings?
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Taylor Larimore
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Re: Long term care insurance

Post by Taylor Larimore »

vsparz wrote:I am wondering about peoples thoughts on long term care insurance?
I have concerns regarding the survivability of the underlying company, rate increases that occur by class, the very restricted definitiion of medical need based on "activities of daily living?

Does anybody plan on funding for this possible event with their own savings?
Hi vsparz:

If you have enough savings to replace the insurance, you don't need the insurance in the first place.
"Simplicity is the master key to financial success." -- Jack Bogle
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BruceM
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Re: Long term care insurance

Post by BruceM »

vsparz wrote:I am wondering about peoples thoughts on long term care insurance?
I have concerns regarding the survivability of the underlying company, rate increases that occur by class, the very restricted definitiion of medical need based on "activities of daily living?

Does anybody plan on funding for this possible event with their own savings?
You might want to do a search of this forum, as there have been many discussions on this topic.

BruceM
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dm200
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Re: Long term care insurance

Post by dm200 »

vsparz wrote:I am wondering about peoples thoughts on long term care insurance?
I have concerns regarding the survivability of the underlying company, rate increases that occur by class, the very restricted definitiion of medical need based on "activities of daily living?

Does anybody plan on funding for this possible event with their own savings?
Yes, we had (and still have) concerns over all of these issues. In the end, about 5 years ago, we bought policies on my wife and I from John Hancock.

There are no guarantees on everything. We chose one of the 3 or 4 top rated companies. We chose plans that we could afford, and we could still afford if rates went up. So far, no rate increases.
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nisiprius
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Re: Long term care insurance

Post by nisiprius »

vsparz wrote:I am wondering about peoples thoughts on long term care insurance?
I have concerns regarding the survivability of the underlying company, rate increases that occur by class, the very restricted definitiion of medical need based on "activities of daily living?

Does anybody plan on funding for this possible event with their own savings?
There's a fairly narrow income zone within which long-term care insurance (LTCI) makes sense. If you're rich, you don't need it. If you're poor, you can't afford it. It is very expensive because it is insuring against an event that is much more common than (say) having your house burn down.

We have some. It's the most unpleasant product I've ever had to think about, so far. With life insurance, at least you get to imagine your happy spouse living the life of Riley and grateful to you for providing so well posthumously. With long-term care insurance, what's the upside? Oh, boy, I can look forward to having someone help me with two of those "activities of daily living." But life is what it is and you need to deal with it.

By all means do your own numbers on the back of your own envelope. Here's what I get. If you don't want to buy LTCI, you need to have a separate fund that is earmarked for the possibility of long-term care. It has to be there when you need it, so you can't spend it yourself on anything but long-term care. If you are lucky and don't need long-term care, your heirs get it.

And because it has to be there when you need it, it has to be invested conservatively. There's not a chance in the world that you can invest it conservatively and have it grow at the 6-7% annual rate of long-term-care costs, so you need to allow for that.The necessary size of that fund, it seems to me, is in the ballpark of $200 a day times ten years, and maybe add 50% more to allow long-term care cost inflation. In round numbers, that's $1 million per person. If you can set $2 million aside and not touch it and not miss it much, then you don't need LTCI. As I say, do your own math, but you're going to get a number somewhere in the general ballpark of $2 million for a couple, while the grand total for LTCI premiums is going to be somewhere in the general ballpark of $100,000 for a couple.

If you can't afford LTCI premiums then your long-term-care plan is Medicaid. The essence of the Medicaid proposition is simple: you pay until you are essentially broke, and then and only then Medicaid takes over. (People try to play games in which they try to fool Medicaid by looking broke without being broke, but I don't feel this is either prudent or ethical).
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tc101
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Re: Long term care insurance

Post by tc101 »

One more reason not to buy long term care insurance

http://nymag.com/news/features/parent-h ... re-2012-5/
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ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

tc101 wrote:One more reason not to buy long term care insurance

http://nymag.com/news/features/parent-h ... re-2012-5/

That link seems to be a reason FOR purchasing LTCi.

We purchased a policy in 2008 from John Hancock. I sincerely hope we never need to use it. One thing to keep in mind about Medicaid: not only do you have to be impoverished (the usual number I see is no more than $2000 in assets), but also your monthly income. Although it varies by state, the most common figure is an income limit of $2000/mo. A modest pension and SS could easily be $2000/mo or more and if you had no money to pay for long term care and your income was too high for Medicaid, you are screwed.
dhodson
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Re: Long term care insurance

Post by dhodson »

nisiprius wrote:
vsparz wrote:I am wondering about peoples thoughts on long term care insurance?
I have concerns regarding the survivability of the underlying company, rate increases that occur by class, the very restricted definitiion of medical need based on "activities of daily living?

Does anybody plan on funding for this possible event with their own savings?
There's a fairly narrow income zone within which long-term care insurance (LTCI) makes sense. If you're rich, you don't need it. If you're poor, you can't afford it. It is very expensive because it is insuring against an event that is much more common than (say) having your house burn down.

We have some. It's the most unpleasant product I've ever had to think about, so far. With life insurance, at least you get to imagine your happy spouse living the life of Riley and grateful to you for providing so well posthumously. With long-term care insurance, what's the upside? Oh, boy, I can look forward to having someone help me with two of those "activities of daily living." But life is what it is and you need to deal with it.

By all means do your own numbers on the back of your own envelope. Here's what I get. If you don't want to buy LTCI, you need to have a separate fund that is earmarked for the possibility of long-term care. It has to be there when you need it, so you can't spend it yourself on anything but long-term care. If you are lucky and don't need long-term care, your heirs get it.

And because it has to be there when you need it, it has to be invested conservatively. There's not a chance in the world that you can invest it conservatively and have it grow at the 6-7% annual rate of long-term-care costs, so you need to allow for that.The necessary size of that fund, it seems to me, is in the ballpark of $200 a day times ten years, and maybe add 50% more to allow long-term care cost inflation. In round numbers, that's $1 million per person. If you can set $2 million aside and not touch it and not miss it much, then you don't need LTCI. As I say, do your own math, but you're going to get a number somewhere in the general ballpark of $2 million for a couple, while the grand total for LTCI premiums is going to be somewhere in the general ballpark of $100,000 for a couple.

If you can't afford LTCI premiums then your long-term-care plan is Medicaid. The essence of the Medicaid proposition is simple: you pay until you are essentially broke, and then and only then Medicaid takes over. (People try to play games in which they try to fool Medicaid by looking broke without being broke, but I don't feel this is either prudent or ethical).
it doesnt need to be invested that conservatively depending on your age. One should likely have disability insurance in case they require such care early on. If you invest too conservatively then you probably wont have enough. It also doesnt have to be completely seperate from other money. If you are requiring LTC then likely you arent going to paris or whatever your plans might have been. In the end, it isnt an easy calculation especially given the very likely rate increases and the possible failure of some LTCi companies if their rate increases arent approved. This is one of those decisions that we will only know the right answer in the distant future which isnt all that helpful unless they make time machines.
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altruistguy
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Re: Long term care insurance

Post by altruistguy »

Hello,

You've gotten some pretty good advice here.

I would add:
- The federal government's LTC plan appears well administered, but it is not subsidized. If you qualify, it is probably worth considering it.
- My second choice would be USAA's.
- If you get LTCI, get one with the longest elimination period (i.e., a year, if possible) that you can. You don't need LTCI for short periods. You may need it for long periods. This is the LTCI equivalent of getting high deductibles on your auto insurance policy (i.e., which is also a good idea).
- If you get LTCI, you should avoid Non-forfeiture benefits. This is sort of like the cash accumulation feature of whole life policies.
- Inflation protection feature is probably a good thing to get.
- At least a three-year benefit period is a good idea. Unlimited benefit periods are available, but are costly.

One non-financial reason to have a LTCI policy is that it makes it easier for you (and/or your loved ones) to make the decision to get you into the care you need when/if the time comes. It is a good thing for a child who is debating whether to get their parents, suffering from dementia perhaps, to have an easy choice to "do the right thing" for mom and/or dad. So this is one non-financial benefit to having an LTCI policy.

Eric E. Haas
stan1
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Re: Long term care insurance

Post by stan1 »

altruistguy wrote: One non-financial reason to have a LTCI policy is that it makes it easier for you (and/or your loved ones) to make the decision to get you into the care you need when/if the time comes. It is a good thing for a child who is debating whether to get their parents, suffering from dementia perhaps, to have an easy choice to "do the right thing" for mom and/or dad. So this is one non-financial benefit to having an LTCI policy.
Same for those of us who don't have children (or have children who are unwilling to assist with elder care). ASSUMING it pays out as promised (I know -- a big assumption) -- LTCI helps add peace of mind that we won't have to rely on the generosity of siblings, nephews/nieces, or friends for care.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
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GregLee
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Re: Long term care insurance

Post by GregLee »

ddunca1944 wrote:
tc101 wrote:One more reason not to buy long term care insurance
http://nymag.com/news/features/parent-h ... re-2012-5/
That link seems to be a reason FOR purchasing LTCi.
It's not that clear -- the author seems to be as confused as I and others are. Read the beginning, and he's saying he owes it to his children to get LTCi, but by the end, he may have talked himself out of it, and is hinting coyly about suicide. But I was interested to read the article, and it told me a little about how assisted care works (not good news).

I have no intention of buying insurance, myself, mainly because I have a deep distrust of insurance companies. It's not that I think they're evil, it's rather that for something like this, their and my interests are directly opposed. They want to maximize premiums and minimize payments, of course, and if the insurance sounds like a good deal for me, that's probably just because I haven't noticed all the catches, yet.
Greg, retired 8/10.
ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

GregLee wrote:
ddunca1944 wrote:
tc101 wrote:One more reason not to buy long term care insurance
http://nymag.com/news/features/parent-h ... re-2012-5/
That link seems to be a reason FOR purchasing LTCi.
It's not that clear -- the author seems to be as confused as I and others are. Read the beginning, and he's saying he owes it to his children to get LTCi, but by the end, he may have talked himself out of it, and is hinting coyly about suicide. But I was interested to read the article, and it told me a little about how assisted care works (not good news).

I have no intention of buying insurance, myself, mainly because I have a deep distrust of insurance companies. It's not that I think they're evil, it's rather that for something like this, their and my interests are directly opposed. They want to maximize premiums and minimize payments, of course, and if the insurance sounds like a good deal for me, that's probably just because I haven't noticed all the catches, yet.
So you don't have homeowner's ins? Auto ins? Healthcare ins?
dhodson
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Re: Long term care insurance

Post by dhodson »

I actually think his distrust isn't deep enough
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tc101
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Re: Long term care insurance

Post by tc101 »

That link seems to be a reason FOR purchasing LTCi.
The article is pretty long, but I think this is the main point:
"The traditional exits, of a sudden heart attack, of dying in one’s sleep, of unreasonably dropping dead in the street, of even a terminal illness, are now exotic ways of going. The longer you live the longer it will take to die. The better you have lived the worse you may die. The healthier you are—through careful diet, diligent exercise, and attentive medical scrutiny—the harder it is to die. Part of the advance in life expectancy is that we have technologically inhibited the ultimate event. We have fought natural causes to almost a draw. If you eliminate smokers, drinkers, other substance abusers, the obese, and the fatally ill, you are left with a rapidly growing demographic segment peculiarly resistant to death’s appointment—though far, far, far from healthy."

"Make no mistake, the purpose of long-term-care insurance is to help finance some of the greatest misery and suffering human beings have yet devised."
A lot of the rest of the article is describing that misery and suffering that old people go through before death.

My feeling is that unless something changes before I hit 80, I need to think about ending my own life before I lose the ability. I don't think this is morbid. It is what I have done for dogs and cats that I loved, to spare them a long drawn out painful death. I loved my father and I wish I could have helped him die, but I was afraid of going to jail.

No reason for me to invest in long term care insurance, because I don't want to go into a nursing home in the first place, because I don't want to lose control of the power to make my own decision about ending my life.
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ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

My feeling is that unless something changes before I hit 80, I need to think about ending my own life before I lose the ability. I don't think this is morbid. It is what I have done for dogs and cats that I loved, to spare them a long drawn out painful death. I loved my father and I wish I could have helped him die, but I was afraid of going to jail.
I've had similar conversations with my sister (because of a strong family history of Alzheimer's). The thing is, you may feel this way now, but the human will to survive is very, very strong. Add in senile dementia (which can creep up without one being aware) and you may well have neither the physical nor the mental capacity to end your life.

Or a stroke in the middle of the night and there you are.

I don't think that LTCi is necessarily the answer for everyone, but I do think that everyone needs to have a plan for their family- a course of action to take if one becomes unable to care for themselves in their later years. My mother never wanted to go to a nursing home, but she did not make any contingency plans either. After her diagnosis of Alzheimer's disease, my sister took her in and cared for her for 5 years until Mom's needs were more than one person could meet. So now, Mom is in a nursing home on the taxpayer's dime (Medicaid).

One of the benefits op an LTCi policy is that you can have covrage for assistance in your home - thus avoiding nursing home.
likegarden
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Re: Long term care insurance

Post by likegarden »

I am starting to review this again, just bought a book about elder law. My wife and I are around 70 and have LTC for 8 years. It seems that the total of premiums paid into LTC are much less than a potential loss of savings by having to spend down to Medicaid limits. But then there is the possibility of getting Trusts to place money in to prevent that Medicaid can get it. Then there is that question, if states will be able in the future to pay for nursing home care.
Grt2bOutdoors
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Re: Long term care insurance

Post by Grt2bOutdoors »

is there an appropriate age or ideal age when one should consider purchasing such a policy?
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ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

GRT2BOUTDOORS wrote:is there an appropriate age or ideal age when one should consider purchasing such a policy?
I was 62 - I do wish I had purchased it before age 60. My husband is 4 years younger and he got a better rate in spite of high blood pressure. In addition, I had to have a physical (by a dr chosen by JH). My husband, being under age 60, did not have to do so.

OTOH, I would not buy one if I was under the age of 50 or so.
Grt2bOutdoors
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Re: Long term care insurance

Post by Grt2bOutdoors »

ddunca1944 wrote:
GRT2BOUTDOORS wrote:is there an appropriate age or ideal age when one should consider purchasing such a policy?
I was 62 - I do wish I had purchased it before age 60. My husband is 4 years younger and he got a better rate in spite of high blood pressure. In addition, I had to have a physical (by a dr chosen by JH). My husband, being under age 60, did not have to do so.

OTOH, I would not buy one if I was under the age of 50 or so.
Thanks for that - I am under 50, my company is offering it through Prudential with 3 options - 1 yr, 2 year, 3 year, a COLA is optional.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

I would absolutely get the COLA - our plan has an inflation rider - 5%/yr compounded.

But I would not buy until my mid - late 50s.
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altruistguy
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Re: Long term care insurance

Post by altruistguy »

FYI, here's a good guide to LTCI:
http://www.ltcfeds.com/documents/files/ ... _Guide.pdf

Eric E. Haas
BruceCM
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Re: Long term care insurance

Post by BruceCM »

ddunca1944 wrote: So you don't have homeowner's ins? Auto ins? Healthcare ins?
You are confusing true insurance with a cost-sharing scheme. If you have dental insurance, do you hope you never have to use it?
More than one 'white paper' from the LTC insurance industry has made it clear that the majority of us will be spending time in high cost assisted living or nursing homes. This isn't true insurance...its a form of dental "insurance" where most of us will utilize it and share the cost with the insurer.

One of the glaring oversights of most posts on this topic is that at some future point, when you require it, the LTCI policy that you hold will begin writing checks to your assisted living or nursing home administrators, as if by magic. Do you know what it takes to trigger payments from a LTC insurer? Do you think that somehow the insurer will clearly recognize when you can't perform that second ADL and immediately start their payouts? Do you think your insurer knows how to work around the inability to perform an ADL?

A lesson I've learned being in this business for many years now, is that the one truism of personal finance that you can take to the bank, is that insurance companies, most of whom are publicly traded, will make decisions that are in they and their shareholders own best interest. If the insurer can wiggle out of making an insurance 'benefit' payment, they will do so. The determination of what constitutes performing an ADL is murky at best and has lots of wiggle room. If you don't understand this, you have a better than even chance that those LTCI premiums you are (or may be) paying are an exercise in pouring money down a rat hole.

And FWIW, Genworth, the largest seller of LTCI policies, just sharply truncated the 'benefits' of their LTCI policies, and who they will sell LTCI to.

http://www.investmentnews.com/article/2 ... /120709970

The handwriting is on the wall. You can pay heed or you can choose to ignore it. Its up to you.

BruceM
ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

The determination of what constitutes performing an ADL is murky at best and has lots of wiggle room.
ADL's are actually clearly defined (I checked our policies). When filing a claim, the patient is evaluated for their abilities to perform ADL's. In addition, our policies go into effect if/when one cannot be left alone because of diminished mental capacity - even if they are able to perform all the ADL's...There is a long thread on the ER (Early Retirement and Financial Insependence) board where one person posted about his experiences with John Hancock and his father's policy after the father had been diagnosed with Alzheimers. In his father's policy, the only trigger was the inability to perform 2 of the ADL's. Well, physically, the father could perform ALL of the ADL's, but could not be unsupervised due to his mental condition. So the poster had problems with his claim. I don't see that as JH "wiggling" out of a contract. Eventually, the poster did suceed in collecting after some months and another evalualttion. When I read that thread, I went and checked our policies - the trigger is the inability to perform 2 of the ADL's OR requiring supervision due to diminshed mental capacity.

At my last part time job, I worked for an elder care agency. We had a number of clients who had long term policies. As a courtesy to the clients, we billed the LTC companies, so I had a chance to see firsthand how they paid up. As long as the client's conditions (and our services) met the policies, there were no problems. (I'm not arguing that problems don't happen, only that in my observations and experience, the companies met their policy's commitment). I also discovered that nearly all of the eldercare agency's managers had taken out LTCi policies for themselves. That, in itself, spoke volumes to me.

I'm not naive. And our LTCi policies are designed to help defray the very high costs of extended long term care, not the typical less than two years.

Our dental insurance is great for preventative care, but nearly useless for helping to defray the costs of fillings, crowns or other expensive dental work. The only reason we even have dental insurance is that we pay no premium - the policies are a retirement benefit. I would not pay premiums for dental insurance because I prefer to insure only against costs that would be financially devastating to us (like 10 years stay in a NH).

I've said it before, but will say it again: I don't think that LTCi is suitable for everyone. There are a number of good reasons not to take out a policy (too young, can't afford premiums, have enough resources to self insure, have family that is able and willing) but I do feel that it was an appropriate decision for us. Everyone needs a contingency plan and I'd rather have a policy than move into my son's basement.
fmhealth
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Re: Long term care insurance

Post by fmhealth »

I purchased LTCi two years ago for my wife & I. I'm 66 she's 63. We have a "bare bones" policy through Genworth that pays along the lines of $105/day with an inflation rider. Total cost is approx. $1,200/year.

I haven't seen this mentioned but how about using a reverse mort. rather than this policy? We have a paid-off home valued at around $450,000.This represents about 17% of our n/w. So, if one of us were to need these services we could simply get this cash flow through the use of this mortgage. I realize there are a number of material drawbacks utilizing this strategy but the pros just might outweigh the cons.

Any thoughts would be very much appreciated.
yobria
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Re: Long term care insurance

Post by yobria »

Genworth's stock price - $35 in 2007, $.80 in 2009, is an example of the risks of paying money upfront to a for-profit company, and hoping for a distant payout. The employees getting the initial cashflow from a policy written today will mostly be a very different group that will have to pay up in the future.
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Taylor Larimore
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Reverse mortgages ?

Post by Taylor Larimore »

Fmhealth wrote:
I haven't seen this mentioned but how about using a reverse mort. rather than this policy?
Before purchasing a reverse mortgage, read this Reuters article which came out yesterday:

More red flags on reverse mortgages

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
fmhealth
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Re: Long term care insurance

Post by fmhealth »

Thank you Taylor. Article highlights some interesting & cogent points. Certainly adds another dimension to this strategy. Although, wouldn't taking out a R/M allow an individual to tap into the equity in their home, continue to live there & pay out a nursing home from the proceeds? Albeit an expensive option, but perhaps less than paying the ever-rising premiums for an LTC policy?

I believe I read that the avg. N/H stay is 18 months. So using todays' dollars, that would equal approx. $110,000. An amount easily covered by the proceeds of the R/M.

Just some additional thoughts to work through. I really have to immerse myself where the devil usually lies. In those pesky details. Thanks again.

Be Well,

fmhealth
ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

A R/M might work ( in spite of the expenses) in the case of a couple that needed to pay for N.H care for one of them. But one requirement for a R/M is that you live IN the home. Do both have to live in the home? Or just one? Or does it depend on the policy?

For the single senior (widow, widower), if s/he took out an R/M to pay for in home care, and then had to go to a NH, then what? In home care for a few hours a day is one thing, but in home care 24x7 costs more than N.H care. (A local agency charges $22/hr for in home care: That's $3696/week or $192,192/yr.)
Last edited by ddunca1944 on Sun Jul 08, 2012 9:08 am, edited 1 time in total.
ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

I believe I read that the avg. N/H stay is 18 months. So using todays' dollars, that would equal approx. $110,000. An amount easily covered by the proceeds of the R/M.
We could cover the cost of an average stay from our resources. Our LTCi policy is designed to help deal with the possibility of an extended stay (my mother has been in a NH 5 years now with no end in sight. At 87, she is physically healthy, but her mind is gone..).
our home is not worth $500,000, so we could not manage 5 years or more with a RM
yobria
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Re: Long term care insurance

Post by yobria »

fmhealth wrote:I believe I read that the avg. N/H stay is 18 months. So using todays' dollars, that would equal approx. $110,000. An amount easily covered by the proceeds of the R/M.
The median nursing home stay is more like 30 days, as I've noted on previous threads. The odds of you staying in a nursing home for 18 months, even if you wind up in one at all, are quite small.
ddunca1944
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Re: Long term care insurance

Post by ddunca1944 »

yobria wrote:
fmhealth wrote:I believe I read that the avg. N/H stay is 18 months. So using todays' dollars, that would equal approx. $110,000. An amount easily covered by the proceeds of the R/M.
The median nursing home stay is more like 30 days, as I've noted on previous threads. The odds of you staying in a nursing home for 18 months, even if you wind up in one at all, are quite small.

Actually, due to a strong family history of Alzheimer's disease, my own odds of staying in a NH 18 months or longer are greater than average. And the odds for someone over age 65 is 1 in 7. The odds of having a house fire are 1 in 1200. Yet most people have fire insurance.
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Re: Long term care insurance

Post by grabiner »

ddunca1944 wrote:Actually, due to a strong family history of Alzheimer's disease, my own odds of staying in a NH 18 months or longer are greater than average. And the odds for someone over age 65 is 1 in 7. The odds of having a house fire are 1 in 1200. Yet most people have fire insurance.
These are inconsistent statistics; the risk of staying in a nursing home is a lifetime risk, while the risk of a fire is an annual risk. If these numbers are correct, then the chance of having a house fire during your lifetime is 1 in 15. (And I'm not sure what the definition of "house fire" is; the National Fire Protection Association says that the lifetime risk of a house fire reported to the fire department is 1 in 4. Probably many of those fires do not cause insurable damage.)
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Re: Long term care insurance

Post by yobria »

ddunca1944 wrote:
yobria wrote:
fmhealth wrote:I believe I read that the avg. N/H stay is 18 months. So using todays' dollars, that would equal approx. $110,000. An amount easily covered by the proceeds of the R/M.
The median nursing home stay is more like 30 days, as I've noted on previous threads. The odds of you staying in a nursing home for 18 months, even if you wind up in one at all, are quite small.
Actually, due to a strong family history of Alzheimer's disease, my own odds of staying in a NH 18 months or longer are greater than average.
Ok, I wasn't referring to your personal health situation, just general averages.
ddunca1944 wrote:And the odds for someone over age 65 is 1 in 7.
According to the New York Times, the chance of needing long term care for more than five years of any type is 1 in 20. Either way, I can self insure for that long.
ddunca1944 wrote:The odds of having a house fire are 1 in 1200. Yet most people have fire insurance.
But that's apples and oranges. Many people who have fire insurance don't have a choice - they live in a condominium, have a mortgage, etc. And fire insurance doesn't come with the many drawbacks of LTCI, as people who've received 50-100% rate increases know. I don't have to worry about my fire insurance company being around at some distant point when I need to collect benefits long after I've paid in the premiums. It's "good insurance" vs "bad insurance".
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Re: Long term care insurance

Post by ddunca1944 »

I prefer to make financial decisions on pragmatism rather than notions of "good" vs "bad".
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Re: Long term care insurance

Post by Johm221122 »

ddunca1944 wrote:
tc101 wrote:One more reason not to buy long term care insurance

http://nymag.com/news/features/parent-h ... re-2012-5/

That link seems to be a reason FOR purchasing LTCi.

We purchased a policy in 2008 from John Hancock. I sincerely hope we never need to use it. One thing to keep in mind about Medicaid: not only do you have to be impoverished (the usual number I see is no more than $2000 in assets), but also your monthly income. Although it varies by state, the most common figure is an income limit of $2000/mo. A modest pension and SS could easily be $2000/mo or more and if you had no money to pay for long term care and your income was too high for Medicaid, you are screwed.
If you have over $2000 in income and your in hospital and your to sick to leave (can't take care of yourself) what do they do with you?There has to be somewhere, with people living longer and not saving,this will happen a lot in future (I think)
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Re: Long term care insurance

Post by ddunca1944 »

If you have over $2000 in income and your in hospital and your to sick to leave (can't take care of yourself) what do they do with you?There has to be somewhere, with people living longer and not saving,this will happen a lot in future (I think)
There have been cases where hospitals have dumped indigent patients. Put them in a taxi, drove them downtown and let them out. Really really sad.

http://www.mysanantonio.com/news/local_ ... 780290.php

http://www.naturalnews.com/023751_hospi ... eless.html

http://oig.hhs.gov/fraud/enforcement/cm ... umping.asp
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Re: Long term care insurance

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nisiprius wrote:By all means do your own numbers on the back of your own envelope. Here's what I get. If you don't want to buy LTCI, you need to have a separate fund that is earmarked for the possibility of long-term care. It has to be there when you need it, so you can't spend it yourself on anything but long-term care. If you are lucky and don't need long-term care, your heirs get it.

And because it has to be there when you need it, it has to be invested conservatively. There's not a chance in the world that you can invest it conservatively and have it grow at the 6-7% annual rate of long-term-care costs, so you need to allow for that.The necessary size of that fund, it seems to me, is in the ballpark of $200 a day times ten years, and maybe add 50% more to allow long-term care cost inflation. In round numbers, that's $1 million per person. If you can set $2 million aside and not touch it and not miss it much, then you don't need LTCI. As I say, do your own math, but you're going to get a number somewhere in the general ballpark of $2 million for a couple, while the grand total for LTCI premiums is going to be somewhere in the general ballpark of $100,000 for a couple.
Thanks for the motivation Nisi....as you suggested, I did a back of the envelope estimate. I started with your $1,000,000 per person. I decided to roll the dice at 5yrs instead of 10 yrs. (...If I were to buy LTCi, I would most likely buy 5 yrs of coverage). This cut it in half. ($500,000) I have checked NH costs in my area and they are about 80% of yours, therefore ($400,000). In addition, I feel that if I went to a NH, my spouses living expenses would be reduced by $25 to$30k per year allowing us to reduce our NH costs by that amount. For 5 years, that would be $150,000.

After all this, my net NH costs would be $250,000 per person. ($1,000,000 divided by 2; $500,000 times 80%; $400,000 minus $150,000)

I know this is all "inexact", but it gives me a target.
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Re: Long term care insurance

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Johm221122 wrote:If you have over $2000 in income and your in hospital and your to sick to leave (can't take care of yourself) what do they do with you?There has to be somewhere, with people living longer and not saving,this will happen a lot in future (I think)
States handle Medicaid differently for nursing-home care. Normally, you are eligible for Medicaid if your income and assets are below the state threshold for Medicaid, and then you get care under Medicaid can keep all your income as long as you spend it to avoid going over the asset limits. (In many states, there is a "medically needy" rule which says that you are eligible for Medicaid if your income minus your medical costs is low enough; you are normally required to spend the difference between your income and a threshold.)

The rule for institutional care is different; the state takes all of your income except a small allowance for personal needs (usually about $50 per month). States have different mechanisms for determining eligibility, but this old report seems to indicate that all states have some procedure for Medicaid eligibility for everyone who cannot afford nursing care.
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Re: Long term care insurance

Post by ddb »

Taylor Larimore wrote:
vsparz wrote:I am wondering about peoples thoughts on long term care insurance?
I have concerns regarding the survivability of the underlying company, rate increases that occur by class, the very restricted definitiion of medical need based on "activities of daily living?

Does anybody plan on funding for this possible event with their own savings?
Hi vsparz:

If you have enough savings to replace the insurance, you don't need the insurance in the first place.
Given the above, would you advise a person with a paid off home to not carry homeowner''s insurance, provided they have enough money to replace the home if something happens?

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Re: Long term care insurance

Post by grabiner »

ddb wrote:
Taylor Larimore wrote:Hi vsparz:

If you have enough savings to replace the insurance, you don't need the insurance in the first place.
Given the above, would you advise a person with a paid off home to not carry homeowner''s insurance, provided they have enough money to replace the home if something happens?
For homeowner's insurance, you need insurance unless you have a lot to spare beyond just the value of the home. If your uninsured home burns down and you rebuild, you'll still be alive with much less money, so your standard of living will decline.

For long-term care insurance, you'll have the same standard of living (none, since you will be dead) after paying your final years of long-term care costs, whether you pay out of pocket or your insurance pays. However, to have enough savings to replace the insurance, you need to know that you will be able to pay for the care in the future at the time you buy the insurance. That is, you need enough savings to live for years before you need long-term care, and still pay for several years of care. One way to have this would be to annuitize your retirement income; if you can afford an annuity which is large enough to cover long-term care costs by itself, then you don't need insurance.
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Re: Long term care insurance

Post by yobria »

ddb wrote:
Taylor Larimore wrote:
vsparz wrote:I am wondering about peoples thoughts on long term care insurance?
I have concerns regarding the survivability of the underlying company, rate increases that occur by class, the very restricted definitiion of medical need based on "activities of daily living?

Does anybody plan on funding for this possible event with their own savings?
Hi vsparz:

If you have enough savings to replace the insurance, you don't need the insurance in the first place.
Given the above, would you advise a person with a paid off home to not carry homeowner''s insurance, provided they have enough money to replace the home if something happens?

- DDB
I'd let the person know it's a matter of personal perference, but they do have the option not to insure, if they can cover the lost home without significant financial injury. Mindlessly paying an insurance premium every month isn't a good idea.
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Re: Long term care insurance

Post by Johm221122 »

grabiner wrote:
Johm221122 wrote:If you have over $2000 in income and your in hospital and your to sick to leave (can't take care of yourself) what do they do with you?There has to be somewhere, with people living longer and not saving,this will happen a lot in future (I think)
States handle Medicaid differently for nursing-home care. Normally, you are eligible for Medicaid if your income and assets are below the state threshold for Medicaid, and then you get care under Medicaid can keep all your income as long as you spend it to avoid going over the asset limits. (In many states, there is a "medically needy" rule which says that you are eligible for Medicaid if your income minus your medical costs is low enough; you are normally required to spend the difference between your income and a threshold.)

The rule for institutional care is different; the state takes all of your income except a small allowance for personal needs (usually about $50 per month). States have different mechanisms for determining eligibility, but this old report seems to indicate that all states have some procedure for Medicaid eligibility for everyone who cannot afford nursing care.
If the common thought of your assets being under 200/300k or over enough to self insure for long term care insurance is the general advice,how will inflation affect this. My idea is people in 30/40's right now will probably not be able to afford long term care insurance with out portfolio of over million dollars.I just don't see long term care insurance for most people in the future (bogleheads are a little different on average)
Edit:Do you think my assumption of 20/30 year time frame will make a million dollar portfolio needed for long term care insurance to be considered?
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Re: Long term care insurance

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I wonder if those who are adamantly against LTCI have had the experience of paying for or witnessing your mother or father paying for nursing home care for their spouse? Or, helped support a mother/father (the surviving spouse) because they had to impoverish themselves to get nursing home care for their husband/wife because they physically could no longer take care them? Or, if you've ever spent a good amount of time in a Medicaid nursing home?

I've done all this and anyone who has most likely has LTCI, if they can afford it.

If you don't have a spouse, don't care to leave an inheritance and feel a Medicaid nursing home is as good as any, you don't need LTCI. Of course, without a spouse you are free to spend all your assets on a high quality nursing home - then be transferred to a Medicaid facility if you out last your money.

If you have a spouse and don't have millions of dollars and one of you ends up in a nursing home the other will suffer the unknown consequences of nursing home care - which can be a very long time. And, very expensive even in low cost states. Or, you children may be saddled with some of the cost burden.

My husband and I have LTCI from NY Life. We got it in our 50s and pay $180/mo for both policies with annual 3% simple interest rate increase. The most important part of this insurance is that it provides in home care. Medicaid does not. We've had this insurance for about 14 years and there has been no premium increase and the insurance company is still around. I've told my children if we get the point we cannot afford this insurance - they need to pay for it to protect themselves.

Those who want LTCI should not wait too long. If you develop an illness you cannot get it. It's cheaper when you get in your 50s. Buy something you can afford to keep. Even if you can't afford the full cost of nursing home care, at least you can buy a portion of the cost.
Last edited by SnapShots on Tue Jul 10, 2012 10:19 am, edited 1 time in total.
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Re: Long term care insurance

Post by yobria »

SnapShots wrote:If you don't have a spouse, don't care to leave an inheritance and feel a Medicaid nursing home is as good as any, you don't need LTCI. Of course, without a spouse you are free to spend all your assets on a high quality nursing home - then be transferred to a Medicaid facility if you out last your money.
If you've signed a contract (in this case a marriage certificate) that puts you in some kind of grave financial risk, it might be wise to break the contract.
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Re: Long term care insurance

Post by Johm221122 »

SnapShots wrote:I wonder if those who are adamantly against LTCI have had the experience of paying for or witnessing your mother or father paying for nursing home care for their spouse? Or, helped support a mother/father (the surviving spouse) because they had to impoverish themselves to get nursing home care for their husband/wife because they physically could no longer take care them? Or, if you've ever spend a good amount of time in a Medicaid nursing home?

I've done all this and anyone who has most likely has LTCI, if they can afford it.

If you don't have a spouse, don't care to leave an inheritance and feel a Medicaid nursing home is as good as any, you don't need LTCI. Of course, without a spouse you are free to spend all your assets on a high quality nursing home - then be transferred to a Medicaid facility if you out last your money.

If you have a spouse and don't have millions of dollars and one of you ends up in a nursing home the other will suffer the unknown consequences of nursing home care - which can be a very long time. And, very expensive even in low cost states. Or, you children may be saddled with some of the cost burden.

My husband and I have LTCI from NY Life. We got it in our 50s and pay $180/mo for both policies with annual 3% simple interest rate increase. The most important part of this insurance is that it provides in home care. Medicaid does not. We've had this insurance for about 14 years and there has been no premium increase and the insurance company is still around.

Those who want LTCI should not wait too long. If you develop an illness you cannot get it. It's cheaper when you get in your 50s. Buy something you can afford to keep. Even if you can't afford the full cost of nursing home care, at least you can buy a portion of the cost.
Could you please tell us basic insurance amounts per day,waiting period,how many years coverage?
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Re: Long term care insurance

Post by dhodson »

ive done those things you speak of and NO i will still not be purchasing LTCi (although your ideas on medicaid nursing homes being horrible are inaccurate. all nursing homes are okay at best and most people purchasing this should be hoping it covers costs to prevent them from being in any nursing home). Its important to plan for the need for LTC. It isnt a requirement to purchase LTCi. Some will chose to purchase and some will not. Currently there are plenty who have purchased it and now have found out that they can no longer afford it.
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Re: Long term care insurance

Post by SnapShots »

yobria wrote:
SnapShots wrote:If you don't have a spouse, don't care to leave an inheritance and feel a Medicaid nursing home is as good as any, you don't need LTCI. Of course, without a spouse you are free to spend all your assets on a high quality nursing home - then be transferred to a Medicaid facility if you out last your money.
If you've signed a contract (in this case a marriage certificate) that puts you in some kind of grave financial risk, it might be wise to break the contract.
I made inquiries, trying to protect my mother and the court would not approve a divorce - essentially she would be abandoning him. I've read where it happens but don't count on it. Besides, Medicaid has a 5 year look back and half of everything would be split among the spouses incase of divorce - in my state. I doubt Medicaid would look on this favorably.
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Re: Long term care insurance

Post by SnapShots »

Johm221122 wrote: Could you please tell us basic insurance amounts per day,waiting period,how many years coverage?
90 day waiting period. Policy start amount was $3,000/mo. Today, it is approximately $4,260/mo. Coverage is unlimited.'

$3,000/mo was the going rate for non-Medicaid nursing homes at the time. The cost today is around $5,000/mo.

If I bought it today, I might limit the coverage to 5 years. And, consider buying it for one spouse - the first to go gets the policy. If the other needed nursing home care then they would have to spend personal assets.
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Re: Long term care insurance

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In Oklahoma a spouse can keep $25,000. Plus 1,500 for burial costs. And, $2000/mo to live on. Any invested interest or dividends went to Medicaid. Every year you have to essentially reapply by submitting financial records. Anything over what is allowed has to be given to Medicaid.
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Re: Long term care insurance

Post by Johm221122 »

SnapShots wrote:
Johm221122 wrote: Could you please tell us basic insurance amounts per day,waiting period,how many years coverage?
90 day waiting period. Policy start amount was $3,000/mo. Today, it is approximately $4,260/mo. Coverage is unlimited.'

$3,000/mo was the going rate for non-Medicaid nursing homes at the time. The cost today is around $5,000/mo.

If I bought it today, I might limit the coverage to 5 years. And, consider buying it for one spouse - the first to go gets the policy. If the other needed nursing home care then they would have to spend personal assets.
Thank you,you seem to have good deal.I guess in10-15 years(43 now)I will have to price.LTC insurance seems like they will eventually raise rates and leave people short
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