Long Term [Care] Rates just went Through the roof!

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WolfgangPauli
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Long Term [Care] Rates just went Through the roof!

Post by WolfgangPauli »

Well, I guess I should have expected it. 20 years ago we thought we were doing the right thing by insuring early for LTC. Paid premiums all that time. Just yesterday I received a letter saying my premiums were going up 70% and I can expect another increase after that. My options:

- Reduce my coverage
- Remove the inflation rider
- Stop paying and let it lapse.

This has nothing to do with health or age (so they say). I am sure it has nothing to do with health as there has been no health assessment done since we got it but age, well that is another thing. Seems oddly suspicious that when we turn / get close to 60 our premiums become virtually unaffordable.

Thoughts?
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MikeG62
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Re: Long Term Rates just with Through the roof!

Post by MikeG62 »

This is one of the reasons I have not pursued LTC insurance. I am sorry to hear they are doing this to you.

You may want to change the title to the thread to say "Long Term "Care" Rates..." I was not sure what the post was going to be about.

Are you willing to share the name of the insurer?

[edited title to clarify Long Term Care - moderator prudent]
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Saving$
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Re: Long Term Rates just with Through the roof!

Post by Saving$ »

Look to see if your LTC policy allows you to stop paying but credit the premiums you have paid to date towards your care. Some allow that.
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munemaker
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Re: Long Term Rates just with Through the roof!

Post by munemaker »

This is one of the reasons why I never bought LTC insurance. The idea behind insurance is to pay the insurance company to take the risk for you. What they are doing is pushing the cost of that risk right back to you.

The other reason I am not buying LTC is on the other end. I have two relative who used LTC, and it was not easy to receive the benefits when you need them.

LTC is a slimey product.
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GerryL
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Re: Long Term [Care] Rates just went Through the roof!

Post by GerryL »

Mine went up dramatically this year. I considered different policy changes and just before I executed I decided to contact the broker who sold me the policy all those many years ago. Glad I did. She looked at various options that were not presented in the mailing I got from the company and I was able pick from more ways to retain value in my policy. Premium is still up, but not as much as it would have been had I done nothing, and I have a better understanding of the long-term impact of the different options I was considering ... and options in the future.

Did you go through a broker to get your policy?
inbox788
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Re: Long Term Rates just with Through the roof!

Post by inbox788 »

munemaker wrote:This is one of the reasons why I never bought LTC insurance. The idea behind insurance is to pay the insurance company to take the risk for you. What they are doing is pushing the cost of that risk right back to you.

The other reason I am not buying LTC is on the other end. I have two relative who used LTC, and it was not easy to receive the benefits when you need them.

LTC is a slimey product.
Yes, it's a very slimey product, and in many situations not a good choice. The only thing worse would be if the premiums were too low and the companies unsustainable. The failure of many extended warranty companies is to be avoided in health care companies.
Limoncello402
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Re: Long Term [Care] Rates just went Through the roof!

Post by Limoncello402 »

Same here. As I posted on another thread, I am quickly seeing that continual similar rises in my Genworth policy premium will amount to 5 figures by the time I'm 70, 10 years from now. And I think cutting benefits is just a slippery slope. I am still not sure whether to drop it or not--have been back and forth many times since receiving the notice.
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EATaxGuy
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Re: Long Term [Care] Rates just went Through the roof!

Post by EATaxGuy »

WolfgangPauli wrote: This has nothing to do with health or age (so they say).
Contact the most powerful politician in your state (the Insurance Commissioner) and file a complaint.
If you bought from a reputable insurer it is probably within their rights (authorized by the insurance commissioner in your state) to raise the premiums this dramatically, but it can't hurt to let your dissatisfaction be known.

If you want to feel a little better compare your policy to the cost of a new policy with the same provisions. LTCI premiums have increased considerably over the last 20 years.
You may have been handed a cactus, but sitting on it is up to you.
pintail07
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Re: Long Term [Care] Rates just went Through the roof!

Post by pintail07 »

Review your options with your broker. One of the least painful ways to reduce costs is to cut inflation protection from compound to simple. In addition, carefully review other products for LTC that have guarantees that premium and benefits can't be changed.
Jackson12
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Re: Long Term [Care] Rates just went Through the roof!

Post by Jackson12 »

WolfgangPauli wrote:Well, I guess I should have expected it. 20 years ago we thought we were doing the right thing by insuring early for LTC. Paid premiums all that time. Just yesterday I received a letter saying my premiums were going up 70% and I can expect another increase after that. My options:

- Reduce my coverage
- Remove the inflation rider
- Stop paying and let it lapse.

This has nothing to do with health or age (so they say). I am sure it has nothing to do with health as there has been no health assessment done since we got it but age, well that is another thing. Seems oddly suspicious that when we turn / get close to 60 our premiums become virtually unaffordable.

Thoughts?
Is it a state partnership plan, providing "dollar for dollar" asset protection, allowing you to qualify for Medicaid without essentially depleting all assets? If there was another increase (likely) ,could you afford the premiums?

If the increase is very near your budget limit, I'd let it lapse if I was in your situation (unless I was in terrible health and likely to need it within a few years). Otherwise, you could be paying premiums for another 10-20 years without using the insurance.

There are already individuals in their 70s and 80s benefiting from their LTC policies but, even so, I know the increases cause major dilemmas before then (and please see info on state limits below) .

To be approved for premium increases, according to the information given me by my state's insurance regulatory agency , the insurance company must first request the increase. Some state regulatory agencies turn down these requests more than others.

Is your state one of them?

There are websites which keep lists of these requests -by date, year, state, and insurance company- as well as whether the requests were approved and how often . I can't find a link now but I once found a Texas government website which kept track of the requests for each state, the requested increase for the premiums - 50%, 30% etc) and whether the requests were approved.

This info might help you see where your insurance company stands in terms of approved premium requests for your state - and how often they were approved.

Another dilemma: What are your alternatives ?

Can the $300,000 or more be saved or paid any other way by the time you need care? Perhaps sell the house and move into an apartment? Do a reverse mortgage? One of my parents needed over 10 years of care and LTC insurance was not available. Even if it had been, there would have been 7 out of those 10 years without benefits.

So we came up with a system of family assistance ( the lion's share of the time) plus part-time aides, nursing students who got free room and board, etc.to keep costs down.

As boomers age, however, the competition for aides and in home care may greatly increase. On the other hand, home care is already a booming business and should continue to be so. With increased demand, though, costs are likely to greatly increase as well.

Finally, even if you hang onto the policy. , your insurance company could go bankrupt ( this has been happening more frequently) . If that happens, you are subject to your state limits for protection. In my state , that limit may be as low as $150,000 ( it depends on whether the plan was a partnership plan) .

This means that a person with a policy worth $300,000 in benefits might only receive $150,000 of actual benefits. I suggest you contact your state regulatory committee to learn your state's limits on protection.
WhyNotUs
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Re: Long Term [Care] Rates just went Through the roof!

Post by WhyNotUs »

WolfgangPauli wrote:
- Reduce my coverage
- Remove the inflation rider
- Stop paying and let it lapse.

Thoughts?
Don't take it personally, the actuarials blew it and fixed income has underperformed for a decade. The major players that I have read about seem to be mostly in the same boat.

As for your choices, it is a number crunching exercise and no numbers have bene provided. Personally, I bought LTC for a couple of years in my 40's and came to the conclusion that the industry was in for troubles and opted out. Can't claim to be omniscient, just did not like the demographics and care cost graphs.
I own the next hot stock- VTSAX
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jeffyscott
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Re: Long Term Rates just with Through the roof!

Post by jeffyscott »

munemaker wrote:This is one of the reasons why I never bought LTC insurance. The idea behind insurance is to pay the insurance company to take the risk for you. What they are doing is pushing the cost of that risk right back to you.
It's becoming prepaid long-term care, rather than insurance.

The only way I'd ever consider it is if you could buy a fully paid policy and that policy did not have a limit on total benefits. And even then, there'd still be the issue of the insurer going bankrupt.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
pintail07
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Re: Long Term [Care] Rates just went Through the roof!

Post by pintail07 »

The only way I'd ever consider it is if you could buy a fully paid policy and that policy did not have a limit on total benefits. And even then, there'd still be the issue of the insurer going bankrupt.
Check oit the newer hybrid LTC policies, they are fully paid up and pay benefits for life.
beardsworth
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Re: Long Term [Care] Rates just went Through the roof!

Post by beardsworth »

pintail07 wrote:
The only way I'd ever consider it is if you could buy a fully paid policy and that policy did not have a limit on total benefits. And even then, there'd still be the issue of the insurer going bankrupt.
Check oit the newer hybrid LTC policies, they are fully paid up and pay benefits for life.
Are you referring to LTC-plus-life-insurance? LTC-plus-annuity? Either? Other?
pintail07
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Re: Long Term [Care] Rates just went Through the roof!

Post by pintail07 »

Both, depends on age and health issues and the state you reside. Until recently I was not a big fan but State Life/ One America have contracts that are good fit for some, not all.
SGM
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Re: Long Term [Care] Rates just went Through the roof!

Post by SGM »

A relative chose to go the self insured route. He is now in an assisted living facility. If current expenses remain the same he has enough funds to last 26 years if he left his investments in cash. If he lived that long he would be the oldest person on the planet. Obviously his expenses will go up with inflation even if he remains at the same facility. If he moved to a more expensive nursing facility his assets will still last his lifetime.

LTCI rates are very difficult to determine as the costs have gone up faster than the rate of inflation. There is a lot of competition among these facilities locally. They have cut back on nursing home beds and greatly increased rehab beds and many spent heavily on upgrading the facilities. Many of these upgrades are simply cosmetic and don't add to the quality of patient care.

Also moral hazard has to be added to the calculation per a report given at last years SS research symposium.

An attorney friend bought LTCI for a few years and then stopped payments because of the increased cost. We have avoided the product and will self insure.
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Lancelot
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Re: Long Term [Care] Rates just went Through the roof!

Post by Lancelot »

WhyNotUs wrote:
WolfgangPauli wrote:
- Reduce my coverage
- Remove the inflation rider
- Stop paying and let it lapse.

Thoughts?
Don't take it personally, fixed income has underperformed for a decade.
Yes, one of the downsides to ultra low interest rates..
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robertalpert
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Re: Long Term [Care] Rates just went Through the roof!

Post by robertalpert »

WolfgangPauli wrote:
Remove the inflation rider

The inflation rider is most likely premiumed at your new / current age.
Duffydog1
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Re: Long Term [Care] Rates just went Through the roof!

Post by Duffydog1 »

I live in Illinois and had the same experience. These increases have to be approved by the State Insurance Commissioner. I couldn't believe it but he approved them. I had a choice of reducing or eliminating my inflation rider or paying a 70% increase. I calculated the difference by giving up the rider and at my age (over 70), and selected this option. If possible keep the policy under the best scenario that works for you. It would be a shame to give up when you might need it in later years.
Dandy
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Re: Long Term [Care] Rates just went Through the roof!

Post by Dandy »

Yikes - it is really bad when you think you have done the prudent thing and this happens. And they say expect further increases. I'm surprised any company is still selling and people are still buying these policies since insurance companies don't really know how to underwrite them properly and face increasing longevity and low interest rates.

My concern is that these policies mean the insurance company is viewing them as a losing product not a profit center and besides raising premiums they will look to be creative in denying claims or delaying payments. A lot depends on what triggers the payments. Life claims are usually easy either you are dead or not. The factors that qualify you for claims may not be so clear and that gray area would be a concern to me given the pressure to stop losses.

Try to see what changes would allow you to retain some coverage but unfortunately your many years of payments may just be sunk costs.
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Re: Long Term [Care] Rates just went Through the roof!

Post by jeffyscott »

SGM wrote:A relative chose to go the self insured route. He is now in an assisted living facility. If current expenses remain the same he has enough funds to last 26 years if he left his investments in cash. If he lived that long he would be the oldest person on the planet. Obviously his expenses will go up with inflation even if he remains at the same facility. If he moved to a more expensive nursing facility his assets will still last his lifetime.

LTCI rates are very difficult to determine as the costs have gone up faster than the rate of inflation. There is a lot of competition among these facilities locally. They have cut back on nursing home beds and greatly increased rehab beds and many spent heavily on upgrading the facilities. Many of these upgrades are simply cosmetic and don't add to the quality of patient care.

Also moral hazard has to be added to the calculation per a report given at last years SS research symposium.

An attorney friend bought LTCI for a few years and then stopped payments because of the increased cost. We have avoided the product and will self insure.
My mom was in assisted living at the end. I learned from looking around for her that many of these places in my area can do essentially everything that a nursing home can, while costing less and providing a nicer environment. She was one of the neediest residents and her costs were about $50,000 per year in 2013. Some places were as high as $6000 per month for those needing the most services and there were one or two that would have been somewhat lower cost than her place. These facilities can bring hospice care in as well, when that is called for. My mom had little money, if she had lived another year or so, she would have run out and the state would have taken over paying for most of the cost of her assisted living.

We are self-insuring based on the assumption that assisted living costs in this range are a realistic worst case. I don't think it is realistic to assume one would be in a nursing home for years on end, given what can be handled in assisted living these days. So I assume worst long term situation would be assisted living.

Besides, in 20 years you'll probably be able to buy or rent a robot that will take care of you in your own home for even less than the cost of assisted living.
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Re: Long Term Rates just with Through the roof!

Post by fourwheelcycle »

jeffyscott wrote:It's becoming prepaid long-term care, rather than insurance. The only way I'd ever consider it is if you could buy a fully paid policy and that policy did not have a limit on total benefits. And even then, there'd still be the issue of the insurer going bankrupt.
Right. At age 60, when my wife and I were considering going on the waiting list for a Type A contract CCRC, I got quotes for two fully pre-paid LTC insurance plans offered through the AARP web site. At that time, the cost for two pre-paid LTC plans was about equal to the non-refundable two person entrance fee for the CCRC we were considering. In turn, the CCRC entrance fee and the cost for two pre-paid LTC plans were each about equal to the cost for three years of care in a high quality local LTC facility.

I concluded my wife and I would break even on the CCRC entrance fee or the two LTC plans if we needed three years of LTC between us before we died. I did not want to take the risk of buying pay as you go LTC insurance, or the risk that the carrier for the two pre-paid LTC plans might become insolvent over a forty year period. We ended up going on the CCRC waiting list. We are now in our late sixties and we plan to move in to the CCRC sometime between age 74 and 78. We will not have to pay the entrance fee until we move in.

The not-for-profit CCRC is highly reputable and has very strong finances. It maintains its reserves at a level equal to about 110% of the total cost for remaining in operation and providing lifetime care for the actuarial life of all current residents. In addition to independent living apartments, it provides on-site LTC, memory care, and assisted living units. The total monthly charge for a couple does not increase if one person moves to any of the long term care settings while the other person remains in the couple's independent living apartment.

The benefits we value are (1) lifetime care in an integrated continuum of care setting very close to a large regional medical center, and (2) relief of any burden on our adult children to arrange our care while we are alive or clear out our possessions and sell our house when we die.
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House Blend
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Re: Long Term [Care] Rates just went Through the roof!

Post by House Blend »

jeffyscott wrote:Besides, in 20 years you'll probably be able to buy or rent a robot that will take care of you in your own home for even less than the cost of assisted living.
You might enjoy the black humor of Robot & Frank (2012):
http://www.imdb.com/title/tt1990314/?ref_=nv_sr_1
IMO
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Re: Long Term [Care] Rates just went Through the roof!

Post by IMO »

WolfgangPauli wrote:Well, I guess I should have expected it. 20 years ago we thought we were doing the right thing by insuring early for LTC. Paid premiums all that time. Just yesterday I received a letter saying my premiums were going up 70% and I can expect another increase after that. My options:

- Reduce my coverage
- Remove the inflation rider
- Stop paying and let it lapse.

This has nothing to do with health or age (so they say). I am sure it has nothing to do with health as there has been no health assessment done since we got it but age, well that is another thing. Seems oddly suspicious that when we turn / get close to 60 our premiums become virtually unaffordable.

Thoughts?
Sorry to hear about your situation. I could express my true thought, but it would get flagged and removed from the blog.

After reading more and more threads on long term care insurance, I'm under the impression that there aren't really good options long term care for most people except to self insure.

I wonder if you could post your specifics for others, how much was the coverage of the plan, how much you were paying annually for 20 years.

This could be a good example of how much your 20 yr premiums paid would be worth today invested in say a typical mutual fund for that time. Furthermore, you're only about 60 yrs old, so I think statistically you'll still at a low risk of actually needing those funds in the near future (hopefully). If one were to continue investing forward ten more years, to say 70 years old (higher risk of actually needing long term care) how much of a long term nest egg would someone have if they had went that route instead?

Would be a great example for others in planning early for future retirement (like you apparently were diligently doing).

Seems so many people get caught up the 4% SWR "number" but seem to forget that unexpected long term care costs for yourself/spouse could make the budget on the 4% SWR possible fail. In other words, seems people should have their "number" on the 4% SWR in one bucket, and then save in a separate bucket one's long term care self insuring costs.
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Re: Long Term [Care] Rates just went Through the roof!

Post by Vanguard Fan 1367 »

My long term care policy went up significantly last fall. I decided to self insure. I do get a credit for premiums paid toward long term care. My parents managed to go on to their reward and were self insured.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."
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nedsaid
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Re: Long Term [Care] Rates just went Through the roof!

Post by nedsaid »

To me, the big clue was when Met Life exited the business several years ago. I declined to purchase.
A fool and his money are good for business.
dn123
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Re: Long Term [Care] Rates just went Through the roof!

Post by dn123 »

IMO wrote:Seems so many people get caught up the 4% SWR "number" but seem to forget that unexpected long term care costs for yourself/spouse could make the budget on the 4% SWR possible fail. In other words, seems people should have their "number" on the 4% SWR in one bucket, and then save in a separate bucket one's long term care self insuring costs.
I had that idea myself (early 50's) and just decided to create a new portfolio (using Schwab's robo advisor service) and am dumping some money into that, and will use that for self insurance later. I realize that if I need the benefit sooner, it wont work out, but Im going to take a bit of risk here, in exchange for not having premiums run up and keeping the $ in the estate in case I were to die w/o needing the benefit.
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Re: Long Term [Care] Rates just went Through the roof!

Post by littlebird »

jeffyscott wrote: My mom was in assisted living at the end. I learned from looking around for her that many of these places in my area can do essentially everything that a nursing home can, while costing less and providing a nicer environment. She was one of the neediest residents and her costs were about $50,000 per year in 2013. Some places were as high as $6000 per month for those needing the most services and there were one or two that would have been somewhat lower cost than her place. These facilities can bring hospice care in as well, when that is called for. My mom had little money, if she had lived another year or so, she would have run out and the state would have taken over paying for most of the cost of her assisted living.

We are self-insuring based on the assumption that assisted living costs in this range are a realistic worst case. I don't think it is realistic to assume one would be in a nursing home for years on end, given what can be handled in assisted living these days. So I assume worst long term situation would be assisted living.

Besides, in 20 years you'll probably be able to buy or rent a robot that will take care of you in your own home for even less than the cost of assisted living.
I wanted to reinforce your point by adding that my spouse, who is bed-bound and no long has use of his hands, but needs no skilled nursing, is in an assisted living group home where he's getting excellent care, close to home, for just under $50,000/year. Although we retired young with very modest resources, we're now, nearly 30 years later, financing this stay with cash flow from SS, pension, annuity, RMD, divs., and interest. I'm able to stay in our home, comfortably, and we ended his first year there up 5% in assets. No LTCI. It definitely is doable! Looking forward to the robot care for myself in a decade or so. :D
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Re: Long Term [Care] Rates just went Through the roof!

Post by jimishooch »

beardsworth wrote:
pintail07 wrote:
The only way I'd ever consider it is if you could buy a fully paid policy and that policy did not have a limit on total benefits. And even then, there'd still be the issue of the insurer going bankrupt.
Check oit the newer hybrid LTC policies, they are fully paid up and pay benefits for life.
Are you referring to LTC-plus-life-insurance? LTC-plus-annuity? Either? Other?
https://www.buaweb.com/cms/resource_lib ... ochure.pdf
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Re: Long Term [Care] Rates just went Through the roof!

Post by IMO »

littlebird wrote:
jeffyscott wrote: Looking forward to the robot care for myself in a decade or so. :D
I do wonder if long term care costs can/will continually increase above normal inflation levels (don't have those stats, just presumed)? Will technological changes help keep costs down or raise costs?

I've seen more and more long term care facilities being built. One could be hopeful that some competition would keep costs in line? Probably just dreaming on that . . .
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Re: Long Term [Care] Rates just went Through the roof!

Post by Limoncello402 »

Have you decided what to do Wolfgang?
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Re: Long Term [Care] Rates just went Through the roof!

Post by Vanguard Fan 1367 »

IMO wrote:
littlebird wrote:
jeffyscott wrote: Looking forward to the robot care for myself in a decade or so. :D
I do wonder if long term care costs can/will continually increase above normal inflation levels (don't have those stats, just presumed)? Will technological changes help keep costs down or raise costs?

I've seen more and more long term care facilities being built. One could be hopeful that some competition would keep costs in line? Probably just dreaming on that . . .

And there is competition among the attorneys for the business of suing nursing homes to help keep costs out of line.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."
inbox788
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Re: Long Term [Care] Rates just went Through the roof!

Post by inbox788 »

IMO wrote:
littlebird wrote:
jeffyscott wrote: Looking forward to the robot care for myself in a decade or so. :D
I do wonder if long term care costs can/will continually increase above normal inflation levels (don't have those stats, just presumed)? Will technological changes help keep costs down or raise costs?

I've seen more and more long term care facilities being built. One could be hopeful that some competition would keep costs in line? Probably just dreaming on that . . .
The conventional wisdom is that costs will go up faster than inflation. Technology adds to cost, even if it helps keep costs down from rising as much, but the direction is rising or rising more without it. And as far as the facilities being built, the baby boomers are going to fill them and more, so if you're a boomer, you may have a hard time finding a good facility. The baby bust generation may benefit from the overbuilding, but there are costs associated with downsizing as well, so not that great a benefit.
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Re: Long Term [Care] Rates just went Through the roof!

Post by littlebird »

Vanguard Fan 1367 wrote: And there is competition among the attorneys for the business of suing nursing homes to help keep costs out of line.
Really? Not in my experience.
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Re: Long Term [Care] Rates just went Through the roof!

Post by Vanguard Fan 1367 »

littlebird wrote:
Vanguard Fan 1367 wrote: And there is competition among the attorneys for the business of suing nursing homes to help keep costs out of line.
Really? Not in my experience.
This probably is not an approved subject to discuss. I haven't looked lately but at one time in the phone book I did see some advertising for someone to sue for nursing home abuse, which I considered old fashioned competition. You had a choice if you wanted an attorney to sue for nursing home abuse.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."
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