Long term care insurance

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maineminder
Posts: 147
Joined: Sat Sep 24, 2011 9:48 am

Re: Long term care insurance

Post by maineminder »

I tried to re-create your numbers and I believe what you plunked in was a policy that paid a 5 year payout @ 200/day with an ACI of 5%, but you only got benefits for 2.2 years.

If you want to compare apples to apples, you may want to pick a policy that pays out closer to your 2.2 year estimate. Not sure what you'd conclude but you'll find that your premiums will be much lower.
pshonore
Posts: 8205
Joined: Sun Jun 28, 2009 2:21 pm

Re: Long term care insurance

Post by pshonore »

Diogenes wrote: Fri Feb 23, 2018 10:33 am Still scratching my head about these LTCI policies. It was suggested that one of the best available now are group policies, such as what is available to Federal employees or former workers. Makes sense as a measuring stick. Most private plans are likely not as good.
Just took a look at that website (https://www.ltcfeds.com) to see how it would shake out, and the costs/benefits look like this:

Example (60 year old): $200/day max benefit, 90-day waiting period, inflation protection ACI - 5%, lifetime max $365K
Yearly premium $5220.

Bought a Genworth policy with $240/day 4 yr coverage (same inflation and waiting period) for spouse and I in our mid 60's about 8 years ago for $4500 covering BOTH of us. Have had one increase of 10% in premium since (to $5k)
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

Diogenes wrote: Fri Feb 23, 2018 10:33 am Still scratching my head about these LTCI policies. It was suggested that one of the best available now are group policies, such as what is available to Federal employees or former workers. Makes sense as a measuring stick. Most private plans are likely not as good.
Just took a look at that website (https://www.ltcfeds.com) to see how it would shake out, and the costs/benefits look like this:

Example (60 year old): $200/day max benefit, 90-day waiting period, inflation protection ACI - 5%, lifetime max $365K
Yearly premium $5220.

Assuming a claim at age 80, the person would have paid in $104K. With the 90-day waiting period, claiming the max per day, the first year the policy would pay $54K, the second and full year $72K, in today's dollars. Per Forbes, the average stay is 2.2 years for a man. That means the benefit used on average would be maybe $150K. Deducting the premium paid of $104K means that on average you would be ahead less than $50K.

What's the benefit to buying peace of mind this way versus setting aside $200K now? I don't see it. If you don't have the money, you likely won't be able to swing a $435/month premium either.

I know there are a couple of folks posting here who sell this kind of insurance and would argue differently, but the current state of LTC seems heavily slanted toward self-insure. Only talking about whats for sale now. Naturally, there will be few anecdotal cases out there from someone who got a stellar plan and paid little for it years ago. But that's not the state of the market now. I suspect many others ultimately canceled such policies anyway due to premium hikes.

Missing something?

Yes, you are missing something. You forgot to calculate the growth of the benefits from the ACI (Automatic Compound Inflation) of 5%. If you start off with a $200 Daily Benefit and it grows by 5% each year, within 20 years, the Daily Benefit will grow be $530. The Lifetime Maximum will grow from $365,000 to $968,000. That means it would take about six months of claims payment to recoup your $100K in premium.

Compounding. It's a beautiful thing.

P.S. the federal employees "group" long-term care policy is a mediocre policy. There are much better policies on the market than that one.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

maineminder wrote: Fri Feb 23, 2018 10:54 am I tried to re-create your numbers and I believe what you plunked in was a policy that paid a 5 year payout @ 200/day with an ACI of 5%, but you only got benefits for 2.2 years.

If you want to compare apples to apples, you may want to pick a policy that pays out closer to your 2.2 year estimate. Not sure what you'd conclude but you'll find that your premiums will be much lower.
His mistake was that he forgot to calculate how much the benefits would increase each year due to the 5% ACI (Automatic Compounding Increase).
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
DrGoogle2017
Posts: 2528
Joined: Mon Aug 14, 2017 12:31 pm

Re: Long term care insurance

Post by DrGoogle2017 »

WoW2012 wrote: Fri Feb 23, 2018 12:10 pm
Diogenes wrote: Fri Feb 23, 2018 10:33 am Still scratching my head about these LTCI policies. It was suggested that one of the best available now are group policies, such as what is available to Federal employees or former workers. Makes sense as a measuring stick. Most private plans are likely not as good.
Just took a look at that website (https://www.ltcfeds.com) to see how it would shake out, and the costs/benefits look like this:

Example (60 year old): $200/day max benefit, 90-day waiting period, inflation protection ACI - 5%, lifetime max $365K
Yearly premium $5220.

Assuming a claim at age 80, the person would have paid in $104K. With the 90-day waiting period, claiming the max per day, the first year the policy would pay $54K, the second and full year $72K, in today's dollars. Per Forbes, the average stay is 2.2 years for a man. That means the benefit used on average would be maybe $150K. Deducting the premium paid of $104K means that on average you would be ahead less than $50K.

What's the benefit to buying peace of mind this way versus setting aside $200K now? I don't see it. If you don't have the money, you likely won't be able to swing a $435/month premium either.

I know there are a couple of folks posting here who sell this kind of insurance and would argue differently, but the current state of LTC seems heavily slanted toward self-insure. Only talking about whats for sale now. Naturally, there will be few anecdotal cases out there from someone who got a stellar plan and paid little for it years ago. But that's not the state of the market now. I suspect many others ultimately canceled such policies anyway due to premium hikes.

Missing something?

Yes, you are missing something. You forgot to calculate the growth of the benefits from the ACI (Automatic Compound Inflation) of 5%. If you start off with a $200 Daily Benefit and it grows by 5% each year, within 20 years, the Daily Benefit will grow be $530. The Lifetime Maximum will grow from $365,000 to $968,000. That means it would take about six months of claims payment to recoup your $100K in premium.

Compounding. It's a beautiful thing.

P.S. the federal employees "group" long-term care policy is a mediocre policy. There are much better policies on the market than that one.
How so? They have the power to negotiate as a group.
The growth is not free, you have to pay for it. You can put the same money in premium in the stock market.
Diogenes
Posts: 602
Joined: Sat Mar 03, 2012 2:58 pm

Re: Long term care insurance

Post by Diogenes »

maineminder wrote: Fri Feb 23, 2018 10:54 am I tried to re-create your numbers and I believe what you plunked in was a policy that paid a 5 year payout @ 200/day with an ACI of 5%, but you only got benefits for 2.2 years.

If you want to compare apples to apples, you may want to pick a policy that pays out closer to your 2.2 year estimate. Not sure what you'd conclude but you'll find that your premiums will be much lower.
You're right. I changed it to the 3-year payout and revised the numbers. Thanks!
Diogenes
Posts: 602
Joined: Sat Mar 03, 2012 2:58 pm

Re: Long term care insurance

Post by Diogenes »

WoW2012 wrote: Fri Feb 23, 2018 12:12 pm
maineminder wrote: Fri Feb 23, 2018 10:54 am I tried to re-create your numbers and I believe what you plunked in was a policy that paid a 5 year payout @ 200/day with an ACI of 5%, but you only got benefits for 2.2 years.

If you want to compare apples to apples, you may want to pick a policy that pays out closer to your 2.2 year estimate. Not sure what you'd conclude but you'll find that your premiums will be much lower.
His mistake was that he forgot to calculate how much the benefits would increase each year due to the 5% ACI (Automatic Compounding Increase).
I see your point. But as we can't predict other things compounding either, like the increases in premiums over 20 years, or the earnings on keeping the $200K at Vanguard for 20 years, I elected to just keep it simple.
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JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: Long term care insurance

Post by JoeRetire »

FBN2014 wrote: Thu Feb 22, 2018 1:39 pm In the same article Edelman makes this statement: "And we believe advances in exponential technologies — including medical innovations in science, neuroscience, physiology and psychology — will eliminate the need for long-term care by 2030."
Yeah, I'm not betting on that happening either.
Edelman doesn't want you to buy LTCi so you can keep it in your portfolio for him to manage.
No matter what else you think of them, your statement is simply not true. They advise some to purchase LTCi. They advise others to purchase a Hybrid Insurance policy. They advise others to self-insure.
Last edited by JoeRetire on Fri Feb 23, 2018 1:12 pm, edited 1 time in total.
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WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

DrGoogle2017 wrote: Fri Feb 23, 2018 12:14 pm
WoW2012 wrote: Fri Feb 23, 2018 12:10 pm

Yes, you are missing something. You forgot to calculate the growth of the benefits from the ACI (Automatic Compound Inflation) of 5%. If you start off with a $200 Daily Benefit and it grows by 5% each year, within 20 years, the Daily Benefit will grow be $530. The Lifetime Maximum will grow from $365,000 to $968,000. That means it would take about six months of claims payment to recoup your $100K in premium.

Compounding. It's a beautiful thing.

P.S. the federal employees "group" long-term care policy is a mediocre policy. There are much better policies on the market than that one.
How so? They have the power to negotiate as a group.
The growth is not free, you have to pay for it. You can put the same money in premium in the stock market.
The federal employees group plan is not a great policy. It's average.
It does NOT have marital discounts.
It does NOT have preferred health discounts.
It is NOT a Partnership-Qualified policy.
It is NOT regulated by the Rate Stability Regulation (in fact the premium goes up every 7 years, sometimes more often)

They have the power to negotiate as a group, but the group itself is very high risk pool and it's priced accordingly.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

DrGoogle2017 wrote: Fri Feb 23, 2018 12:14 pm
You can put the same money in premium in the stock market.
A 60-year old male, in good health, can get $500,000 of long-term care insurance benefits for $225 per month.
You'd have to earn 24%, pre-tax, every year, for 20 straight years.
Which Vanguard fund does that?
I'll sell my house and put all my money into that fund!
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
ncbill
Posts: 2049
Joined: Sun Jul 06, 2008 4:03 pm
Location: Western NC

Re: Long term care insurance

Post by ncbill »

pshonore wrote: Fri Feb 23, 2018 11:58 am
Diogenes wrote: Fri Feb 23, 2018 10:33 am Still scratching my head about these LTCI policies. It was suggested that one of the best available now are group policies, such as what is available to Federal employees or former workers. Makes sense as a measuring stick. Most private plans are likely not as good.
Just took a look at that website (https://www.ltcfeds.com) to see how it would shake out, and the costs/benefits look like this:

Example (60 year old): $200/day max benefit, 90-day waiting period, inflation protection ACI - 5%, lifetime max $365K
Yearly premium $5220.

Bought a Genworth policy with $240/day 4 yr coverage (same inflation and waiting period) for spouse and I in our mid 60's about 8 years ago for $4500 covering BOTH of us. Have had one increase of 10% in premium since (to $5k)
Except those terms aren't available anymore, same with the John-Hancock-no-premium-increase-allowed policies from the 1990s other posters keep mentioning.

We're even eligible for the federal policies since our kid's active duty military, but as other posters note they're terrible.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

ncbill wrote: Fri Feb 23, 2018 3:11 pm
pshonore wrote: Fri Feb 23, 2018 11:58 am
Diogenes wrote: Fri Feb 23, 2018 10:33 am Still scratching my head about these LTCI policies. It was suggested that one of the best available now are group policies, such as what is available to Federal employees or former workers. Makes sense as a measuring stick. Most private plans are likely not as good.
Just took a look at that website (https://www.ltcfeds.com) to see how it would shake out, and the costs/benefits look like this:

Example (60 year old): $200/day max benefit, 90-day waiting period, inflation protection ACI - 5%, lifetime max $365K
Yearly premium $5220.

Bought a Genworth policy with $240/day 4 yr coverage (same inflation and waiting period) for spouse and I in our mid 60's about 8 years ago for $4500 covering BOTH of us. Have had one increase of 10% in premium since (to $5k)
Except those terms aren't available anymore, same with the John-Hancock-no-premium-increase-allowed policies from the 1990s other posters keep mentioning.

We're even eligible for the federal policies since our kid's active duty military, but as other posters note they're terrible.

It's not that there aren't good LTCi policies today.
There are excellent LTCi policies today, even better than policies sold 20 years ago.
They are just hard to find.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
DrGoogle2017
Posts: 2528
Joined: Mon Aug 14, 2017 12:31 pm

Re: Long term care insurance

Post by DrGoogle2017 »

WoW2012 wrote: Fri Feb 23, 2018 1:17 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 12:14 pm
You can put the same money in premium in the stock market.
A 60-year old male, in good health, can get $500,000 of long-term care insurance benefits for $225 per month.
You'd have to earn 24%, pre-tax, every year, for 20 straight years.
Which Vanguard fund does that?
I'll sell my house and put all my money into that fund!
You said they don’t discriminate on health problem with a few exceptions. Why not wait a while like when I get into my 70s and purchase them. My family has likelyhood of getting stroke or heart attach, but not AZ.
Dinosaur Dad
Posts: 233
Joined: Wed Feb 22, 2017 5:05 pm
Location: Connecticut

Re: Long term care insurance

Post by Dinosaur Dad »

I found this article very helpful in illustrating some of the considerations:

http://www.theretirementmanifesto.com/w ... insurance/
"Take calculated risks - that is quite different from being rash." | General George S. Patton
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

DrGoogle2017 wrote: Fri Feb 23, 2018 4:59 pm
WoW2012 wrote: Fri Feb 23, 2018 1:17 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 12:14 pm
You can put the same money in premium in the stock market.
A 60-year old male, in good health, can get $500,000 of long-term care insurance benefits for $225 per month.
You'd have to earn 24%, pre-tax, every year, for 20 straight years.
Which Vanguard fund does that?
I'll sell my house and put all my money into that fund!
You said they don’t discriminate on health problem with a few exceptions. Why not wait a while like when I get into my 70s and purchase them. My family has likelyhood of getting stroke or heart attach, but not AZ.

1) A 60-year old male, in good health, can get $500,000 of long-term care insurance benefits for $225 per month. (Total premiums paid to age 90 would be $81,000)
2) A 70-year old male, in good health, can get $500,000 of long-term care insurance benefits for $590 per month. (Total premiums paid to age 90 would be $141,600) Waiting to age 70 doesn't save you any money.
3) But the main reason it's better to buy younger, rather than older, is because you don't know when you'll have that stroke or heart attack.

If I knew that I wasn't going to need long-term care until age 90, I wouldn't own a policy. My concern is, "what if I need care at age 65 and my wife is only 60"? That's too early to start to drain retirement accounts to pay for my care. Even if I died in a few years, she still has a lot of years to go... I don't want to leave her in financial straits.
Last edited by WoW2012 on Fri Feb 23, 2018 5:39 pm, edited 1 time in total.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

Dinosaur Dad wrote: Fri Feb 23, 2018 5:14 pm I found this article very helpful in illustrating some of the considerations:

http://www.theretirementmanifesto.com/w ... insurance/

If all long-term care policies were like the policy described in that article, then I would "self-insure" too.
Fortunately, most LTCi policies are NOTHING like the policy he used for his "analysis".
There are so many false statements and half-truths in that article, I don't know where to begin.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
DrGoogle2017
Posts: 2528
Joined: Mon Aug 14, 2017 12:31 pm

Re: Long term care insurance

Post by DrGoogle2017 »

True but I take my risk. Maybe I’ll wait until I’m in my 80s.
Another question I have is when you receive LTC money, do you still have to pay for premium, or does it stop.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

DrGoogle2017 wrote: Fri Feb 23, 2018 5:19 pm True but I take my risk. Maybe I’ll wait until I’m in my 80s.
Another question I have is when you receive LTC money, do you still have to pay for premium, or does it stop.
You're not putting yourself at risk.
You're putting your family and loved ones at risk.
They are the ones who will bear the burden of your care, not you.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
DrGoogle2017
Posts: 2528
Joined: Mon Aug 14, 2017 12:31 pm

Re: Long term care insurance

Post by DrGoogle2017 »

WoW2012 wrote: Fri Feb 23, 2018 5:43 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 5:19 pm True but I take my risk. Maybe I’ll wait until I’m in my 80s.
Another question I have is when you receive LTC money, do you still have to pay for premium, or does it stop.
You're not putting yourself at risk.
You're putting your family and loved ones at risk.
They are the ones who will bear the burden of your care, not you.
You hit all your he emotional points. There is money for them to take care of me.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

DrGoogle2017 wrote: Fri Feb 23, 2018 5:51 pm
WoW2012 wrote: Fri Feb 23, 2018 5:43 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 5:19 pm True but I take my risk. Maybe I’ll wait until I’m in my 80s.
Another question I have is when you receive LTC money, do you still have to pay for premium, or does it stop.
You're not putting yourself at risk.
You're putting your family and loved ones at risk.
They are the ones who will bear the burden of your care, not you.
You hit all your he emotional points. There is money for them to take care of me.

Caregiving is emotional. It's all about family and our most important and our closest elationships.
Wouldn't it be better if your kids oversaw your care rather than become your caregiver?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
DrGoogle2017
Posts: 2528
Joined: Mon Aug 14, 2017 12:31 pm

Re: Long term care insurance

Post by DrGoogle2017 »

WoW2012 wrote: Fri Feb 23, 2018 5:57 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 5:51 pm
WoW2012 wrote: Fri Feb 23, 2018 5:43 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 5:19 pm True but I take my risk. Maybe I’ll wait until I’m in my 80s.
Another question I have is when you receive LTC money, do you still have to pay for premium, or does it stop.
You're not putting yourself at risk.
You're putting your family and loved ones at risk.
They are the ones who will bear the burden of your care, not you.
You hit all your he emotional points. There is money for them to take care of me.

Caregiving is emotional. It's all about family and our most important and our closest elationships.
Wouldn't it be better if your kids oversaw your care rather than become your caregiver?
That’s the plan, they will manage my care, there is money for that. They just there to make sure I don’t get rip off by any caregiver.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

DrGoogle2017 wrote: Fri Feb 23, 2018 8:18 pm

That’s the plan, they will manage my care, there is money for that. They just there to make sure I don’t get rip off by any caregiver.

Have you and your spouse made a list of which assets to liquidate in what order?
Have you specifically told your children to use your assets to pay for your care instead of becoming your caregiver?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
DrGoogle2017
Posts: 2528
Joined: Mon Aug 14, 2017 12:31 pm

Re: Long term care insurance

Post by DrGoogle2017 »

WoW2012 wrote: Fri Feb 23, 2018 8:32 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 8:18 pm

That’s the plan, they will manage my care, there is money for that. They just there to make sure I don’t get rip off by any caregiver.

Have you and your spouse made a list of which assets to liquidate in what order?
Have you specifically told your children to use your assets to pay for your care instead of becoming your caregiver?
I have a budget of $120k per year, current nursing home cost in my area. It will be in perpetuity, no need to sell anything.
WoW2012
Posts: 1455
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Re: Long term care insurance

Post by WoW2012 »

DrGoogle2017 wrote: Fri Feb 23, 2018 8:34 pm
WoW2012 wrote: Fri Feb 23, 2018 8:32 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 8:18 pm

That’s the plan, they will manage my care, there is money for that. They just there to make sure I don’t get rip off by any caregiver.

Have you and your spouse made a list of which assets to liquidate in what order?
Have you specifically told your children to use your assets to pay for your care instead of becoming your caregiver?
I have a budget of $120k per year, current nursing home cost in my area. It will be in perpetuity, no need to sell anything.

Are you suggesting that when you need long-term care all of your other expenses will stop?
Don't you have a spouse? Does he/she have his/her own income?
Is he/she not dependent upon any of your $120K income?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
DrGoogle2017
Posts: 2528
Joined: Mon Aug 14, 2017 12:31 pm

Re: Long term care insurance

Post by DrGoogle2017 »

WoW2012 wrote: Fri Feb 23, 2018 8:39 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 8:34 pm
WoW2012 wrote: Fri Feb 23, 2018 8:32 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 8:18 pm

That’s the plan, they will manage my care, there is money for that. They just there to make sure I don’t get rip off by any caregiver.

Have you and your spouse made a list of which assets to liquidate in what order?
Have you specifically told your children to use your assets to pay for your care instead of becoming your caregiver?
I have a budget of $120k per year, current nursing home cost in my area. It will be in perpetuity, no need to sell anything.

Are you suggesting that when you need long-term care all of your other expenses will stop?
Don't you have a spouse? Does he/she have his/her own income?
Is he/she not dependent upon any of your $120K income?
No I’m not suggesting anything at all.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

DrGoogle2017 wrote: Fri Feb 23, 2018 8:49 pm
WoW2012 wrote: Fri Feb 23, 2018 8:39 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 8:34 pm
WoW2012 wrote: Fri Feb 23, 2018 8:32 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 8:18 pm

That’s the plan, they will manage my care, there is money for that. They just there to make sure I don’t get rip off by any caregiver.

Have you and your spouse made a list of which assets to liquidate in what order?
Have you specifically told your children to use your assets to pay for your care instead of becoming your caregiver?
I have a budget of $120k per year, current nursing home cost in my area. It will be in perpetuity, no need to sell anything.

Are you suggesting that when you need long-term care all of your other expenses will stop?
Don't you have a spouse? Does he/she have his/her own income?
Is he/she not dependent upon any of your $120K income?
No I’m not suggesting anything at all.

For the sake of your family, you might want to think through these hard questions.
Not everyone needs (or wants) long-term care insurance.
But everyone should have a long-term care plan (which may or may not include long-term care insurance).
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
DrGoogle2017
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Re: Long term care insurance

Post by DrGoogle2017 »

WoW2012 wrote: Fri Feb 23, 2018 8:52 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 8:49 pm
WoW2012 wrote: Fri Feb 23, 2018 8:39 pm
DrGoogle2017 wrote: Fri Feb 23, 2018 8:34 pm
WoW2012 wrote: Fri Feb 23, 2018 8:32 pm


Have you and your spouse made a list of which assets to liquidate in what order?
Have you specifically told your children to use your assets to pay for your care instead of becoming your caregiver?
I have a budget of $120k per year, current nursing home cost in my area. It will be in perpetuity, no need to sell anything.

Are you suggesting that when you need long-term care all of your other expenses will stop?
Don't you have a spouse? Does he/she have his/her own income?
Is he/she not dependent upon any of your $120K income?
No I’m not suggesting anything at all.

For the sake of your family, you might want to think through these hard questions.
Not everyone needs (or wants) long-term care insurance.
But everyone should have a long-term care plan (which may or may not include long-term care insurance).
Thank you for your comment. I will.
Diogenes
Posts: 602
Joined: Sat Mar 03, 2012 2:58 pm

Re: Long term care insurance

Post by Diogenes »

WoW2012 wrote: Fri Feb 23, 2018 5:18 pm
Dinosaur Dad wrote: Fri Feb 23, 2018 5:14 pm I found this article very helpful in illustrating some of the considerations:

http://www.theretirementmanifesto.com/w ... insurance/

If all long-term care policies were like the policy described in that article, then I would "self-insure" too.
Fortunately, most LTCi policies are NOTHING like the policy he used for his "analysis".
There are so many false statements and half-truths in that article, I don't know where to begin.
Wow12, the article seems well done and the Morningstar second article he links to even better.
What specifically is false? Do you know of an article that illustrates that and why self-insurance is not a good option?
Do you sell LTCI by chance?
westrichj312
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Joined: Wed Jul 05, 2017 4:25 pm

Re: Long term care insurance

Post by westrichj312 »

It's hard for some people to understand you have been sold a bill of goods!
FBN2014
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Re: Long term care insurance

Post by FBN2014 »

Many posters have stated that being in a Medicaid facility is inferior to a private pay facility. I would disagree with that generalization. All facilities have to meet state standards. The best way to go is picking a facility with a mix of private pay and Medicaid patients. The quality of care will be the same. I have an 89 year old uncle that I am the POA for and that I placed in an assisted living/dementia facility. He is enrolled in the Medicaid PACE program which provides room, board, and medical care at a University hospital. The facility is clean, the food is excellent, and the supervision is excellent. My daughter works as a physical therapist at a long term care Medicaid facility. Again, the facility is very good. The stigma associated with Medicaid facilities presently is exaggerated because they are highly regulated unlike in the past.
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WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

Diogenes wrote: Fri Feb 23, 2018 11:10 pm
WoW2012 wrote: Fri Feb 23, 2018 5:18 pm
Dinosaur Dad wrote: Fri Feb 23, 2018 5:14 pm I found this article very helpful in illustrating some of the considerations:

http://www.theretirementmanifesto.com/w ... insurance/

If all long-term care policies were like the policy described in that article, then I would "self-insure" too.
Fortunately, most LTCi policies are NOTHING like the policy he used for his "analysis".
There are so many false statements and half-truths in that article, I don't know where to begin.
Wow12, the article seems well done and the Morningstar second article he links to even better.
What specifically is false? Do you know of an article that illustrates that and why self-insurance is not a good option?
Do you sell LTCI by chance?
I've had two close relatives who have needed long-term care. One had chosen the "self-insure" route. The other had decided to buy long-term care insurance. The one who chose the "self-insure" route had a massive stroke less than two years after telling us he wanted to "self insure". Together, he and his wife needed care for a total of over 11 years. (6.5 years for him and 4.5 years for her). Needless to say, the "self-insure" approach didn't work very well for them.

The other relative bought a policy about 10 years ago and she's using it now. In less than 5 months of using it, she's recovered all the premiums she paid, plus she's saved tens of thousands of dollars in capital gains taxes by not having to sell any of her rental properties.

Here's the issue I have with that blogger. How can someone self-insure if they don't know the answer to two very simple questions:

1) when will the need for long-term care arrive?
2) for how long will care be needed?

Any analysis that assumes care won't be needed until age 90 and for no more than three years (like that blogger does) is ridiculous. If I knew I wasn't going to be hospitalized this year, I wouldn't spend $15,000 on medical insurance this year. If I knew I wasn't going to be hospitalized for the next 40 years, I definitely would not own medical insurance. I'd "self-insure".

If you start with a false premise (like he does), your conclusion is probably flawed (like his is).

P.S. I do own long-term care insurance and I'm paying A LOT LESS than the premiums he used for his calculations.
P.P.S. My wife is a licensed insurance agent for one of the largest insurers in the country, so this is something we've discussed with all our family members.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

FBN2014 wrote: Sat Feb 24, 2018 9:28 am Many posters have stated that being in a Medicaid facility is inferior to a private pay facility. I would disagree with that generalization. All facilities have to meet state standards. The best way to go is picking a facility with a mix of private pay and Medicaid patients. The quality of care will be the same. I have an 89 year old uncle that I am the POA for and that I placed in an assisted living/dementia facility. He is enrolled in the Medicaid PACE program which provides room, board, and medical care at a University hospital. The facility is clean, the food is excellent, and the supervision is excellent. My daughter works as a physical therapist at a long term care Medicaid facility. Again, the facility is very good. The stigma associated with Medicaid facilities presently is exaggerated because they are highly regulated unlike in the past.
That is true.
However, there are more choices for people who don't rely on Medicaid.
A LOT more choices. The best memory care facilities do not take Medicaid.
Also, the Medicaid waiting lists can be very long, especially for the nicer facilities.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

westrichj312 wrote: Sat Feb 24, 2018 8:44 am It's hard for some people to understand you have been sold a bill of goods!
Agreed. I trust everything I read in the "Mailbag" section of Barron's.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
marcopolo
Posts: 8411
Joined: Sat Dec 03, 2016 9:22 am

Re: Long term care insurance

Post by marcopolo »

WoW2012 wrote: Sat Feb 24, 2018 9:48 am
Diogenes wrote: Fri Feb 23, 2018 11:10 pm
WoW2012 wrote: Fri Feb 23, 2018 5:18 pm
Dinosaur Dad wrote: Fri Feb 23, 2018 5:14 pm I found this article very helpful in illustrating some of the considerations:

http://www.theretirementmanifesto.com/w ... insurance/

If all long-term care policies were like the policy described in that article, then I would "self-insure" too.
Fortunately, most LTCi policies are NOTHING like the policy he used for his "analysis".
There are so many false statements and half-truths in that article, I don't know where to begin.
Wow12, the article seems well done and the Morningstar second article he links to even better.
What specifically is false? Do you know of an article that illustrates that and why self-insurance is not a good option?
Do you sell LTCI by chance?
I've had two close relatives who have needed long-term care. One had chosen the "self-insure" route. The other had decided to buy long-term care insurance. The one who chose the "self-insure" route had a massive stroke less than two years after telling us he wanted to "self insure". Together, he and his wife needed care for a total of over 11 years. (6.5 years for him and 4.5 years for her). Needless to say, the "self-insure" approach didn't work very well for them.

The other relative bought a policy about 10 years ago and she's using it now. In less than 5 months of using it, she's recovered all the premiums she paid, plus she's saved tens of thousands of dollars in capital gains taxes by not having to sell any of her rental properties.

Here's the issue I have with that blogger. How can someone self-insure if they don't know the answer to two very simple questions:

1) when will the need for long-term care arrive?
2) for how long will care be needed?

Any analysis that assumes care won't be needed until age 90 and for no more than three years (like that blogger does) is ridiculous. If I knew I wasn't going to be hospitalized this year, I wouldn't spend $15,000 on medical insurance this year. If I knew I wasn't going to be hospitalized for the next 40 years, I definitely would not own medical insurance. I'd "self-insure".

If you start with a false premise (like he does), your conclusion is probably flawed (like his is).

P.S. I do own long-term care insurance and I'm paying A LOT LESS than the premiums he used for his calculations.
P.P.S. My wife is a licensed insurance agent for one of the largest insurers in the country, so this is something we've discussed with all our family members.
The policies i see available are not a good comparison to health insurance. With health insurance, now that lifetime caps have been lifted, it covers the tail risk of very expensive event(s). This is the ideal reason to have insurance.
What I have seen available in LTC policies is not really insurance, but rather pre-paid benefits, in that the policy only pays a pre-determined benefit.
I can self pay for the duration that most LTC policies will cover. What would be useful is a policy that had several years of deductible/exclusion, then covered the tail risk of long term stay. That would be actual insurance, and probably worth purchasing. Why don't insurance companies sell such a product? Hybrid policies MAY be an option, by why not a simpler LTC policy that does not mix in unneeded life insurance?
Once in a while you get shown the light, in the strangest of places if you look at it right.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

marcopolo wrote: Sat Feb 24, 2018 11:16 am

The policies i see available are not a good comparison to health insurance. With health insurance, now that lifetime caps have been lifted, it covers the tail risk of very expensive event(s). This is the ideal reason to have insurance.
What I have seen available in LTC policies is not really insurance, but rather pre-paid benefits, in that the policy only pays a pre-determined benefit.
I can self pay for the duration that most LTC policies will cover. What would be useful is a policy that had several years of deductible/exclusion, then covered the tail risk of long term stay. That would be actual insurance, and probably worth purchasing. Why don't insurance companies sell such a product? Hybrid policies MAY be an option, by why not a simpler LTC policy that does not mix in unneeded life insurance?

I wasn't comparing long-term care insurance with health insurance. I was comparing the idea of self-insuring versus buying insurance. The blogger assumed he wouldn't need long-term care until age 90 (he's 51 now) and it would only be for three years and it would only be for ONE spouse.

If I knew I wasn't going to need surgery or a lengthy hospital stay for the next 39 years I wouldn't own medical insurance. I'd self-insure. The blogger's flaw is that he assumes he won't need long-term care at age 60 or 65 or 70 (like many people do).

I'm sorry you haven't found a policy that covers a long-tail risk. They are out there.

The biggest problem with long-term care insurance is the insurance agents. Most of them know nothing about long-term care insurance and even less about financial planning.

My policy costs $100 per month and has almost one million dollars in benefits. Even if I don't need care for 50 years, it won't take me long to recover my costs. It's real insurance, not "pre-paid".

fyi... regulators won't allow a policy that has "several years of deductible/exclusion".

Just curious, do you own your cars free and clear?
If so, do you have collision insurance on them?
If so, what's the deductible on the collision insurance?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
marcopolo
Posts: 8411
Joined: Sat Dec 03, 2016 9:22 am

Re: Long term care insurance

Post by marcopolo »

WoW2012 wrote: Sat Feb 24, 2018 11:56 am
marcopolo wrote: Sat Feb 24, 2018 11:16 am

The policies i see available are not a good comparison to health insurance. With health insurance, now that lifetime caps have been lifted, it covers the tail risk of very expensive event(s). This is the ideal reason to have insurance.
What I have seen available in LTC policies is not really insurance, but rather pre-paid benefits, in that the policy only pays a pre-determined benefit.
I can self pay for the duration that most LTC policies will cover. What would be useful is a policy that had several years of deductible/exclusion, then covered the tail risk of long term stay. That would be actual insurance, and probably worth purchasing. Why don't insurance companies sell such a product? Hybrid policies MAY be an option, by why not a simpler LTC policy that does not mix in unneeded life insurance?

I wasn't comparing long-term care insurance with health insurance. I was comparing the idea of self-insuring versus buying insurance. The blogger assumed he wouldn't need long-term care until age 90 (he's 51 now) and it would only be for three years and it would only be for ONE spouse.

If I knew I wasn't going to need surgery or a lengthy hospital stay for the next 39 years I wouldn't own medical insurance. I'd self-insure. The blogger's flaw is that he assumes he won't need long-term care at age 60 or 65 or 70 (like many people do).

I'm sorry you haven't found a policy that covers a long-tail risk. They are out there.

The biggest problem with long-term care insurance is the insurance agents. Most of them know nothing about long-term care insurance and even less about financial planning.

My policy costs $100 per month and has almost one million dollars in benefits. Even if I don't need care for 50 years, it won't take me long to recover my costs. It's real insurance, not "pre-paid".

fyi... regulators won't allow a policy that has "several years of deductible/exclusion".

Just curious, do you own your cars free and clear?
If so, do you have collision insurance on them?
If so, what's the deductible on the collision insurance?
I am not discounting the value of insurance. I have used and continue to use all sorts of insurance.

I purchased term life insurance until i had enough assets to no longer need it. I have a high liability coverage for auto and home, and a very large umbrella policy. Our cars are all paid for, but we do NOT carry collision coverage them, as that is a loss i can easily absorb. We have health insurance with high deductible. The common thread in all those decisions is to insure for long tail risk. Insurance is not efficient for routine, expected, events.

My problem with LTC insurance policies available today is it is the exact opposite of that. As you point out most people will need it at some point. Most of them for short periods of time (I think i have seen <3 years stated, but i do not know how accurate that is). In any case, that is what most policies cover. In my view that is the wrong use of insurance. Covering those high-probability cases is what drives up the cost of LTC policies to the point where most people don't buy them. A better model would be to provide coverage that is rarely used (so insurance company can make its necessary profits), but then in those rare cases, protects the purchaser from long tail risk that would other wise ruin them financially. That should make the policies much more reasonably priced, as most policies would never pay any claims.

You say that i am just not finding them, that would be great news. Can you provide a link to a policy with unlimited benefits, that is not a hybrid life insurance product, i would be interested in that.
Once in a while you get shown the light, in the strangest of places if you look at it right.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

marcopolo wrote: Sat Feb 24, 2018 12:24 pm
I am not discounting the value of insurance. I have used and continue to use all sorts of insurance.

I purchased term life insurance until i had enough assets to no longer need it. I have a high liability coverage for auto and home, and a very large umbrella policy. Our cars are all paid for, but we do NOT carry collision coverage them, as that is a loss i can easily absorb. We have health insurance with high deductible. The common thread in all those decisions is to insure for long tail risk. Insurance is not efficient for routine, expected, events.

My problem with LTC insurance policies available today is it is the exact opposite of that. As you point out most people will need it at some point. Most of them for short periods of time (I think i have seen <3 years stated, but i do not know how accurate that is). In any case, that is what most policies cover. In my view that is the wrong use of insurance. Covering those high-probability cases is what drives up the cost of LTC policies to the point where most people don't buy them. A better model would be to provide coverage that is rarely used (so insurance company can make its necessary profits), but then in those rare cases, protects the purchaser from long tail risk that would other wise ruin them financially. That should make the policies much more reasonably priced, as most policies would never pay any claims.

You say that i am just not finding them, that would be great news. Can you provide a link to a policy with unlimited benefits, that is not a hybrid life insurance product, i would be interested in that.
Would a policy with 15 years of shared benefits be too short of a tail for you?
A healthy 51-year old couple could share 15 years of benefits, roughly $1.6M of benefits, for $117 per month per spouse.
That sounds like real insurance and not just "pre-paid".
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Dinosaur Dad
Posts: 233
Joined: Wed Feb 22, 2017 5:05 pm
Location: Connecticut

Re: Long term care insurance

Post by Dinosaur Dad »

WoW2012 wrote: Sat Feb 24, 2018 12:45 pm
marcopolo wrote: Sat Feb 24, 2018 12:24 pm
I am not discounting the value of insurance. I have used and continue to use all sorts of insurance.

I purchased term life insurance until i had enough assets to no longer need it. I have a high liability coverage for auto and home, and a very large umbrella policy. Our cars are all paid for, but we do NOT carry collision coverage them, as that is a loss i can easily absorb. We have health insurance with high deductible. The common thread in all those decisions is to insure for long tail risk. Insurance is not efficient for routine, expected, events.

My problem with LTC insurance policies available today is it is the exact opposite of that. As you point out most people will need it at some point. Most of them for short periods of time (I think i have seen <3 years stated, but i do not know how accurate that is). In any case, that is what most policies cover. In my view that is the wrong use of insurance. Covering those high-probability cases is what drives up the cost of LTC policies to the point where most people don't buy them. A better model would be to provide coverage that is rarely used (so insurance company can make its necessary profits), but then in those rare cases, protects the purchaser from long tail risk that would other wise ruin them financially. That should make the policies much more reasonably priced, as most policies would never pay any claims.

You say that i am just not finding them, that would be great news. Can you provide a link to a policy with unlimited benefits, that is not a hybrid life insurance product, i would be interested in that.
Would a policy with 15 years of shared benefits be too short of a tail for you?
A healthy 51-year old couple could share 15 years of benefits, roughly $1.6M of benefits, for $117 per month per spouse.
That sounds like real insurance and not just "pre-paid".
Coming back into this thread...interesting and thoughtful (and bluntly honest!)comments...appreciate both of your contributions and thanks for clarifying your points. My experience, with my mother: she had an old "unlimited asset protection" policy that worked like a charm, starting with in-home care and progressing to nursing home. . Some are saying that these are still available...I haven't found them locally (Connecticut), but that would certainly be worth looking into. Those policies I have looked into are much more expensive than before, and the terms are limited. To me it really becomes an exercise in forecasting something that may or may not happen, and deciding how much risk you want to take on yourself or transfer. For me, right now my conclusion is to (1) set aside $500k in today's investments as specifically long term care money for me and my wife, and (2) potentially pull on other funds that are earmarked for child's legacy (investments and/or house equity), if that becomes necessary. High inflation on medical and long term costs is a source of a lot of worry as I think this through.
"Take calculated risks - that is quite different from being rash." | General George S. Patton
pintail07
Posts: 380
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Re: Long term care insurance

Post by pintail07 »

There are traditional policies with unlimited benefit periods. It really depends on what state you reside as to if they are available. Yes I do sell LTC most agents don't really understand the policies available and how they can be utilized. These policies also can be structured to return your premiums if not used, but that rider is expensive. The hybrid policies in some instances can be helpful, but mostly for underwriting leniency. The true cost of especially the life hybrids are rarely talked about. Talk to an agent that understands the market to get a clearer view.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

Dinosaur Dad wrote: Sun Feb 25, 2018 2:37 pm For me, right now my conclusion is to (1) set aside $500k in today's investments as specifically long term care money for me and my wife, and (2) potentially pull on other funds that are earmarked for child's legacy (investments and/or house equity), if that becomes necessary. High inflation on medical and long term costs is a source of a lot of worry as I think this through.
Here's a better idea:
(1) set aside $100k in today's investments as specifically long term care money for you and your wife, and
(2) since you average about 8% return on your money, that $100K will generate $8,000 per year (on average)
(3) take the $8,000 year, pay any tax that is due (estimated $2,000 in taxes)
(4) take the remaining $6,000 per year and buy $1,000,000 of long-term care insurance that can be shared between you and your wife.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Dinosaur Dad
Posts: 233
Joined: Wed Feb 22, 2017 5:05 pm
Location: Connecticut

Re: Long term care insurance

Post by Dinosaur Dad »

WoW2012 wrote: Sun Feb 25, 2018 4:24 pm
Dinosaur Dad wrote: Sun Feb 25, 2018 2:37 pm For me, right now my conclusion is to (1) set aside $500k in today's investments as specifically long term care money for me and my wife, and (2) potentially pull on other funds that are earmarked for child's legacy (investments and/or house equity), if that becomes necessary. High inflation on medical and long term costs is a source of a lot of worry as I think this through.
Here's a better idea:
(1) set aside $100k in today's investments as specifically long term care money for you and your wife, and
(2) since you average about 8% return on your money, that $100K will generate $8,000 per year (on average)
(3) take the $8,000 year, pay any tax that is due (estimated $2,000 in taxes)
(4) take the remaining $6,000 per year and buy $1,000,000 of long-term care insurance that can be shared between you and your wife.
This is worth looking into. I'll have to see how much $6k/year buys for us (we both turn 62 this year), see about waiting periods, inflation index, anticipation of future premium increases, etc. One thing I like about this is that it's pure protection (vs life insurance with long term care provision), protects either my wife or me, depending who passes first. Thanks for sharing your thoughts.
"Take calculated risks - that is quite different from being rash." | General George S. Patton
GridironGems
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Re: Long term care insurance

Post by GridironGems »

I'm 31 and who knows what it'll look like in 30 years, but I plan on using part of my HSA to pay for LTC premiums
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munemaker
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Re: Long term care insurance

Post by munemaker »

I am somewhat surprised the people are still interested in LTC policies. I know two elderly people who have had and used these policies. In both cases, as they aged, the insurance companies jacked the rates way up, to the point where one of them almost cancelled. I intervened and the payment was made by overnight mail on the last day of the grace period. The insurance companies are just hoping that after paying in for years and years, you will cancel due to their huge rate hikes, just before you would start drawing.

Then, if you do manage to swallow the huge rate increases, they make it difficult for you to collect. Both of these people I know managed to collect, but they don't make it easy. These were with two different providers. One company allowed in home care using uncredentialed people who were paid under $10/hour. In the other case, the company required credentialled people to provide the in home care at a cost of $15/hour. So...you have limited coverage dollars to work with, and in one case it goes twice as far as the other case. Who would ever think about asking about this when you are buying insurance?

What do you want from insurance? You want to off load your risk. So what happens when the rates are jacked up after you have been paying for many years? The insurance companies are off loading their risk on to you.

These policies favor the insurance companies and are not friendly to the consumer. I would not touch one of these policies under any circumstances unless they guarantee a level premium, which of course they will never do.
Dinosaur Dad
Posts: 233
Joined: Wed Feb 22, 2017 5:05 pm
Location: Connecticut

Re: Long term care insurance

Post by Dinosaur Dad »

munemaker wrote: Sun Feb 25, 2018 8:46 pm I am somewhat surprised the people are still interested in LTC policies. I know two elderly people who have had and used these policies. In both cases, as they aged, the insurance companies jacked the rates way up, to the point where one of them almost cancelled. I intervened and the payment was made by overnight mail on the last day of the grace period. The insurance companies are just hoping that after paying in for years and years, you will cancel due to their huge rate hikes, just before you would start drawing.

Then, if you do manage to swallow the huge rate increases, they make it difficult for you to collect. Both of these people I know managed to collect, but they don't make it easy. These were with two different providers. One company allowed in home care using uncredentialed people who were paid under $10/hour. In the other case, the company required credentialled people to provide the in home care at a cost of $15/hour. So...you have limited coverage dollars to work with, and in one case it goes twice as far as the other case. Who would ever think about asking about this when you are buying insurance?

What do you want from insurance? You want to off load your risk. So what happens when the rates are jacked up after you have been paying for many years? The insurance companies are off loading their risk on to you.

These policies favor the insurance companies and are not friendly to the consumer. I would not touch one of these policies under any circumstances unless they guarantee a level premium, which of course they will never do.
I too have watched as the rates were raised. There's been a big shakeout among LTC providers over the past 3-5 years and it certainly gives you pause...the idea of big rate increases over time, plus the policies seems to be more restrictive, give me a lot of pause. However, I'm not ruling it out completely...have more homework to do in context of my larger retirement plan.
"Take calculated risks - that is quite different from being rash." | General George S. Patton
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

munemaker wrote: Sun Feb 25, 2018 8:46 pm I am somewhat surprised the people are still interested in LTC policies. I know two elderly people who have had and used these policies. In both cases, as they aged, the insurance companies jacked the rates way up, to the point where one of them almost cancelled. I intervened and the payment was made by overnight mail on the last day of the grace period. The insurance companies are just hoping that after paying in for years and years, you will cancel due to their huge rate hikes, just before you would start drawing.

Then, if you do manage to swallow the huge rate increases, they make it difficult for you to collect. Both of these people I know managed to collect, but they don't make it easy. These were with two different providers. One company allowed in home care using uncredentialed people who were paid under $10/hour. In the other case, the company required credentialled people to provide the in home care at a cost of $15/hour. So...you have limited coverage dollars to work with, and in one case it goes twice as far as the other case. Who would ever think about asking about this when you are buying insurance?

What do you want from insurance? You want to off load your risk. So what happens when the rates are jacked up after you have been paying for many years? The insurance companies are off loading their risk on to you.

These policies favor the insurance companies and are not friendly to the consumer. I would not touch one of these policies under any circumstances unless they guarantee a level premium, which of course they will never do.
It is true that many of the older long-term care insurance policies have had large premium increases.

Fortunately, regulators do not allow any LTCi policy purchased today to use the old pricing assumptions. Additionally, to protect consumers purchasing policies today, 41 states have passed strict pricing regulations. These regulations have removed the profit incentive from rate increases. It forces long-term care ins. co.'s to lower their profits if they seek a rate increase.

Now this is bad news and good news. The bad news is that a policy purchased today costs more than a similar policy that was purchased 10 years ago. The good news is that since today’s policies are priced more conservatively and there is no longer a profit incentive in rate increases, today's policies are less likely to have a large premium increase in your lifetime.

P.S. There are a couple of policies where the premiums go up every year and the increases get larger and larger as you age. Those policies are rarely a good choice and they are not an example of how most long-term care policies work.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

Dinosaur Dad wrote: Sun Feb 25, 2018 9:05 pm
munemaker wrote: Sun Feb 25, 2018 8:46 pm I am somewhat surprised the people are still interested in LTC policies. I know two elderly people who have had and used these policies. In both cases, as they aged, the insurance companies jacked the rates way up, to the point where one of them almost cancelled. I intervened and the payment was made by overnight mail on the last day of the grace period. The insurance companies are just hoping that after paying in for years and years, you will cancel due to their huge rate hikes, just before you would start drawing.

Then, if you do manage to swallow the huge rate increases, they make it difficult for you to collect. Both of these people I know managed to collect, but they don't make it easy. These were with two different providers. One company allowed in home care using uncredentialed people who were paid under $10/hour. In the other case, the company required credentialled people to provide the in home care at a cost of $15/hour. So...you have limited coverage dollars to work with, and in one case it goes twice as far as the other case. Who would ever think about asking about this when you are buying insurance?

What do you want from insurance? You want to off load your risk. So what happens when the rates are jacked up after you have been paying for many years? The insurance companies are off loading their risk on to you.

These policies favor the insurance companies and are not friendly to the consumer. I would not touch one of these policies under any circumstances unless they guarantee a level premium, which of course they will never do.
I too have watched as the rates were raised. There's been a big shakeout among LTC providers over the past 3-5 years and it certainly gives you pause...the idea of big rate increases over time, plus the policies seems to be more restrictive, give me a lot of pause. However, I'm not ruling it out completely...have more homework to do in context of my larger retirement plan.
Most things have improved over the past 25 years including long-term care insurance. Traditional long-term care insurance policies available for sale today have stronger consumer protections and better benefits than policies that were sold years ago. Regulators enacted major reforms to long-term care insurance in 1993, 1996, 2000 and 2005.

However, insurance reforms are NOT retroactive. Insurance reforms are like airbags in cars. Airbags became mandatory for all new cars sold in the U.S. beginning on September 1st, 1998. The government regulations did NOT require that airbags be installed in older cars, only new cars.

The same is true for long-term care insurance. The long-term care insurance reforms implemented in 1993 did not improve policies purchased before 1993. The reforms only improved the policies that were purchased after 1993. The same is true for the reforms the regulators implemented in 1996, 2000, and 2005.

In most states, long-term care insurance policies purchased today have all the consumer protections mandated by the 1993, 1996, 2000, and 2005 reforms.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

When my relative needed to file a claim on her long-term care policy,I suggested she have the home care agency file the claim for her. Home care agencies (especially the big national chains) file thousands of long-term care insurance claims every year. They are experts at getting LTCi claims approved quickly.

The owner of the local agency had my relative sign a couple of HIPAA forms and they took care of everything from there forward. The claim was approved in a few weeks. They sent the bills to the insurance company every month and it went very smoothly. It couldn't have been any easier.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

munemaker wrote: Sun Feb 25, 2018 8:46 pm I am somewhat surprised the people are still interested in LTC policies. I know two elderly people who have had and used these policies. In both cases, as they aged, the insurance companies jacked the rates way up, to the point where one of them almost cancelled. I intervened and the payment was made by overnight mail on the last day of the grace period. The insurance companies are just hoping that after paying in for years and years, you will cancel due to their huge rate hikes, just before you would start drawing.

Then, if you do manage to swallow the huge rate increases, they make it difficult for you to collect. Both of these people I know managed to collect, but they don't make it easy. These were with two different providers. One company allowed in home care using uncredentialed people who were paid under $10/hour. In the other case, the company required credentialled people to provide the in home care at a cost of $15/hour. So...you have limited coverage dollars to work with, and in one case it goes twice as far as the other case. Who would ever think about asking about this when you are buying insurance?

What do you want from insurance? You want to off load your risk. So what happens when the rates are jacked up after you have been paying for many years? The insurance companies are off loading their risk on to you.

These policies favor the insurance companies and are not friendly to the consumer. I would not touch one of these policies under any circumstances unless they guarantee a level premium, which of course they will never do.

fyi, LTC insurance companies have NEVER been allowed to increase rates on any policyholder because the policyholder has gotten older. Your understanding of why these two people had a rate increase is incorrect.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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munemaker
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Joined: Sat Jan 18, 2014 5:14 pm

Re: Long term care insurance

Post by munemaker »

WoW2012 wrote: Sun Feb 25, 2018 10:23 pm
munemaker wrote: Sun Feb 25, 2018 8:46 pm I am somewhat surprised the people are still interested in LTC policies. I know two elderly people who have had and used these policies. In both cases, as they aged, the insurance companies jacked the rates way up, to the point where one of them almost cancelled. I intervened and the payment was made by overnight mail on the last day of the grace period. The insurance companies are just hoping that after paying in for years and years, you will cancel due to their huge rate hikes, just before you would start drawing.

Then, if you do manage to swallow the huge rate increases, they make it difficult for you to collect. Both of these people I know managed to collect, but they don't make it easy. These were with two different providers. One company allowed in home care using uncredentialed people who were paid under $10/hour. In the other case, the company required credentialled people to provide the in home care at a cost of $15/hour. So...you have limited coverage dollars to work with, and in one case it goes twice as far as the other case. Who would ever think about asking about this when you are buying insurance?

What do you want from insurance? You want to off load your risk. So what happens when the rates are jacked up after you have been paying for many years? The insurance companies are off loading their risk on to you.

These policies favor the insurance companies and are not friendly to the consumer. I would not touch one of these policies under any circumstances unless they guarantee a level premium, which of course they will never do.

fyi, LTC insurance companies have NEVER been allowed to increase rates on any policyholder because the policyholder has gotten older. Your understanding of why these two people had a rate increase is incorrect.
I know that. I never said companies increased rates because the policyholder got older. I said that as the policyholder aged, the rates were raised. Age was not the cause, but the rates were indeed raised as they got older. To the elderly policyholder, the cause doesn't really matter anyway.

My understanding is correct, and it was stated correctly. You read something into this that was not stated or implied.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Long term care insurance

Post by WoW2012 »

munemaker wrote: Mon Feb 26, 2018 8:33 pm
WoW2012 wrote: Sun Feb 25, 2018 10:23 pm
munemaker wrote: Sun Feb 25, 2018 8:46 pm I am somewhat surprised the people are still interested in LTC policies. I know two elderly people who have had and used these policies. In both cases, as they aged, the insurance companies jacked the rates way up, to the point where one of them almost cancelled. I intervened and the payment was made by overnight mail on the last day of the grace period. The insurance companies are just hoping that after paying in for years and years, you will cancel due to their huge rate hikes, just before you would start drawing.

Then, if you do manage to swallow the huge rate increases, they make it difficult for you to collect. Both of these people I know managed to collect, but they don't make it easy. These were with two different providers. One company allowed in home care using uncredentialed people who were paid under $10/hour. In the other case, the company required credentialled people to provide the in home care at a cost of $15/hour. So...you have limited coverage dollars to work with, and in one case it goes twice as far as the other case. Who would ever think about asking about this when you are buying insurance?

What do you want from insurance? You want to off load your risk. So what happens when the rates are jacked up after you have been paying for many years? The insurance companies are off loading their risk on to you.

These policies favor the insurance companies and are not friendly to the consumer. I would not touch one of these policies under any circumstances unless they guarantee a level premium, which of course they will never do.

fyi, LTC insurance companies have NEVER been allowed to increase rates on any policyholder because the policyholder has gotten older. Your understanding of why these two people had a rate increase is incorrect.
I know that. I never said companies increased rates because the policyholder got older. I said that as the policyholder aged, the rates were raised. Age was not the cause, but the rates were indeed raised as they got older. To the elderly policyholder, the cause doesn't really matter anyway.

My understanding is correct, and it was stated correctly. You read something into this that was not stated or implied.

Thank you for clarifying.

What many people don't know is that 41 states have very strict pricing regulations for new policies designed to prevent future rate increases on policies purchased today.

Every new policy that is for sale today, in those states, must comply with the following pricing regulations:

It must be priced higher than all previous policies that company has ever sold in that state,
It must include ALL prior rate increases in the new pricing, and
It must include a pricing “cushion” (about 10% more) as extra protection from rate increases.

For example, if the prior policy sold by the insurance company cost $1,000 per year for X benefits and that policy had an 80% rate increase, a new policy with X benefits must be priced no less than $1,980.

$1,000 (old policy pricing)
plus 80% (old policy rate increase)
plus 10% (cushion)
= $1,980 (new policy pricing)

Lastly, the regulation requires that if the insurance company seeks a rate increase, they must first lower their profits to a level predetermined by the regulation and re-allocate those profits toward claims, thereby resulting in a smaller rate increase. This helps to discourage insurance companies from requesting rate increases on the policies issued under these regulations because no insurance company likes to lower their profits.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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