Long Term Care Plans

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What are your plans to handle potential long term care costs?

Self-Insure
46
59%
Long Term Care Insurance
32
41%
 
Total votes: 78

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orlandoman
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Long Term Care Plans

Post by orlandoman »

There are basically 3 ways to cover any potential long term care costs:
1. Self-Insure - use your or your family's assets
2. Long Term Care Insurance
3. Medicaid - most people have to spend their assets down to about $2,000 to qualify, with exceptions for a vehicle & residence in most states

What are your plans?
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steve roy
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Post by steve roy »

Self insure.

To pay for a "Long-term care insurance policy" for twenty years, only to see the rates shoot up or the coverage plunge (as has happened to policies recently) makes purchasing l.t. care insurance less than an ideal option, at least to me.
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Bob B
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Post by Bob B »

Not to be cynical, but you left out Option 4 - Suicide.

http://www.reuters.com/article/idUSTRE4AJ7W320081120

It's not always about the money.
Regards, | Bob | Wiki
ResNullius
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Post by ResNullius »

Stay away from them. That's just my opinion, but read Consumer Reports before you even think about buying a policy.
Sidney
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Post by Sidney »

Bob B wrote:Not to be cynical, but you left out Option 4 - Suicide.

http://www.reuters.com/article/idUSTRE4AJ7W320081120

It's not always about the money.
One problem is that just when you need to implement you may not be lucid or ambulatory enough to pull it off.
I always wanted to be a procrastinator.
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nisiprius
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Post by nisiprius »

For those who say they are self-insuring... would you spell out exactly how?

When I did the back-of-the-envelope calculation, the answer I came up with was that in order to feel that I had an adequate reserve for self-insuring, I would need the equivalent of $200 a day times 10-15 years = about $750,000 to $1 million in current dollars. It's not self-insurance if it's not there when you need it, so it really does need to be set aside and not used for anything else but the kids' inheritance. And it needs to be there when you need it so it has to be invested conservatively. And long-term-care is currently growing about 3% faster than inflation and conservative investments probably don't quite grow that fast.

So, are those who say they are self-insuring really setting $1 million aside in as a dedicated, earmarked slice of their portfolio? (Or, what amounts to the same thing, have a portfolio that is so much larger than $1 million that you are confident it can take a $1 million hit without disrupting your financial life?)

If not, what are you doing and why are you confident that it will serve your needs?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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paulob
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Post by paulob »

I didn't vote as I have not decided on a plan. My mother entered the phase of life last year where LTC is needed, doesn't have LTC insurance, and isn't adequately self-insured. The experience is causing me to consider purchasing a policy in the future.

Being many years from retirement, however, that is my focus. The LTC decision "line" will come later.
Last edited by paulob on Sat Jan 08, 2011 5:07 am, edited 1 time in total.
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Oneanddone
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Post by Oneanddone »

I think that many people are confusing "self-insure" with "not-insure".

Not insuring is often the smart move. Once can't self-insure until they actually have the assets to pay for care out of pocket.
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nisiprius
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Post by nisiprius »

Oneanddone wrote:I think that many people are confusing "self-insure" with "not-insure".
Perhaps.
Once can't self-insure until they actually have the assets to pay for care out of pocket.
Agreed.
Not insuring is often the smart move.
I doubt it. Or at least I'd like to amplify what you mean.

I agree that it is not at all clear that buying long-term-care insurance before reaching 55 or so is a smart move; waiting might well be smarter. But sooner or later you have to choose something.

I would argue that if you are not seriously planning to set aside an adequate earmarked reserve for long-term care, and if you cannot credibly expect to reach a total portfolio well upwards of $3 million, then your plan can only be "qualify for Medicaid." And thank goodness there is Medicaid. Depending on what part of the country you are in, it is not necessarily a terrible option.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
ilskeptic
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Post by ilskeptic »

My answer: yes and no. At age 62, I recently bought an LTC policy that would cover me for four years and (under relatively recent federal law) would also protect an equivalent amount of assets for my wife and kids if I need nursing care for longer than that. The policy certainly isn't cheap, but it should be affordable even after I retire, so I think it's a reasonable hedge against the possibility I might suffer a disastrous, but non-fatal disability.

Sure, I suppose the company could jack up prices or even go under, but I've checked them out and I'm reasonably confident I've made a good bet. I think that's all I can ask.

OTOH, because of various medical conditions, my wife is basically uninsurable for LTC and therefore self-insured by default. I could care for her as long as my own health remains good. After that, she has a pension that would pay, in our area, two-thirds or more of the typical nursing home bill. (Her pension -- yes, it's a teacher pension -- also has a built-in inflation factor, which obviously helps.)

Not a perfect answer for either of us, I suppose, but the combination helps us both sleep a lot easier.

My point is that, for most of us, the answer to buy/not buy LTC isn't cut and dried. You need to consider your own circumstances and make a thoughtful decision. Blowing off the whole idea on the grounds that nobody knows what the future will bring seems short-sighted to me. After all, if people knew the future, there wouldn't be much of a market for any kind of insurance.
Oneanddone
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Post by Oneanddone »

amplification of "not insuring is often the smart move":

I'm simply saying that it is often the smart move because cash flow is an issue. If one can't save for retirement, as an example, because their money is being used to fund a LTCi policy, not insuring is a smart move.
CAP
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Post by CAP »

The option that I chose is self-insure. So far, none of my relatives have ever needed the insurance as they had good genes & lived at home until the end with the exception of one who used her own money for assisted living.

Since prices for all insurances are going up, I really can't justify the cost for myself. I can't see spending the money for xxxx number of years & then having to drop the insurance because of cost, the company going out of business, having problems with claims etc. when I would need it most.

I probably will not leave behind a legacy & really have no need to do so.
IowaFarmBoy
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Post by IowaFarmBoy »

Another thing to consider about "self-insuring" is to realize that you might need it at age 60. When I was looking into this, this was one of the things that swayed me to buying. I felt that if we didn't need it till age 85, we probably could self-insure. If the need was there at age 60, there was a big problem that could basically mess up all our plans.

This was one of the hardest financial decisions I've tried to sort out because of all the reasons everyone has mentioned. We ultimately bought a joint plan that covers 8 years between my spouse and I. Seemed like the sweet spot between cost and coverage for us.
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plannerman
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Post by plannerman »

I answered self-insure, but that's not the complete answer.

My wife and I are signed up for a "high-end" continuing care, retirement community. This is one of those places where you must be able to live independently when you enter, but has an assisted living wing, skilled nursing section and an Alzheimer's unit. This is where we plan to go next anyway when we are too old to play golf and don't want to take care of a big house.

One of the benefits is, once you are in, you can stay there until you die, even if you run out of money. In essence, the community is ensuring your long-term care not an insurance company.

There is, of course, the possibility you could become permanently disabled before you enter, so it is not an answer for everyone. But I view the risk of becoming permanently disabled and then still living for a long time after that remote.

What I would consider buying, if it existed, is catastrophic long-term care insurance--long-term care insurance that doesn't kick in for several years or until you reach some out-of-pocket maximum. We have sufficient income and assets to pay for long-term care for a reasonable number of years, but I would be willing to insure against that very remote possibility we might need long-term care for say10-20 years.

I haven’t looked into long-term care insurance for a few years, but the last time I did, most of the affordable policies had a maximum amount of time they would pay for long-term care of around 6-years. This is just the opposite of what I want. I want insurance that doesn’t kick-in for 6-years or so.

plannerman
SamB
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Post by SamB »

plannerman wrote: I want insurance that doesn’t kick-in for 6-years or so.

plannerman
It sounds like you want an "elimination period" of 6-years. It is pretty standard to offer a policy with an elimination period of 365 days. I do not see why you could not find a company that would be glad to offer you a longer period. In fact, what you are suggesting is a very sensible approach. The more assets you have the longer the elimination period you should be willing tolerate, and the lower the premiums you will have to pay.

Sam
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orlandoman
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Post by orlandoman »

After my diligent evaluation, I determined that I was primarily interested in more of a catastrophic coverage. The most I could find were 180 & 365 day elimination periods & that does vary by state.

I can afford a large up front single pay policy & the policy option that is the most appealing to me is one from a major company that offers a 100% return of the single premium at anytime, minus any claims that have been paid. So, my cost of the policy is the lost opportunity cost of the single premium payment, i.e. what I might earn in a CD or market appreciation minus tax on that amount. Also, this gives me the option to re-evaluate if new policys come out or interest rates go much higher.
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baw703916
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Post by baw703916 »

nisiprius wrote: I would argue that if you are not seriously planning to set aside an adequate earmarked reserve for long-term care, and if you cannot credibly expect to reach a total portfolio well upwards of $3 million...
Guess what my financial goal is. Unfortunately, I'm not able to insure medically for LTC, and fairly likely to need it. So either I get to the Magic Number, or probably end up on Medicaid.
Most of my posts assume no behavioral errors.
BruDude
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Post by BruDude »

orlandoman wrote:I can afford a large up front single pay policy & the policy option that is the most appealing to me is one from a major company that offers a 100% return of the single premium at anytime, minus any claims that have been paid. So, my cost of the policy is the lost opportunity cost of the single premium payment, i.e. what I might earn in a CD or market appreciation minus tax on that amount. Also, this gives me the option to re-evaluate if new policys come out or interest rates go much higher.
Return of premium is a sucker's bet. The older you get, the higher the cost for a new LTC policy, so surrendering your old one would probably be a bad idea. As time goes on, LTC policies will get watered down to make them more affordable, just as health insurance has now, so what you buy might not even be available again in 5 or 10 years. In all likelihood, your health will be worse as you get older, making it even more expensive or not possible to get other coverage. The only time an ROP would help is if we went to a single payer LTC system, which isn't going to happen anytime soon. Just my 2 cents.
LittleOlMe
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Post by LittleOlMe »

Now that 40 states have "LTC Partnership programs" you do not have to buy an "unlimited" long-term care insurance policy. You only need to buy an amount of long-term care insurance equal to the amount of assets you want to protect for yourself, your spouse or partner, and/or your heirs.
The Long-Term Care Partnership programs provide dollar-for-dollar asset protection. Each dollar that your partnership policy pays out in benefits entitles you to keep a dollar of your assets if you ever need to apply for Medicaid services.

Four states have successfully run LTC Partnership programs for years, namely, California, Connecticut, Indiana and New York. 36 other states have implemented similar programs since the passage of the Deficit Reduction Act in 2005.

Here’s a link to a more detailed explanation:

http://bit.ly/How-Partnership-Policies-Protect-Assets
LittleOlMe
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Post by LittleOlMe »

steve roy wrote:Self insure.

To pay for a "Long-term care insurance policy" for twenty years, only to see the rates shoot up or the coverage plunge (as has happened to policies recently) makes purchasing l.t. care insurance less than an ideal option, at least to me.
Most owners of long-term care insurance have never had any increase on their premiums. Most of those who have had premium increases it has been less than a 2% per year increase. There are two types of long-term care policies that can never have a rate increase. Here's an explanation of them:

http://bit.ly/Level-Premium-LTC-Insurance
yobria
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Post by yobria »

nisiprius wrote:For those who say they are self-insuring... would you spell out exactly how?
As I posted on a recent thread, there's about a 2% chance someone's going to need LTCI benefits for more than five years (much less if you're male).

I can self insure for five years. The negatives of LTCI are so great that I'll happily take the 1-2% risk of ending up on Medicaid.

Nick
yobria
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Post by yobria »

CAP wrote:I probably will not leave behind a legacy & really have no need to do so.
Exactly. With LTCI, you'll probably leaving a legacy - to the insurance company...

Nick
LittleOlMe
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Post by LittleOlMe »

yobria wrote:
CAP wrote:I probably will not leave behind a legacy & really have no need to do so.
Exactly. With LTCI, you'll probably leaving a legacy - to the insurance company...

Nick

Most people who purchase long-term care insurance are not concerned about leaving assets to their hers. Most are concerned about maintaining their lifestyle if their spouse/partner needs long-term care.
dcb
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Post by dcb »

SamB wrote:
plannerman wrote: I want insurance that doesn’t kick-in for 6-years or so.

plannerman
It sounds like you want an "elimination period" of 6-years. It is pretty standard to offer a policy with an elimination period of 365 days. I do not see why you could not find a company that would be glad to offer you a longer period. In fact, what you are suggesting is a very sensible approach. The more assets you have the longer the elimination period you should be willing tolerate, and the lower the premiums you will have to pay.

Sam
Just what I would be interested in. Has anyone had success finding a policy with a 3+ year elimination period? Since the assumed risk to the insurance company would be extremely low, I would think the premiums would also be much more affordable.

dcb
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orlandoman
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Post by orlandoman »

If you want to see the statistics of % of need & type of care needed, for how long, see:

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

See the 2 charts on page 342, this is 16 pages from a larger report.
LittleOlMe
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Post by LittleOlMe »

yobria wrote:
nisiprius wrote:For those who say they are self-insuring... would you spell out exactly how?
As I posted on a recent thread, there's about a 2% chance someone's going to need LTCI benefits for more than five years (much less if you're male).

I can self insure for five years. The negatives of LTCI are so great that I'll happily take the 1-2% risk of ending up on Medicaid.

Nick


a) There are currently over ten million people in this country needing long-term care (most of them receiving that care at home.)

b) 20% of the people who need long-term care need it for over 5 years.

c) There is no objective basis for that 1% to 2% figure.
yobria
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Post by yobria »

LittleOlMe wrote:
a) There are currently over ten million people in this country needing long-term care (most of them receiving that care at home.)

b) 20% of the people who need long-term care need it for over 5 years.

c) There is no objective basis for that 1% to 2% figure.
http://www.nytimes.com/2010/11/05/busin ... 5CARE.html
LittleOlMe
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Post by LittleOlMe »

yobria wrote:
LittleOlMe wrote:
a) There are currently over ten million people in this country needing long-term care (most of them receiving that care at home.)

b) 20% of the people who need long-term care need it for over 5 years.

c) There is no objective basis for that 1% to 2% figure.
http://www.nytimes.com/2010/11/05/busin ... 5CARE.html


That article disproves your figures.
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steve roy
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Post by steve roy »

yobria wrote:
nisiprius wrote:For those who say they are self-insuring... would you spell out exactly how?
As I posted on a recent thread, there's about a 2% chance someone's going to need LTCI benefits for more than five years (much less if you're male).

I can self insure for five years. The negatives of LTCI are so great that I'll happily take the 1-2% risk of ending up on Medicaid.
With those odds, and since I'm in my sixties already, I've opted to accumulate and roll the dice.

In some ways, this is a lot like investing and asset allocation. You make your best assumptions, and move forward. I've made the determination that since I ...

1) Neither smoke nor drink, 2) have long-lived family genes, 3) exercise seven days a week (and have for forty-eight years), 3) have enough money to pay for five-plus years of lying in a bed with a drool cup

... that I will play the odds. And I fully understand that God laughs at those who make long-term plans.
yobria
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Post by yobria »

steve roy wrote:
yobria wrote:
nisiprius wrote:For those who say they are self-insuring... would you spell out exactly how?
As I posted on a recent thread, there's about a 2% chance someone's going to need LTCI benefits for more than five years (much less if you're male).

I can self insure for five years. The negatives of LTCI are so great that I'll happily take the 1-2% risk of ending up on Medicaid.
With those odds, and since I'm in my sixties already, I've opted to accumulate and roll the dice.
Alas, you'll never know the joys of filing a LTCI claim....

http://www.nytimes.com/2007/03/26/business/26care.html
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paulob
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Post by paulob »

steve roy wrote:.

In some ways, this is a lot like investing and asset allocation. You make your best assumptions, and move forward. I've made the determination that since I ...

1) Neither smoke nor drink, 2) have long-lived family genes, 3) exercise seven days a week (and have for forty-eight years), 3) have enough money to pay for five-plus years of lying in a bed with a drool cup
I would think that long-lived family genes would argue for LTC, not against it.
Paul
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mickeyd
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Post by mickeyd »

Many LTC policies are poorly structured and the insurance companies have limited claims experience. The result is a product that is either currently over priced, under priced, or poorly priced. Self insurance has worked well so far and is what I have always opted for.
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LittleOlMe
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Post by LittleOlMe »

yobria wrote:
steve roy wrote:
yobria wrote:
nisiprius wrote:For those who say they are self-insuring... would you spell out exactly how?
As I posted on a recent thread, there's about a 2% chance someone's going to need LTCI benefits for more than five years (much less if you're male).

I can self insure for five years. The negatives of LTCI are so great that I'll happily take the 1-2% risk of ending up on Medicaid.
With those odds, and since I'm in my sixties already, I've opted to accumulate and roll the dice.
Alas, you'll never know the joys of filing a LTCI claim....

http://www.nytimes.com/2007/03/26/business/26care.html


A recent federal study concluded that there is no data supporting the claims made in this article.
LittleOlMe
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Post by LittleOlMe »

mickeyd wrote:Many LTC policies are poorly structured and the insurance companies have limited claims experience. The result is a product that is either currently over priced, under priced, or poorly priced. Self insurance has worked well so far and is what I have always opted for.


How many of you who have chosen to "self-insure" your home? Do you think that the odds of a catastrophic loss of your home are substantially greater than the odds of needing 5+ years of long-term care?

The risk of needing 5+ years of long-term care are significantly greater than the risk of a catastrophic loss of your home.

But, most people cannot imagine become disabled. It is a lot easier to imagine your home burning down.

Hence, it is not logic that causes you to insure the lesser risk and not insure the greater risk-----------what is it then?
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baw703916
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Post by baw703916 »

LittleOlMe wrote: How many of you who have chosen to "self-insure" your home? Do you think that the odds of a catastrophic loss of your home are substantially greater than the odds of needing 5+ years of long-term care?

The risk of needing 5+ years of long-term care are significantly greater than the risk of a catastrophic loss of your home.

But, most people cannot imagine become disabled. It is a lot easier to imagine your home burning down.

Hence, it is not logic that causes you to insure the lesser risk and not insure the greater risk-----------what is it then?
Maybe it's that people will sell me insurance on my home, but not LTCi?

Guess it's my fault for waiting too long (say, age 20) to buy it. Not that it even existed then.
Most of my posts assume no behavioral errors.
CAP
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Post by CAP »

LittleOlMe wrote:
mickeyd wrote:Many LTC policies are poorly structured and the insurance companies have limited claims experience. The result is a product that is either currently over priced, under priced, or poorly priced. Self insurance has worked well so far and is what I have always opted for.


How many of you who have chosen to "self-insure" your home? Do you think that the odds of a catastrophic loss of your home are substantially greater than the odds of needing 5+ years of long-term care?

The risk of needing 5+ years of long-term care are significantly greater than the risk of a catastrophic loss of your home.

But, most people cannot imagine become disabled. It is a lot easier to imagine your home burning down.

Hence, it is not logic that causes you to insure the lesser risk and not insure the greater risk-----------what is it then?


With the tanked real estate market in many areas, many people probably could "self insure" their home now. Hopefully life will last until the market does improve.

I I guess it comes down to finances & how much risk one is willing to take as to whether to purchase LTC insurance. I suppose I am a "risk taker" in the LTC area.
yobria
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Post by yobria »

CAP wrote:With the tanked real estate market in many areas, many people probably could "self insure" their home now.
The reason most people have this type of insurance is that it's required by their lender.

It's also a far more established, legitimate type of insurance.

Nick
pkh01l
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Post by pkh01l »

I guess I plan on doing a combo of two options. I will self-insure until I run out of money, then use Medicaid. How long I can self insure will depend on a lot of things between now and then.
bluemarlin08
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Post by bluemarlin08 »

Going to be a big demand for medicaid beds in the future. Many of the better NH aren't taking medicaid patients.
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mickeyd
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Post by mickeyd »

LittleOlMe wrote:
mickeyd wrote:Many LTC policies are poorly structured and the insurance companies have limited claims experience. The result is a product that is either currently over priced, under priced, or poorly priced. Self insurance has worked well so far and is what I have always opted for.


How many of you who have chosen to "self-insure" your home? Do you think that the odds of a catastrophic loss of your home are substantially greater than the odds of needing 5+ years of long-term care?

The risk of needing 5+ years of long-term care are significantly greater than the risk of a catastrophic loss of your home.

But, most people cannot imagine become disabled. It is a lot easier to imagine your home burning down.

Hence, it is not logic that causes you to insure the lesser risk and not insure the greater risk-----------what is it then?
:D This response looks to be similar to that wording in several LTC marketing pieces that I have seen in the past. Vague "facts", fear of the unknown, compare/contrast of very different items. Still does not motivate me to "sign on the line which is dotted."
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BruceM
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Post by BruceM »

LittleOlMe wrote:
mickeyd wrote:Many LTC policies are poorly structured and the insurance companies have limited claims experience. The result is a product that is either currently over priced, under priced, or poorly priced. Self insurance has worked well so far and is what I have always opted for.


How many of you who have chosen to "self-insure" your home? Do you think that the odds of a catastrophic loss of your home are substantially greater than the odds of needing 5+ years of long-term care?

The risk of needing 5+ years of long-term care are significantly greater than the risk of a catastrophic loss of your home.

But, most people cannot imagine become disabled. It is a lot easier to imagine your home burning down.

Hence, it is not logic that causes you to insure the lesser risk and not insure the greater risk-----------what is it then?
This is really comparing apples to hamburger.

Property and casualty insurance goes year to year. If the insurer gets into financial trouble or develops a bad reputation for paying on legitimate claims, I can discontinue the policy at the end of the coverage period and go somewhere else. Can't do that with LTCi when I'm 80.

You do not pay a property insurer (for most consumers, this would be home and auto) premiums today for highly probable claims in 25 years. The homeowner's insurance to LTCi analogy is I buy a homeowner's polciy with the understanding that eventually the house will burn down.

The insurance industry just loves to publish 'white papers' on 'research' they have done on the need for LTC, the results of which...SURPRISE...shows that I'm going to spend my last months or years of life in some institution costing a bazillion dollars a day and bankrupt my estate and put my family in debtors prison and all other manner of anguish. And the only way to prevent this is to...SURPRISE...buy their insurance. Well, if I do run a high risk of spending months/years in some expensive institution, that means that my probability of a claim is relatively high...which means LTCI is much more like dental insurance....odds are I'm going to use it. This is completely unlike consumer P&C insurance, which many consumers will carry all their lives and make either no claims or few claims, with very few ever making catestrophic claims.

BruceM
LittleOlMe
Posts: 151
Joined: Sun Dec 27, 2009 7:21 pm

Post by LittleOlMe »

mickeyd wrote:Many LTC policies are poorly structured and the insurance companies have limited claims experience.

How much claims experience do you think is needed before the product becomes "legitimate"?
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