You may want to rethink the odds of ever needing LTCi

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
User avatar
dbCooperAir
Posts: 1107
Joined: Tue Jan 07, 2014 10:13 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by dbCooperAir »

BruDude wrote:LTCi also pays for home healthcare which can also be a huge cost, especially if someone needs 24 hour care/supervision, which can often be the case with Alzheimer's/dementia. Many people absolutely refuse to put a family member in a nursing home unless medically necessary, so using statistics about nursing home care to argue against LTCi is a bit misleading if you ask me. Having said that, LTCi is getting more and more expensive and the benefits on new policies are getting worse. Just to buy the same benefits you could have had three years ago would cost you twice the price today with most companies. People who bought policies 5+ years ago got a steal. Replacing an older LTCi policy is almost impossible because the old benefits were better and policies were so much cheaper.
I agree very much with the above, seeing this first hand. We have a family member who bought a policy (an unlimited policy) about 10 years ago, we are coming up on year 3 of collecting on this policy, not a nursing home but a assisted living facility. Its not a cheap stay that is for sure. If I recall the policy cost was around $3,000/year, not sure what the policy started at, could have been less.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-
BruDude
Posts: 3573
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: You may want to rethink the odds of ever needing LTCi

Post by BruDude »

TN_INVEST wrote:
edge wrote:Very odd the article left out any analysis of home care. Home care is by far the preference, not nursing homes, so this analysis is pretty skewed.

And unfortunately those living needs riders typically only cover nursing home and scantily at that.
That's the first thing that I thought about.

IN-HOME CARE is what's most appealing

And you can bet that families fight tooth and nail to stay out of nursing homes (even if they have insurance). Yet, I'd be willing to bet that most folks that enter a nursing home have already spent a ton more time dealing with long term care stuff at home.

Looking at just nursing home care and ignoring the time that leads up to entering the nursing home is sorta like saying Usain Bolt works for <10 seconds.
X2
User avatar
Artsdoctor
Posts: 4292
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: You may want to rethink the odds of ever needing LTCi

Post by Artsdoctor »

I'm actually very surprised that Alicia Munnell would write an article like this. She is seasoned and well-respected. Her article is technically correct, but she really misses a much bigger picture.

As previous posters noted, there is a lot more to long-term care than nursing home care. Most long-term care policies will allow for in-home care and assisted living care; both are excluded in all of Munnell's data referring to nursing home care.

Family members may need to take time off or quit working altogether to care for a parent; this opportunity cost can be huge. Home care workers cost money; assisted living programs cost money; she excludes the cost of these expenses altogether, and neglects to acknowledge that LTC policies will offer some reimbursement for these costs.
Last edited by Artsdoctor on Tue Sep 16, 2014 5:50 pm, edited 1 time in total.
pshonore
Posts: 7075
Joined: Sun Jun 28, 2009 2:21 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by pshonore »

My Genworth agent told me that 70% of their LTC claim $ get spent on other than nursing homes. (assisted living, in home care, etc.)
TN_INVEST
Posts: 423
Joined: Tue Jul 26, 2011 12:21 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by TN_INVEST »

pshonore wrote:My Genworth agent told me that 70% of their LTC claim $ get spent on other than nursing homes. (assisted living, in home care, etc.)
And there is the moral hazard that insurance companies face (disability, dental, LTC & health especially). Folks that have the policy are more likely to show up as recipients of care because they have the insurance. Folks that don't have insurance may never show up as receiving care...therefore they may skew the numbers even more.

I'd be very leery of the studies that say the average stay in a nursing home is X-# of days. Usually the need for long term care is considerably longer.
golfvestor
Posts: 80
Joined: Fri Aug 22, 2014 11:50 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by golfvestor »

EnjoyIt wrote:
Browser wrote:Not sure I agree with the scary tale of Medicaid-only nursing homes.

Browser, you don't have to agree with me, but I can tell you from first hand experience of patients we see from some of these nursing homes. There are very very few good ones out there. Frankly, I am scared. How do I know? I take care of them when they get to the hospital.

As for government ratings, I would put very little merit into those ratings. In all honesty I am not sure how specific nursing homes are rated, but I see how other practices of medicine are rated and the metrics they use don't explain how good the actual care is. For example:

There is a metric for surgeons regarding surgical site infections and complications. You would think that the less complications a surgeon has the better that surgeon is and that may be the case. But in reality here is what may happen. Some surgeons choose to only take the simplest of cases. Young healthy people with easy anatomy. For years they practice doing only easier surgeries and over time loose their skill. On the other hand, you may have a surgeon that takes cases that many others won't. Cases that are more complicated with higher risk. The anatomy might be more complex or the patient may have serious comorbidities making the surgery more risky. Because of the increased complexity they tend to have higher complication rates, higher infection rates and therefor poorer metrics. In reality, that surgeon could be light years better than the one with good metrics.

My point being, don't just judge a facility by its government ratings. You are much better off taking first hand experiences from real people such as the family of patients. Asking your doctor if they know about that facility, and also talking to the case worker/manager at the hospital. I personally have a family member in a nursing home. Although it is not top notch, the care is pretty good. Even there I notice how it could take a few days to realize someone is not doing well. My family member was becoming more and more lethargic over the coarse of a few days. We were on vacation at the time and were unable to visit regularly. By the time we got there she was completely out of it and fully bed ridden. We pushed for her to go to the hospital where she was treated for a urinary tract infection. Although the bacteria was treated pretty quickly and easily, the fact that she ended up that sick and bedridden led to atrophy and muscle weakness requiring rehab. It took months for her to get back to her previous strength. One of the worst things an old person can do is nothing. The muscles waste away so quickly. If the change in mental status was recognized a few days sooner she may have avoided the hospital stay and avoided such severe atrophy.

We now avoid a similar scenario by hiring a private nurse to check up on her every day while we are out of town, or unable to visit for a day or two. The nurse is now very familiar with the baseline of my family member and if any change arises action could take place quickly. And this is in a "well rated" nursing home.

The financial part of this topic is that it is best to be prepared financially to address some of the shortcomings of todays nursing facilities.
If you can't rely on public rankings of nursing homes, government or otherwise, then why not just resign yourself to wherever medicaid puts you? You said talk to families of patients. If you continue with the medical analogy, isn't talking to patients a good way to find if a doctor is friendly and has nice staff, but a terrible way to find out if he's any good at his job? Would a random person cold calling the hospital case worker/manager get a candid answer, or does your position in the medical field give you better access to information?
EnjoyIt
Posts: 5490
Joined: Sun Dec 29, 2013 8:06 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by EnjoyIt »

Browser wrote:
What I am concerned about is your assertion that there are "medicaid" nursing homes that are even worse than the run-of-the-mill nursing homes, or that medicaid patients may generally be getting subpar care compared to private pay patients in the same facility. Is that what you are stating, and can you clarify?
Browser, my apologies if I gave you that assumption that different pay scale patients receive different types of care. I have not seen that in my experience as most nurses have no clue under what insurance plan you have. What I do see is facilities whose majority source of revenue comes from the government tend to provide poorer service.
golfvestor wrote: If you can't rely on public rankings of nursing homes, government or otherwise, then why not just resign yourself to wherever medicaid puts you? You said talk to families of patients. If you continue with the medical analogy, isn't talking to patients a good way to find if a doctor is friendly and has nice staff, but a terrible way to find out if he's any good at his job? Would a random person cold calling the hospital case worker/manager get a candid answer, or does your position in the medical field give you better access to information?
I would agree that my direct hospital access would give me better insight, but it does not mean that you can't step foot into a hospital and request to talk to a social worker and ask those questions face to face. They will know right off the bat which places in the area are better. I then recommend physically going to the facilities yourself and checking them out. See what some of the patient look like while in the hallway or at lunch. Are they dirty and disheveled? Talk to a patient or maybe a family member that is leaving the facility. Feel free to utilize the public rankings as well, but do the legwork to check up on those places.
You are also correct that just because a physician and staff are friendly does not equal appropriate practice of medicine. It is tough being a patient in this country. Your best bet is to educate yourself as you are doing now.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
rockylou
Posts: 129
Joined: Sat Feb 23, 2013 4:31 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by rockylou »

[off topic comment and followup deleted by admin alex]
User avatar
tadamsmar
Posts: 9251
Joined: Mon May 07, 2007 12:33 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by tadamsmar »

Browser wrote:
Ged wrote:
nisiprius wrote:So why Don't we see recommendations not to buy homeowners insurance?
Actually I thought about this a fair bit. Reasons I came up with:

1. Cost for a LCTi policy is often much higher than homeowner's. That means the lifestyle tradeoff may be negligible in one case and substantial in the other.

2. LTCi is sticky - stop paying into it and you have lost your chance. Homeowners can be resumed at any time.

3. LTCi really doesn't handle tail risk well. Homeowner's does a better job at that.

4. The LTCi market seems quite unstable. Who knows what will happen in the future. Homeowners seems better.
Pretty good. Another one that occurs to me is that I can buy homeowner's insurance when I'm 65 and the premium isn't any higher than if I happened to be half that age. LTCi I have to buy before I've left puberty or I can't afford the premiums. :annoyed
Another one: homeowner's insurance is covers liability lawyer's fees. There is nothing comparable in LTCi.

I found #3 a sticking point. I never found anything comparable to a catastrophic coverage policy for LTC. Most Boglehads are in effect already self-funding an annuity (rather than just buying a inflation-adjusted fixed annuity to cover their expenses) and catastrophic LTC coverage would be of value to someone doing that.

I think one of the reasons that you can't get catastrophic coverage is that it's better for the LTCi insurance company if they are involved in LTC decisions in the early stages of LTC when they can guide you toward a less expensive path.
Diogenes
Posts: 602
Joined: Sat Mar 03, 2012 3:58 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by Diogenes »

I just have not seen a LTCI policy that is available now that makes any economic sense. If it is peace of mind of regular payments sought, would not a simple annuity be better? If there are good policies for sale out there, perhaps someone can provide links?

A friend bought a policy in their early 50's. The premiums have now gone sky high and they are looking to convince me that they have too much 'invested' to cancel. I suspect this is the case for many that advocate for these policies.

With the Baby Boomers in their late 50's and 60's, many who have not looked after their retirement needs, perhaps we will see competitive products.
Alan S.
Posts: 10307
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: You may want to rethink the odds of ever needing LTCi

Post by Alan S. »

There needs to be more competitors in the field to get access to more flexible coverage options and to have competitive premiums. Right now the market is not only unhealthy, but actually impaired. The hangover from poor claims projections back in the 90s is still with us.

If you can afford to self insure this exposure, it won't matter.

Another factor you seldom hear about is the affect on LTC costs should a healthy LTC market ever return. Just as student loan proceeds have led to excessive cost increases in college tuition, if millions of people were able to purchase LTCi you can bet that the demographics plus demand for services would spike the costs even more. People that self insure would need to put aside even more to fund the potential costs. There would be winners and losers, but those who are self insuring from the beginning would then be too old to have access to reasonable premiums, and would have more ailments subject to underwriting.

As things are now, for those whose family situation premits relocation, the costs of LTC in the south are less than half the costs in the high cost northeastern states.
BIGal
Posts: 151
Joined: Fri Oct 26, 2012 9:34 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by BIGal »

I handled my bachelor Uncle's finances for the last 9 years while he was in a nursing home sans LTC insurance.....he passed in April of this year....how does 425k in expenses over a 9 year period sound. Do my wife and I have a policy......what do you think?
FedGuy
Posts: 1304
Joined: Sun Jul 25, 2010 3:36 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by FedGuy »

BIGal wrote:I handled my bachelor Uncle's finances for the last 9 years while he was in a nursing home sans LTC insurance.....he passed in April of this year....how does 425k in expenses over a 9 year period sound. Do my wife and I have a policy......what do you think?
With all sympathy for what must have been a very difficult and draining situation, I think it supports the views that have been advanced in this thread that the long term care insurance products generally available on the market are inadequate. A typical 3-5 year policy would have only covered a third to about a half of the time your uncle needed it, so in the grand scheme of things might not have ended up making a tremendous difference and might not have been worth years of paying premiums.
desiderium
Posts: 1002
Joined: Sat Jan 04, 2014 11:08 am

Re: You may want to rethink the odds of ever needing LTCi

Post by desiderium »

What gets missed sometimes in the actuarial calculations is that long term survival (long tail risk) can vary a lot depending on the degree of medical intervention.
In your calculations, consider the following for your own life under these circumstances:

Start with basic lifespan estimates, multiplied by the costs of basic nursing care: bathing, changing clothes, avoiding bedsores, cooking and serving meals, etc.
Add time after successful treatment for urinary infections, pneumonia.
Add time gained by successful hospitalizations for dehydration or more serious infections, heart attacks, etc.
Add time gained by successful management of chronic diseases--high blood pressure, diabetes, hypothyroidism
Add time gained by preventive measures such as flu shots, cholesterol lowering drugs and screening for cancer.
Add time gained by inserting a feeding tube in the event one stops eating

Elderly people who are severely disabled after strokes or with advanced dementia often receive all of these interventions, and they have a significant impact on longevity, or long-tail financial risk.

These are obviously all individual decisions, and this is strictly an actuarial discussion. However, it is something more people should think about carefully. For reasons that are not necessarily financial, my wife and I have each decided to forego all medical interventions if we are unable to live at home. We have communicated this to our children and siblings, and have it in writing. I don't have data, but I think this reduces our long tail risk significantly.
BruDude
Posts: 3573
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: You may want to rethink the odds of ever needing LTCi

Post by BruDude »

FedGuy wrote:
BIGal wrote:I handled my bachelor Uncle's finances for the last 9 years while he was in a nursing home sans LTC insurance.....he passed in April of this year....how does 425k in expenses over a 9 year period sound. Do my wife and I have a policy......what do you think?
With all sympathy for what must have been a very difficult and draining situation, I think it supports the views that have been advanced in this thread that the long term care insurance products generally available on the market are inadequate. A typical 3-5 year policy would have only covered a third to about a half of the time your uncle needed it, so in the grand scheme of things might not have ended up making a tremendous difference and might not have been worth years of paying premiums.
LTC policies have a pool of money - if you use less than the monthly maximum, it can last longer. For example, a policy with $6k/month benefit for 3 years can act as a $3k/month policy for 6 years, or a $1,500/month policy for 12 years. The "benefit amount" is only the maximum that you can take in a month. The vast majority of LTCi buyers either know someone directly that had an LTC event, or have heard stories from people they know about how catastrophic it can be. The vast majority that pass on LTCi because of the price haven't been through it before. Those that have been through it and pass anyway know what kind of risk they are taking.
dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by dhodson »

BruDude wrote:
FedGuy wrote:
BIGal wrote:I handled my bachelor Uncle's finances for the last 9 years while he was in a nursing home sans LTC insurance.....he passed in April of this year....how does 425k in expenses over a 9 year period sound. Do my wife and I have a policy......what do you think?
With all sympathy for what must have been a very difficult and draining situation, I think it supports the views that have been advanced in this thread that the long term care insurance products generally available on the market are inadequate. A typical 3-5 year policy would have only covered a third to about a half of the time your uncle needed it, so in the grand scheme of things might not have ended up making a tremendous difference and might not have been worth years of paying premiums.
LTC policies have a pool of money - if you use less than the monthly maximum, it can last longer. For example, a policy with $6k/month benefit for 3 years can act as a $3k/month policy for 6 years, or a $1,500/month policy for 12 years. The "benefit amount" is only the maximum that you can take in a month. The vast majority of LTCi buyers either know someone directly that had an LTC event, or have heard stories from people they know about how catastrophic it can be. The vast majority that pass on LTCi because of the price haven't been through it before. Those that have been through it and pass anyway know what kind of risk they are taking.
That was likely true before all the big rate increases (which are still coming it seems). Now nobody on either side knows exactly what kind of risk they are taking.
BruDude
Posts: 3573
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: You may want to rethink the odds of ever needing LTCi

Post by BruDude »

dhodson wrote:
BruDude wrote:
FedGuy wrote:
BIGal wrote:I handled my bachelor Uncle's finances for the last 9 years while he was in a nursing home sans LTC insurance.....he passed in April of this year....how does 425k in expenses over a 9 year period sound. Do my wife and I have a policy......what do you think?
With all sympathy for what must have been a very difficult and draining situation, I think it supports the views that have been advanced in this thread that the long term care insurance products generally available on the market are inadequate. A typical 3-5 year policy would have only covered a third to about a half of the time your uncle needed it, so in the grand scheme of things might not have ended up making a tremendous difference and might not have been worth years of paying premiums.
LTC policies have a pool of money - if you use less than the monthly maximum, it can last longer. For example, a policy with $6k/month benefit for 3 years can act as a $3k/month policy for 6 years, or a $1,500/month policy for 12 years. The "benefit amount" is only the maximum that you can take in a month. The vast majority of LTCi buyers either know someone directly that had an LTC event, or have heard stories from people they know about how catastrophic it can be. The vast majority that pass on LTCi because of the price haven't been through it before. Those that have been through it and pass anyway know what kind of risk they are taking.
That was likely true before all the big rate increases (which are still coming it seems). Now nobody on either side knows exactly what kind of risk they are taking.
It's still the same risk, but with the higher prices now it just means you can't shift as much of that risk to the insurance company, or you can pay a higher price to do it.
LongerPrimer
Posts: 903
Joined: Thu Jun 05, 2014 10:01 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by LongerPrimer »

:| :| When we bought LTCi, in our early 50's, 12 yrs past, we purchased the higher end policy (more costly). We reasoned that the LTC company was still around and had a commanding market share because they had a pricing model that was fair and tilted to those who could afford the policies. At that time many companies had much lower cost plans and in our research, the people who bought the low costs plans where adversely selected by health and assets. So many of these companies soon crashed and burned spectacularly to the detriment of the policy holders.

I would very much concur with, dhudson. :mrgreen:
randomguy
Posts: 9208
Joined: Wed Sep 17, 2014 9:00 am

Re: You may want to rethink the odds of ever needing LTCi

Post by randomguy »

BIGal wrote:I handled my bachelor Uncle's finances for the last 9 years while he was in a nursing home sans LTC insurance.....he passed in April of this year....how does 425k in expenses over a 9 year period sound. Do my wife and I have a policy......what do you think?
Nope. 425k looks like a big number but <50k/yr on the other hand looks like a perfectly manageable one. Paying 2k/yr(+increases) for 20 years to get a policy that you have a low chance of needing doesn't make financial sense. You would be better off dumping that money into longevity insurance.
User avatar
1210sda
Posts: 1813
Joined: Wed Feb 28, 2007 8:31 am

Re: You may want to rethink the odds of ever needing LTCi

Post by 1210sda »

BIGal wrote:I handled my bachelor Uncle's finances for the last 9 years while he was in a nursing home sans LTC insurance.....he passed in April of this year....how does 425k in expenses over a 9 year period sound. Do my wife and I have a policy......what do you think?
That's less than $50k per year. How much did he spend per year before entering the nursing home??
If, let's say, he spent $40k per year, then in this example, being in the nursing home cost an additional $10k per year.
1210
adamthesmythe
Posts: 4003
Joined: Mon Sep 22, 2014 4:47 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by adamthesmythe »

Seems to me this is a case where anecdotes from the past are not relevant to making a decision today. Policies have become more expensive and cover less.
User avatar
Index Fan
Posts: 2582
Joined: Wed Mar 07, 2007 12:13 pm
Location: The great Midwest

Re: You may want to rethink the odds of ever needing LTCi

Post by Index Fan »

I'd be very interested in seeing how often LTCi actually pays when it is needed. I've seen quite a few (admittedly anecdotal) stories about people who paid for LTCi for years and then when it was needed all sorts of roadblocks and denial of claims came from the insurance company. If someone who is incapacitated doesn't have a strong advocate to fight for claims when they need it, the results may be even worse.

Admission: I used to have LTCi but stopped the policy due to such concerns.
"Optimum est pati quod emendare non possis." | -Seneca
bowtie
Posts: 376
Joined: Sun Jul 20, 2014 11:41 am

Re: You may want to rethink the odds of ever needing LTCi

Post by bowtie »

I have had my policy for 7 years.
It is possible based upon what I am reading here that companies no longer issue what is called unlimited instead of three to five year policies.
I cannot answer your question about use, as I know no one who has ever used one.
TN_INVEST
Posts: 423
Joined: Tue Jul 26, 2011 12:21 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by TN_INVEST »

Index Fan wrote:I'd be very interested in seeing how often LTCi actually pays when it is needed. I've seen quite a few (admittedly anecdotal) stories about people who paid for LTCi for years and then when it was needed all sorts of roadblocks and denial of claims came from the insurance company. If someone who is incapacitated doesn't have a strong advocate to fight for claims when they need it, the results may be even worse.

Admission: I used to have LTCi but stopped the policy due to such concerns.
I ran across this Forbes article and learned a few things (mainly that there is a lot of red tape and potential pitfalls to filing a claim)

http://www.forbes.com/sites/nextavenue/ ... -benefits/
Iorek
Posts: 1226
Joined: Fri Mar 08, 2013 9:38 am

Re: You may want to rethink the odds of ever needing LTCi

Post by Iorek »

TN_INVEST wrote:
Index Fan wrote:I'd be very interested in seeing how often LTCi actually pays when it is needed. I've seen quite a few (admittedly anecdotal) stories about people who paid for LTCi for years and then when it was needed all sorts of roadblocks and denial of claims came from the insurance company. If someone who is incapacitated doesn't have a strong advocate to fight for claims when they need it, the results may be even worse.

Admission: I used to have LTCi but stopped the policy due to such concerns.
I ran across this Forbes article and learned a few things (mainly that there is a lot of red tape and potential pitfalls to filing a claim)

http://www.forbes.com/sites/nextavenue/ ... -benefits/
Although that article suggests that newer policies (w/in the last 10 years) have fewer issues.
skepticalobserver
Posts: 1096
Joined: Tue Jul 29, 2014 11:29 am

Re: You may want to rethink the odds of ever needing LTCi

Post by skepticalobserver »

On a more positive note, I understand that we may soon see LTC policies offering large deductibles ($100,000 and up), which would reduce premiums and serve as catastrophic coverage for long nursing home stays. Such a policy may help provide some financial insulation to families with sizable portfolios.
castlemodesto
Posts: 146
Joined: Sun Sep 15, 2013 12:31 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by castlemodesto »

the possibility of large deductibles is very encouraging. Skepticalobserver are you able to point us to the source of your information?, as this is the first i have heard about it. Thanks
BruDude
Posts: 3573
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: You may want to rethink the odds of ever needing LTCi

Post by BruDude »

A one year elimination period is already a pretty large deductible.
skepticalobserver
Posts: 1096
Joined: Tue Jul 29, 2014 11:29 am

Re: You may want to rethink the odds of ever needing LTCi

Post by skepticalobserver »

A couple of days ago on the radio I heard someone in the insurance business mention that a high deductible LTC policy was in the works. No names were given.

Here's a link to a brief article about existing 365 elimination day policies: http://ltcipartners.typepad.com/views_o ... ch-on.html
dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by dhodson »

The issue is more the tail (unlimited benefits) then the deductible.
adamthesmythe
Posts: 4003
Joined: Mon Sep 22, 2014 4:47 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by adamthesmythe »

skepticalobserver's referenced article provides an example

>Consider a 60-year-old couple who purchase $6,000 per month of coverage for a three year benefit period and 3% compound inflation rider.

Sounds like a great option to me...big deductible AND no coverage of the tail risk.
Monarch
Posts: 3
Joined: Wed Sep 24, 2014 10:06 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by Monarch »

How about using a reverse mortgage line of credit to pay LTC expenses as they occur?
technovelist
Posts: 3297
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: You may want to rethink the odds of ever needing LTCi

Post by technovelist »

adamthesmythe wrote:skepticalobserver's referenced article provides an example

>Consider a 60-year-old couple who purchase $6,000 per month of coverage for a three year benefit period and 3% compound inflation rider.

Sounds like a great option to me...big deductible AND no coverage of the tail risk.
Yes, that sounds like a great option to me too... but not for the purchaser, unfortunately. :annoyed
In theory, theory and practice are identical. In practice, they often differ.
JustCurious304
Posts: 49
Joined: Thu Sep 25, 2014 4:35 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by JustCurious304 »

I wish I had never bought my LTHC policy through PERS about 18 years ago. There have been 2 or 3 premium increases. Now they are giving people a choice of almost doubling their premium or deleting the Built-in Inflation protection. I chose to delete the inflation protection and keep my rate about the same. Part of my reasoning is that it may be difficult to ever collect even if I need long term care.

My father-in-law paid into long term health care for several years before passing away about a year ago. His John Hancock policy refused to pay for his assisted living which was about $6,000 a month. He was living in an independent apartment but needed more help as time went on during the two years he was there. At 94, his dementia got worse, he needed help with medications, some mobility issues, someone to be in the apartment while he took a shower. However, because "he didn't have an Alzheimer's diagnosis, or was not officially to the point of needing help with at least two daily skills", he was denied twice. Two doctors wrote reports about his dementia, also. This experience shows how difficult it is to collect on insurance. I was not nearby and in charge or I might have been pursuing this more than the family member who was in charge.
dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by dhodson »

JustCurious304 wrote:I wish I had never bought my LTHC policy through PERS about 18 years ago. There have been 2 or 3 premium increases. Now they are giving people a choice of almost doubling their premium or deleting the Built-in Inflation protection. I chose to delete the inflation protection and keep my rate about the same. Part of my reasoning is that it may be difficult to ever collect even if I need long term care.

My father-in-law paid into long term health care for several years before passing away about a year ago. His John Hancock policy refused to pay for his assisted living which was about $6,000 a month. He was living in an independent apartment but needed more help as time went on during the two years he was there. At 94, his dementia got worse, he needed help with medications, some mobility issues, someone to be in the apartment while he took a shower. However, because "he didn't have an Alzheimer's diagnosis, or was not officially to the point of needing help with at least two daily skills", he was denied twice. Two doctors wrote reports about his dementia, also. This experience shows how difficult it is to collect on insurance. I was not nearby and in charge or I might have been pursuing this more than the family member who was in charge.

its very important to make sure family members are aware of any insurance policy as you get older such as LTCi or life insurance. Not only will someone need to make sure the insurance company lives up to its promise but it is easy for someone older to forget a payment and then all those years of paying have gone to waste.
LeeMKE
Posts: 2038
Joined: Mon Oct 14, 2013 9:40 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by LeeMKE »

FWIW

We bought LTCi at age 50.

Paying $2063 per year to cover both of us. Elimination period is 90 days. Lifetime benefit period. Home care and facility care. inflation rider of 5%/year. So far no increases in the premium.
Daily benefit has risen to just over $200/day which is enough for a decent place, though we might want to add some for a better place.

IMHO odds are good one of us will need help. And if the other is alive, we don't want to exhaust assets to help the weaker of the two, leaving the second person destitute.

Grateful that we had a good broker helping us wade through the choices, and that we both did it then. Now that we are 60, we couldn't afford the premiums and probably couldn't pass the physicals. And I'm glad the use of LTC may be coming down. That might leave the insurance companies with enough resources to cover everyone. I've been in Medicaid facilities, and want to avoid that at all costs.
The mightiest Oak is just a nut who stayed the course.
BruDude
Posts: 3573
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: You may want to rethink the odds of ever needing LTCi

Post by BruDude »

LeeMKE wrote:FWIW

We bought LTCi at age 50.

Paying $2063 per year to cover both of us. Elimination period is 90 days. Lifetime benefit period. Home care and facility care. inflation rider of 5%/year. So far no increases in the premium.
Daily benefit has risen to just over $200/day which is enough for a decent place, though we might want to add some for a better place.

IMHO odds are good one of us will need help. And if the other is alive, we don't want to exhaust assets to help the weaker of the two, leaving the second person destitute.

Grateful that we had a good broker helping us wade through the choices, and that we both did it then. Now that we are 60, we couldn't afford the premiums and probably couldn't pass the physicals. And I'm glad the use of LTC may be coming down. That might leave the insurance companies with enough resources to cover everyone. I've been in Medicaid facilities, and want to avoid that at all costs.
That's a hell of a deal now....even a 5-year benefit today for similar options would be 2-3x the price of what you're paying for lifetime benefits.
LongerPrimer
Posts: 903
Joined: Thu Jun 05, 2014 10:01 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by LongerPrimer »

We bought something like LeeMKE' s.
We have 30 day (?) elimination, his and hers policy, now $210/day, 1095 days, if one spouse dies after 10 years of no claims, the remaining spouse's policy is paid up. We Had two increases and looking at 3rd for 30% to $3200/yr (?) Combined.
We believed in the LTCi salesman and our FA who said that the cost of waiting will cost so much more And for less.
bluemarlin08
Posts: 1561
Joined: Wed Aug 29, 2007 12:18 pm

Re: You may want to rethink the odds of ever needing LTCi

Post by bluemarlin08 »

One of the big players in LTCi is putting more emphasis on their life/LTVI policies. It's very hard to predict lapse rates because there just are few policyholders just aren't lapsing. Couple that with low yields on reserves and rates have no where to go but up. I only sell LTC to people that contact me and ask me to handle it.
edge
Posts: 3520
Joined: Mon Feb 19, 2007 7:44 pm
Location: NY

Re: You may want to rethink the odds of ever needing LTCi

Post by edge »

It's still the same risk, but with the higher prices now it just means you can't shift as much of that risk to the insurance company, or you can pay a higher price to do it.
This is wrong. The balance of risk has fundamentally changed. First, the policies no longer cover tail risk and have significantly capped and reduced benefits. Second, it is clear that the insurance companies had issues managing risk and had to shift a lot of the risk burden onto policy holders via rate increases.
The issue is more the tail (unlimited benefits) then the deductible.
I think this is also not quite correct. One of the massive challenges in the LTCi market is the exceptionally low lapse rate. Lapse forecast was 5.5% and the actual lapse rate turned out to be 0.5%. Couple this with the extremely high claim rate and higher than expected severity of claims - and it has been bone crushing for the insurance companies. Basically risk pooling assumptions, critical for any insurance business, stopped working. In a world of very high deductibles and/or coinsurance it *could* come to pass that pooled risk actually begins working again and products could be designed to cover tail risk.
Post Reply