A caution to those contemplating LTCI

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
john94549
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Re: A caution to those contemplating LTCI

Post by john94549 »

Browser, don't get me started on trusts. The main problem with "springing" powers of attorney: they never "spring". In my Mom's case, the springing power of attorney in the trust requires two physicians (one of whom designated as a personal physician) to certify her incompetence. Well, aside from the fact that none of the doctors she went to admitted to being a "personal physician", they all candidly admitted they would never certify her. Period.
letsgobobby
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Re: A caution to those contemplating LTCI

Post by letsgobobby »

manwithnoname wrote:
letsgobobby wrote:
manwithnoname wrote:
If they are cognitively impared then they should have a guardian, conservator or an attorney in fact to prepare the documents for them.
No brainer
Do you have any experience in this field? What you are proposing is black and white is far from it.
I do. I don't know why durable POAs are not utilized to prevent the problems you have illustrated. What do
persons in your state do to avoid the problem that has been described in the OP.

Your comment:

What you are proposing is black and white is far from it.

did you mean as black and white not is black and white?

by the way what kind of advice do you give?
Cognitive impairment is typically a years long process, not an event. Mild cognitive change can leave one vulnerable to scammers and unable to navigate complex systems far before one is legally incompetent or clinically incapacitated. Not everyone has a willing and able child or partner to navigate these systems for them when they aren't able. Additionally with an aging population the very old who need long term care often have adult children who themselves are in their 60s-70s, struggling with their own medical and cognitive problems, and unable to assist their parents with these difficult tasks.

I'm not saying to avoid LTCI entirely. I'm saying it is reasonable to consider how difficult it might be to file a claim with whatever insurer you choose.
Dandy
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Re: A caution to those contemplating LTCI

Post by Dandy »

Long term care and insurance coverage for it is the scariest part of financial planning in retirement. Relatively low occurrence and duration od usually a few years but maybe much longer. Very high and increasing care costs. Insurance companies who can't underwrite it correctly and high premium increases or exiting the business. Vague or debatable conditions to qualify for claims could cause delays or denial of claims. Coverage often only available for a certain term such as 3 years vs length of actual need. A very needed insurance and difficult to self insure.

Self insurance is risky. How much in enough? Are there policies with a waiting period before benefits of 2 or 3 years and then cover for 3 years or life? I would be more interested in those policies and self insure the 2 or 3 waiting period. At least I would have a reasonable idea of the amount of money to set aside. Kind of like health insurance with a large deductible.
Levett
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Re: A caution to those contemplating LTCI

Post by Levett »

"I wonder how carefully people have thought about this"

It's a fair thing to be concerned about.

Evidence suggests that not that many people have wills, not to say estate plans.

As the owner of an LTCI for nearly 15 years (purchased as a supplement to preserve as much of estate as possible just in case), I have one (anecdotal) observation: those who bought--rather than were sold--policies incorporated LTCI into their estate plan. Of those whom I have read about who have had problems, they appear to have been sold policies, not knowing much if anything about either the complexity of some policies or the reliability of some vendors.

Prior to purchase, one should read the NAIC booklet on LTCI (A Shopper's Guide to Long-Term Care Insurance) from beginning to end (more than once) and one should check with one's state insurance commissioner regarding complaint ratios.

Lev
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jimgour
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Re: A caution to those contemplating LTCI

Post by jimgour »

There have been a lot of replies but I did not see this site posted (Pardon me if I missed it):

http://www.consumeraffairs.com/insurance/ltc.html

Rather depressing.

Jim
OmegaDog
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Location: Indianapolis

Re: A caution to those contemplating LTCI

Post by OmegaDog »

A few people have asked about the safe bands for self insuring. Here are snippets I've collected from my own LTCI investigation. Sorry, I don't have links, but you could probably Google some of these and get the full original post.

Money.cnn.com:
Can you pay for your own care? The alternative is to self-insure. Savings of more than $1.5 million should allow you to do this and still meet other retirement goals, says Rochester, N.Y., planner Jeff Feldman.

Money.cnn.com (10/2012):
So buy only if your assets total $250,000 to $1.5 million, says San Diego financial planner Gil Armour. Below that, you're likely to exhaust your money fast enough to qualify for Medicaid; above it, you can pay your own way.

Inside Indiana Business:
Generally, families with assets in excess of $2,000,000 can self-insure. If you have assets in the range of $1,000,000 to $2,000,000, you may want to consider the purchase of a policy. If you have limited assets, the cost of a policy may be prohibitive.

TimesUnion.com:
The accepted wisdom is that people with substantial assets -- at least $1 million for an individual and $2 million per couple -- don't need long-term care insurance, unless they are trying to make sure that everything gets passed along to heirs.

Personally, I have decided to self-insure. Most of the policies I researched had lifetime limits, either time and/or dollars. A $200k limit may not prevent a nursing home from emptying my savings. And lifetime policies are outrageously expensive.

SmartMoney.com:
There are few traditional policies that have lifetime benefits – most have a designated benefit period, Stratidis says.
letsgobobby
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Re: A caution to those contemplating LTCI

Post by letsgobobby »

OmegaDog,

thank you for that data, and welcome!

Based on your research the consensus is that assets of $1.5M-$2.0M is needed to self-inure a couple. These are in 2012 or so dollars so of course that number will have to rise over time.

Someone else pointed out that the risk is in the long/skinny tail: not a 1-2 year stay, but a 10 year stay. Are there products that have 1-3 year lifetime deductibles (or measured in dollars, $100k-$300k)? Combining such a policy with assets might be a reasonable strategy
countdown
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Re: A caution to those contemplating LTCI

Post by countdown »

This is a very informative thread. Thanks to those contributing.
bsteiner
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Re: A caution to those contemplating LTCI

Post by bsteiner »

john94549 wrote:Browser, don't get me started on trusts. The main problem with "springing" powers of attorney: they never "spring". In my Mom's case, the springing power of attorney in the trust requires two physicians (one of whom designated as a personal physician) to certify her incompetence. Well, aside from the fact that none of the doctors she went to admitted to being a "personal physician", they all candidly admitted they would never certify her. Period.
John is correct. The difficulty with a springing power of attorney (one that becomes effective when a condition is satisfied) is that it can sometimes be difficult to establish that the condition has been satisfied.

Most people will give their spouses powers of attorney that are effective immediately, at least in a first marriage. Older people will often give their children powers of attorney that are effective immediately. However, some people are only willing to give someone a power of attorney if it doesn't become effective except if the principal is disabled. Since disability is subjective, the test is usually the certification by some one or more individuals that the principal is disabled. Requiring two doctors, one of whom is the principal's personal physician, seems overkill. Most people who give springing powers of attorney only require one doctor's certification.

If you give someone a power of attorney, you don't need to create a trust for your own benefit to enable someone to act for you if you're disabled.

While we're on the subject of trusts, occasionally someone provides in a trust that a trustee ceases to act if some specified individuals (who need not be doctors) say that the person is disabled. You could provide a similar test for a springing power of attorney.

Note that some states don't allow for springing powers of attorney.
Topic Author
Browser
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Re: A caution to those contemplating LTCI

Post by Browser »

john94549 wrote:Browser, don't get me started on trusts. The main problem with "springing" powers of attorney: they never "spring". In my Mom's case, the springing power of attorney in the trust requires two physicians (one of whom designated as a personal physician) to certify her incompetence. Well, aside from the fact that none of the doctors she went to admitted to being a "personal physician", they all candidly admitted they would never certify her. Period.
You must have confused me with someone who knows anything about trusts. :happy What you've said certainly sounds like a problem for certain kinds of trusts. I only have the general idea that it might be a good idea to set a trust up for one's own care before it becomes cognitively and physically difficult to do that for oneself. That is, for those of us who can't count on family members to be around who are willing and able to take care of things. I intend to look into this option further to see if I can develop and understanding of the types of trusts that can be used and how they work. Maybe we need to start a thread on this topic.
We don't know where we are, or where we're going -- but we're making good time.
mss
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Re: A caution to those contemplating LTCI

Post by mss »

I wanted to add a little more info based on experience with my mother in LTC:

There are a couple of "features" of LTC insurance that I was not aware of at the beginning.

My mother was in an assisted living facility and had a one-year lease on a room. She fell and broke her hip and went to the hospital of course. She was out about a five weeks and I found out that her LTC policy had a 10-day per calendar year "hospital bed hold" feature. This meant that they would pay for her assisted living room for 10 days and after that, you have to pay personally (at about $160/day).

Then when she went back to assisted living, Medicare paid for I think 100 days, which they do after a qualifying hospital stay. After the 100 days, the insurance company started paying again, but only after going through a process to re-qualify her with the insurance company.

On another occasion, she went to the hospital and stayed about four days which was enough to trigger the Medicare 100-day thing and the LTC requalification again.

I am explaining this just to illustrate that it is not just complicated to get in the first time; you really need someone to help you deal with the ongoing issues.
Mark
Gnirk
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Re: A caution to those contemplating LTCI

Post by Gnirk »

john94549 wrote:Gnirk, congrats to you and your Mom. However, one wonders how folks with Alzheimers, and no close (and dutiful) relatives, can even attempt to navigate.
In my opinion, they can't. The sad truth is, that if I had not known about the policy, and was involved with paying my mother's bills, she would have most likely let it lapse. It's so important, again my opinion, that everyone have someone who they trust have a DPOA, even if it's an attorney who can act in their behalf.
ddunca1944
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Re: A caution to those contemplating LTCI

Post by ddunca1944 »

Browser wrote: You must have confused me with someone who knows anything about trusts. :happy What you've said certainly sounds like a problem for certain kinds of trusts. I only have the general idea that it might be a good idea to set a trust up for one's own care before it becomes cognitively and physically difficult to do that for oneself. That is, for those of us who can't count on family members to be around who are willing and able to take care of things. I intend to look into this option further to see if I can develop and understanding of the types of trusts that can be used and how they work. Maybe we need to start a thread on this topic.
I would love to see a thread on this topic - how can we proactively set up a plan in case we lose our cognitive abilities and don't have responsible, trusted family to take over?
Topic Author
Browser
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Re: A caution to those contemplating LTCI

Post by Browser »

ddunca1944 wrote:
Browser wrote: You must have confused me with someone who knows anything about trusts. :happy What you've said certainly sounds like a problem for certain kinds of trusts. I only have the general idea that it might be a good idea to set a trust up for one's own care before it becomes cognitively and physically difficult to do that for oneself. That is, for those of us who can't count on family members to be around who are willing and able to take care of things. I intend to look into this option further to see if I can develop and understanding of the types of trusts that can be used and how they work. Maybe we need to start a thread on this topic.
I would love to see a thread on this topic - how can we proactively set up a plan in case we lose our cognitive abilities and don't have responsible, trusted family to take over?
I concur. Have been thinking a lot about this lately. I don't think most of us give enough thought to this matter - we trust that the fates will treat us well, even in the case of having family members to act in our behalf. Family members aren't always motivated or in the best position themselves to act effectively. If you make it to your 90s, you might not have a spouse around anymore and your kids are getting into their 70s and having health issues of their own. I realized this in the case of my mother, who is 96. I'm not that much better off than she is to deal with her medical care, nursing homes, her finances, Medicare, Medicaid and the whole jungle of stuff that has to be navigated. When I'm in my 80s and 90s it will be impossible for me to deal with it on my own.
We don't know where we are, or where we're going -- but we're making good time.
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