Long Term Care

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ready53
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Long Term Care

Post by ready53 » Sun Sep 23, 2018 3:04 pm

It has been 1 ½ years since my last significant post. As an update, I retired late last year after 39+ years with a megacorp. It wasn’t fully on my terms, but I did receive a severance package which was certainly welcome. I am 65 (and now on Medicare) and my DW will turn 65 in a couple months and will go on Medicare in November. We have an immediate $67.9K annual pension (non-COLAed) and our plans for social security will provide $37.4K annually starting in 2019 and will increase to $67.4K annually in 2023. We have $4.3M in financial assets (95% in qualified plans) and we are in the process of selling our house (free and clear) that we hope to clear $650K after commissions and closing costs. Our expenses are quite high for the next year or so (~ $190K), but will be around $120K annually thereafter. I think we should be OK financially as we journey through our next chapter.
Something I am now starting to investigate is Long Term Care. While DW and I are quite active and in good health now, we certainly are fully aware that things can change as we advance in age, and one or both of us needing some sort of Long Term Care support is a definite possibility. Long Term Care can be quite expensive and I want to make sure we plan for it appropriately. I assume our choices are to self-insure or purchase some sort of Long Term Care policy. I would very much appreciate hearing insights on this topic. With our assets ($4.9M after we sell the house) is self-insuring the best route or should we consider a Long Term Care policy? If we go the Long Term Care policy route are the certain types of policies we should consider? Are there certain types we should definitely avoid?
Any insights and suggestions will be most appreciated.

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mickeyd
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Re: Long Term Care

Post by mickeyd » Sun Sep 23, 2018 4:20 pm

I Have always thought that LTCi was over priced and a waste of money in the long term. Of course, insurance agents will advise you that this is incorrect. I know that I have saved many thousands of $s over the last 10 years by assuming the LTC risk myself.
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Dandy
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Re: Long Term Care

Post by Dandy » Sun Sep 23, 2018 4:51 pm

I feel you have enough assets/income to self insure or certainly to buy LTC policies for both of you. I have less assets/income and have decided to self insure. I usually err on being insured in almost every way. I would love to take this risk off the table. But the insurance companies don't know how to price/profit on this product.

The deal is that most likely there will be a decent waiting period ( 6 months?) that you will pay the expenses for, then the coverage period or amount the insurance will pay for, then it is back to your dime. My understanding is that insurers will likely cap their payments at say $300k or 36 months. So, if you put aside about $300k for each of you will likely self insure at least for a 2 or 3 years.

If you don't like that approach then buy LTC for both and pay premiums for the rest of your lives, with the strong possibility of rate increases along the way. If you can find a policy from a top insurer that you pay a lump up front you might want to consider that.

My info is a bit dated so always check it out before making a final decision.

bsteiner
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Re: Long Term Care

Post by bsteiner » Sun Sep 23, 2018 5:21 pm

Are there any long-term care policies? The ones I've seen are called long-term but are really short-term, only covering the first few years. A long-term policy would cover an unlimited amount of time, but not the first few years.

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Cyclesafe
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Re: Long Term Care

Post by Cyclesafe » Sun Sep 23, 2018 5:32 pm

Assisted living in San Diego costs about $120k/year for a couple. A nursing home costs more, but with hospice and a DNR it shouldn't be necessary.

LTC insurance premiums are is paid from day one and may not be needed by both of you or even one of you. And the contract tells you when you'll be eligible to collect benefits. I think retaining control of when you make the move to independent, to assisted, to nursing (if needed) is priceless. With $4.9M you both ought to have a wonderful retirement and a comfortable dotage.

To gain confidence, make an appointment with several facilities in your area. Talk as if you are planning for your parents. Find out about the stages of care, how long each stage typically lasts, and how much each stage costs. Decide before you go about medical directives, because your wishes during the last stages of life have a huge bearing on cost.

For example, assisted living is typically for three years. Costs start off low at the beginning, but increase when more and more assistance with Activities of Daily Life is required. Extreme elderly enrolled in hospice typically expire in assisted living.

Tough but necessary conversations. Good luck.

(Corrected reflecting comments below)
Last edited by Cyclesafe on Mon Sep 24, 2018 10:21 am, edited 1 time in total.

pintail07
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Re: Long Term Care

Post by pintail07 » Sun Sep 23, 2018 5:37 pm

There are "long term" policies that will pay benefits for life. Self insuring is great as long as you don't need it. If you do have insurance after a few months of claims all premiums are more than returned in the form of claims. Self insuring can cost much more if one goes on claim. There are some concepts that can protect you from future rate increases.

JoeRetire
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Re: Long Term Care

Post by JoeRetire » Sun Sep 23, 2018 5:46 pm

ready53 wrote:
Sun Sep 23, 2018 3:04 pm
With our assets ($4.9M after we sell the house) is self-insuring the best route
Yes

delamer
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Re: Long Term Care

Post by delamer » Sun Sep 23, 2018 5:55 pm

Cyclesafe wrote:
Sun Sep 23, 2018 5:32 pm
Assisted living in San Diego costs about $120k/year for a couple. A nursing home costs more, but with hospice and a DNR it shouldn't be necessary.

LTC insurance is paid from day one and may not be needed by both of you or even one of you. And the contract tells you when you'll be eligible to collect benefits. I think retaining control of when you make the move to independent, to assisted, to nursing (if needed) is priceless. With $4.9M you both ought to have a wonderful retirement and a comfortable dotage.

To gain confidence, make an appointment with several facilities in your area. Talk as if you are planning for your parents. Find out about the stages of care, how long each stage typically lasts, and how much each stage costs. Decide before you go about medical directives, because your wishes during the last stages of life have a huge bearing on cost.

For example, assisted living is typically for three years. Costs start off low at the beginning, but increase when more and more assistance with Activities of Daily Life is required. Extreme elderly enrolled in hospice typically expire in assisted living.

Tough but necessary conversations. Good luck.
It is not true that the combination of hospice care and DNRs keep people out of nursing homes; otherwise the only people in them would be there for short-term rehab. For example, people with dementia plus physical disabilities may not be suitably placed in assisted living since they need skilled nursing care.

LTC policies don’t pay out from Day 1. Usually, there is a 60 to 90 day waiting period before benefits kick in.

I do agree that the OP is in a good position to self insure. The real financial risk is not that one of them will need a couple of years of care — which is ehat such insurance covers — but that one (or both) will need 10 years plus of care.

delamer
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Re: Long Term Care

Post by delamer » Sun Sep 23, 2018 5:58 pm

pintail07 wrote:
Sun Sep 23, 2018 5:37 pm
There are "long term" policies that will pay benefits for life. Self insuring is great as long as you don't need it. If you do have insurance after a few months of claims all premiums are more than returned in the form of claims. Self insuring can cost much more if one goes on claim. There are some concepts that can protect you from future rate increases.
Do you know specifically which insurers offer lifetims coverage?

This has been a topic before on the forum, and no one has ever identified such an insurer.

delamer
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Re: Long Term Care

Post by delamer » Sun Sep 23, 2018 6:03 pm

bsteiner wrote:
Sun Sep 23, 2018 5:21 pm
Are there any long-term care policies? The ones I've seen are called long-term but are really short-term, only covering the first few years. A long-term policy would cover an unlimited amount of time, but not the first few years.
This is exactly the type if policy that I’d like.

We can self insure for a few years. It is the prospect of needing care for many years that is scary. Low probability but high risk.

Buying into a well-funded CCRC is the closest thing to providing unlimited coverage.

pintail07
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Re: Long Term Care

Post by pintail07 » Sun Sep 23, 2018 6:07 pm

National Guardian and One America. I show both to my clients. One big obstacle however, is about 30% of those that apply can't qualify medically. Make sure you talk with a independent broker and let them ask about medical history. We often submit preliminary info to the insurer to get an idea of insurability before officially submitting application.
Last edited by pintail07 on Sun Sep 23, 2018 6:16 pm, edited 1 time in total.

delamer
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Re: Long Term Care

Post by delamer » Sun Sep 23, 2018 6:13 pm

pintail07 wrote:
Sun Sep 23, 2018 6:07 pm
National Guardian and One America. I show both to my clients. One big obstacle however, is about 30% of those that apply can't qualify medically. Make sure you talk with a independent broker and let them ask about medical history. We often submit preliminary info to the insurer to get an idea of inseparability before officially submitting application.
Thanks.

bsteiner
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Re: Long Term Care

Post by bsteiner » Sun Sep 23, 2018 6:20 pm

It looks like National Guardian has a lifetime policy (though not in New York), but the maximum deductible is only 6 months. It looks like One America's policies are hybrids with life insurance or an annuity, which means you have to also buy something that you probably won't need or want.

Can you get National Guardian to offer a 3-year deductible? That should significantly reduce the cost, since you would only be insuring against the risk of needing care for a long time.

pintail07
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Re: Long Term Care

Post by pintail07 » Sun Sep 23, 2018 6:29 pm

I assume that longer deductible periods would appeal to few prospects. Regarding the One America policies, if the policy can do what you want it to do, pay a claim for lifetime and no rate increases, and the premiums are tolerable, seems the added bonus of life insurance or an annuity are really irrelevant if one accepts that the policy will provide the benefits at a reasonable price. In addition, returns most of the premium if there is never a claim. There are some other other downsides.

hesson11
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Re: Long Term Care

Post by hesson11 » Sun Sep 23, 2018 6:38 pm

You might find it helpful to visit:

https://longtermcare.acl.gov/

I just started poking around there, so I haven't investigated it fully. But it addresses paying for LTC care through alternatives I hadn't known about, specifically annuities and life insurance. I think it's at least worth checking out.

TN_Boy
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Re: Long Term Care

Post by TN_Boy » Sun Sep 23, 2018 7:11 pm

pintail07 wrote:
Sun Sep 23, 2018 6:29 pm
I assume that longer deductible periods would appeal to few prospects. Regarding the One America policies, if the policy can do what you want it to do, pay a claim for lifetime and no rate increases, and the premiums are tolerable, seems the added bonus of life insurance or an annuity are really irrelevant if one accepts that the policy will provide the benefits at a reasonable price. In addition, returns most of the premium if there is never a claim. There are some other other downsides.
"I assume that longer deductible periods would appeal to few prospects."

Why do you think this?

I think there should be a *lot* of people interested in a long deductible period for LTC insurance. It would sure appeal to me. Many people with decent but not huge portfolios would be fine handling a year or three of LTC, but 5 to 10 years would be tough, especially if one spouse need lots of care and the other was still around.

A policy with a deductible longer than the average assisted living stay should be quite affordable -- many people wouldn't need it, and many of the people triggering the policy would use it for only a modest amount of time.

TN_Boy
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Re: Long Term Care

Post by TN_Boy » Sun Sep 23, 2018 7:14 pm

JoeRetire wrote:
Sun Sep 23, 2018 5:46 pm
ready53 wrote:
Sun Sep 23, 2018 3:04 pm
With our assets ($4.9M after we sell the house) is self-insuring the best route
Yes
+1

With your income stream and financial assets you appear to be fine even if one of you winds up needing a lot of care.

HereToLearn
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Re: Long Term Care

Post by HereToLearn » Sun Sep 23, 2018 8:13 pm

delamer wrote:
Sun Sep 23, 2018 5:55 pm
Cyclesafe wrote:
Sun Sep 23, 2018 5:32 pm

LTC policies don’t pay out from Day 1. Usually, there is a 60 to 90 day waiting period before benefits kick in.

Agree that LTC policies do not pay out from Day 1, but also want to add that in order for the LTC carrier to start paying benefits, the insured has to have been documented to be unable to perform the ADLs for the duration of the elimination period, and to have received care from a licensed provider during that time. So...no paying the helper under the table/off the books, and also must withhold the employee share of FICA and remit along with the employer share of FICA.

I have found that the licensed aides require a minimum shift of four hours, so if the insured only needed help for two hours, she must still pay for four hours.

An elderly person may need help for a long time before becoming eligible for LTC benefits. Obviously this will not be the case with someone who suffers a stroke or something, but is the case for those suffering slow declines.

pintail07
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Re: Long Term Care

Post by pintail07 » Sun Sep 23, 2018 8:38 pm

Most plans have the ability to add a rider that waives the waiting period for home care, I always include on client policies.

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mlebuf
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Re: Long Term Care

Post by mlebuf » Sun Sep 23, 2018 9:02 pm

Hi Ready 53,

This is a no-brainer. At your level of wealth you do not need LTC insurance. Manage your money prudently with a balanced portfolio and you and your spouse will be well equipped to pay any costs of long term care. Here's wishing you both a great retirement.
Best wishes, | Michael | | Invest your time actively and your money passively.

marcopolo
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Re: Long Term Care

Post by marcopolo » Sun Sep 23, 2018 9:15 pm

TN_Boy wrote:
Sun Sep 23, 2018 7:11 pm
pintail07 wrote:
Sun Sep 23, 2018 6:29 pm
I assume that longer deductible periods would appeal to few prospects. Regarding the One America policies, if the policy can do what you want it to do, pay a claim for lifetime and no rate increases, and the premiums are tolerable, seems the added bonus of life insurance or an annuity are really irrelevant if one accepts that the policy will provide the benefits at a reasonable price. In addition, returns most of the premium if there is never a claim. There are some other other downsides.
"I assume that longer deductible periods would appeal to few prospects."

Why do you think this?

I think there should be a *lot* of people interested in a long deductible period for LTC insurance. It would sure appeal to me. Many people with decent but not huge portfolios would be fine handling a year or three of LTC, but 5 to 10 years would be tough, especially if one spouse need lots of care and the other was still around.

A policy with a deductible longer than the average assisted living stay should be quite affordable -- many people wouldn't need it, and many of the people triggering the policy would use it for only a modest amount of time.

I would also love such a policy. This has come up in previous discussions. I believe such long deductible/exclusion period is specifically prohibited by state laws in just about every state. I believe in a miss-guided effort to protect consumers from purchasing insurance that never pays. Those law makers seem to have forgotten the real purpose of insurance, and are treating it more like what health insurance has also become, pre-paid services.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Smoke
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Re: Long Term Care

Post by Smoke » Mon Sep 24, 2018 3:52 am

I took out a LTH package for my wife and I 14 yrs ago at age 50. Lifetime coverage, 5% per yr inflation increases etc etc.
It's a what my current insurance agent says is a cadillac plan no one offers anymore, it was thru Allainz , they no longer offer it.
You don't need to be old to be put into a nursing home or need care, accidents do happen.
Strange is that the agent I bought it from at the time has passed away. He was younger than I was .

retengr
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Re: Long Term Care

Post by retengr » Mon Sep 24, 2018 7:31 am

We had a life insurance policy which we no longer needed. We did a 1035 exchange to apply the ~$150K cash value to a hybrid policy from State Life. They offer a variety of hybrid options; we chose Asset Care II. This is a one payment policy. We live in Florida.
These things are a little difficult to fully understand, but each of us is insured for LTC without a time limit. There is a 60 day period where we pay before the policy kicks in; there is a 3% inflation rider.
Another benefit for us: we did not want to just cash in the life insurance policy because there would be a significant tax impact in one year. With the hybrid policy, this is spread over 8 years, making the impact much less.
We had been planning to self insure for LTC; the hybrid policy will not cover the full cost of what LTC be, but it might cover about half. We did not want to put more money into the hybrid policy to up that percentage; we just wanted to convert something we no longer needed (life insurance) to something we might need (LTC help).

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Cyclesafe
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Re: Long Term Care

Post by Cyclesafe » Mon Sep 24, 2018 10:18 am

delamer wrote:
Sun Sep 23, 2018 5:55 pm
Cyclesafe wrote:
Sun Sep 23, 2018 5:32 pm
Assisted living in San Diego costs about $120k/year for a couple. A nursing home costs more, but with hospice and a DNR it shouldn't be necessary.

LTC insurance is paid from day one and may not be needed by both of you or even one of you. And the contract tells you when you'll be eligible to collect benefits. I think retaining control of when you make the move to independent, to assisted, to nursing (if needed) is priceless. With $4.9M you both ought to have a wonderful retirement and a comfortable dotage.

To gain confidence, make an appointment with several facilities in your area. Talk as if you are planning for your parents. Find out about the stages of care, how long each stage typically lasts, and how much each stage costs. Decide before you go about medical directives, because your wishes during the last stages of life have a huge bearing on cost.

For example, assisted living is typically for three years. Costs start off low at the beginning, but increase when more and more assistance with Activities of Daily Life is required. Extreme elderly enrolled in hospice typically expire in assisted living.

Tough but necessary conversations. Good luck.
It is not true that the combination of hospice care and DNRs keep people out of nursing homes; otherwise the only people in them would be there for short-term rehab. For example, people with dementia plus physical disabilities may not be suitably placed in assisted living since they need skilled nursing care. Yes, one can come up with a combination of circumstances where hospice and a DNR would not preclude a potentially long stay in a nursing home. Nevertheless, with hospice and a DNR the chances of a stint in a nursing home are low.

LTC policies don’t pay out from Day 1. Usually, there is a 60 to 90 day waiting period before benefits kick in. Poor writing on my part. What I meant to write is that LTC premiums start from day one - meaning start as soon as the agreement is entered into. "Many" people end up not needing LTC at all.

I do agree that the OP is in a good position to self insure. The real financial risk is not that one of them will need a couple of years of care — which is ehat such insurance covers — but that one (or both) will need 10 years plus of care.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 10:41 am

mickeyd wrote:
Sun Sep 23, 2018 4:20 pm
I Have always thought that LTCi was over priced and a waste of money in the long term. Of course, insurance agents will advise you that this is incorrect. I know that I have saved many thousands of $s over the last 10 years by assuming the LTC risk myself.
I wonder how many people decide to self-insure for long-term care, yet they insure their jewelry, they own collision insurance on the cars they paid cash for, and they own umbrella liability insurance.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 10:50 am

Dandy wrote:
Sun Sep 23, 2018 4:51 pm
But the insurance companies don't know how to price/profit on this product.

My understanding is that insurers will likely cap their payments at say $300k or 36 months.

So, if you put aside about $300k for each of you will likely self insure at least for a 2 or 3 years.

with the strong possibility of rate increases along the way.

My info is a bit dated so always check it out before making a final decision.
Dandy: But the insurance companies don't know how to price/profit on this product.
WoW2012: Some insurance companies have found LTC insurance to be very profitable. Others have not. It's like any other business. The ones who know how to do it, stay in the business. The ones who don't, get out. We don't buy IBM PC's anymore, does that mean that personal computers are dead? No. It means we buy our laptops and PC's from HP (or some other provider who can provide the product profitably and at a good price).

Dandy: My understanding is that insurers will likely cap their payments at say $300k or 36 months.
WoW2012: My wife and I share about $900,000 of long-term care insurance benefits. We could have purchased more or less. It's not up to the insurer how much benefit you buy, it's up to you.

Dandy: So, if you put aside about $300k for each of you will likely self insure at least for a 2 or 3 years.
WoW2012: Or, I could invest that $300K and take a small portion of the earnings to buy a long-term care policy.

Dandy: with the strong possibility of rate increases along the way.
WoW2012: There are new regulations now which penalize the insurers if they seek a rate increase.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 10:58 am

bsteiner wrote:
Sun Sep 23, 2018 5:21 pm
Are there any long-term care policies? The ones I've seen are called long-term but are really short-term, only covering the first few years. A long-term policy would cover an unlimited amount of time, but not the first few years.
Why not just buy the longest elimination period available in your state and then choose a large co-insurance amount?

JoeRetire
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Re: Long Term Care

Post by JoeRetire » Mon Sep 24, 2018 11:02 am

WoW2012 wrote:
Mon Sep 24, 2018 10:41 am
mickeyd wrote:
Sun Sep 23, 2018 4:20 pm
I Have always thought that LTCi was over priced and a waste of money in the long term. Of course, insurance agents will advise you that this is incorrect. I know that I have saved many thousands of $s over the last 10 years by assuming the LTC risk myself.
I wonder how many people decide to self-insure for long-term care, yet they insure their jewelry, they own collision insurance on the cars they paid cash for, and they own umbrella liability insurance.
I believe the OP has sufficient assets to afford long term care.

But many folks don't have those kinds of assets yet choose not to purchase long term care insurance anyway. And many of those folks just use the handy term "self-insure" to make themselves feel better about their choice. mickeyd more correctly uses the term "assuming the LTC risk myself", although saving "many thousands" won't amount to much if long-term care is actually needed.

If you have a lot of assets such that you can afford to pay for your long term care, then it makes sense not to purchase insurance.
If you have very few assets such that you can expect Medicaid to pay for your long term care, then it makes sense not to purchase insurance.
If you are among the many of us in the middle, that's when it's a more difficult decision. Trying to get lucky and just hoping for the best isn't really the same as "self-insure".

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 11:05 am

Cyclesafe wrote:
Sun Sep 23, 2018 5:32 pm


Assisted living in San Diego costs about $120k/year for a couple. A nursing home costs more, but with hospice and a DNR it shouldn't be necessary.


This is dangerous advice.
Hospice is only for people who have terminal illnesses (typically less than six months to live).
A "Do Not Resuscitate" (DNR) will not prevent most people from needing long-term care.
There are over 5M people with Alzheimer's.
How is a DNR going to prevent them from needing care?

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 11:23 am

Cyclesafe wrote:
Sun Sep 23, 2018 5:32 pm

And the contract tells you when you'll be eligible to collect benefits. I think retaining control of when you make the move to independent, to assisted, to nursing (if needed) is priceless.

Cycle: And the contract tells you when you'll be eligible to collect benefits.
WoW2012: Doesn't every insurance contract (home, auto, medical, disability, etc...) tell you when you'll be eligible to collect benefits? Every long-term care policy that meets the federal guidelines pays benefits if someone needs "standby assistance" or "physical assistance" to perform any two of the activities of daily living (e.g. bathing, dressing, eating, toileting, getting out of a bed or chair, and maintaining continence.) Also, benefits are paid if someone is cognitively impaired and needs to be supervised to avoid harming themselves or others.


Cycle: I think retaining control of when you make the move to independent, to assisted, to nursing (if needed) is priceless.
WoW2012: This is a common misunderstanding about long-term care insurance. Long-term care insurance claimants decide if they want to stay at home or move to an assisted living facility or move to a nursing home. The insurance companies do NOT make that decision.

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Steelersfan
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Re: Long Term Care

Post by Steelersfan » Mon Sep 24, 2018 11:53 am

I've been retired for several years so have read all the posts on LTC here and have considered this question multiple times. I have half the number of people, half the assets, and half the annual retirement income, and I feel very comfortable self insuring.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 11:57 am

pintail07 wrote:
Sun Sep 23, 2018 5:37 pm
There are "long term" policies that will pay benefits for life. Self insuring is great as long as you don't need it. If you do have insurance after a few months of claims all premiums are more than returned in the form of claims. Self insuring can cost much more if one goes on claim. There are some concepts that can protect you from future rate increases.
My relative paid about $30K in long-term care insurance premiums over 10 years. If we had to sell her rental properties to pay for her care the capital gains tax alone would've been about $100K.

delamer
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Re: Long Term Care

Post by delamer » Mon Sep 24, 2018 11:59 am

Steelersfan wrote:
Mon Sep 24, 2018 11:53 am
I've been retired for several years so have read all the posts on LTC here and have considered this question multiple times. I have half the number of people, half the assets, and half the annual retirement income, and I feel very comfortable self insuring.
It is easier to make the decision to self-insure when you are single. You don’t have to be concerned about providing adequate income for the healthy spouse if the other half of the couple needs long-term care.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 12:06 pm

JoeRetire wrote:
Sun Sep 23, 2018 5:46 pm
ready53 wrote:
Sun Sep 23, 2018 3:04 pm
With our assets ($4.9M after we sell the house) is self-insuring the best route
Yes

If your portfolio is $4 million, would you alter your investment mix to gain an extra 0.2% per year, if the new investment mix could result in you losing hundreds of thousands of dollars? That's what you're recommending ready53 do.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 12:13 pm

delamer wrote:
Sun Sep 23, 2018 6:03 pm
bsteiner wrote:
Sun Sep 23, 2018 5:21 pm
Are there any long-term care policies? The ones I've seen are called long-term but are really short-term, only covering the first few years. A long-term policy would cover an unlimited amount of time, but not the first few years.
This is exactly the type if policy that I’d like.

We can self insure for a few years. It is the prospect of needing care for many years that is scary. Low probability but high risk.

Buying into a well-funded CCRC is the closest thing to providing unlimited coverage.

Yes, there are policies where you pay for most of the cost of care for 2 to 3 years (depending upon the policy) with no limit on the length of benefits payable after that. The only problem with a CCRC is that you've got to get in one before you need care.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 12:16 pm

delamer wrote:
Sun Sep 23, 2018 5:58 pm
pintail07 wrote:
Sun Sep 23, 2018 5:37 pm
There are "long term" policies that will pay benefits for life. Self insuring is great as long as you don't need it. If you do have insurance after a few months of claims all premiums are more than returned in the form of claims. Self insuring can cost much more if one goes on claim. There are some concepts that can protect you from future rate increases.
Do you know specifically which insurers offer lifetims coverage?

This has been a topic before on the forum, and no one has ever identified such an insurer.
Only two insurers offer "unlimited benefit periods": OneAmerica and National Guardian. Nearly every long-term care insurer offers couples/partners 15 years of shared benefits.

HereToLearn
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Re: Long Term Care

Post by HereToLearn » Mon Sep 24, 2018 12:26 pm

WoW2012 wrote:
Mon Sep 24, 2018 11:23 am
Cyclesafe wrote:
Sun Sep 23, 2018 5:32 pm

And the contract tells you when you'll be eligible to collect benefits. I think retaining control of when you make the move to independent, to assisted, to nursing (if needed) is priceless.

Cycle: And the contract tells you when you'll be eligible to collect benefits.
WoW2012: Doesn't every insurance contract (home, auto, medical, disability, etc...) tell you when you'll be eligible to collect benefits? Every long-term care policy that meets the federal guidelines pays benefits if someone needs "standby assistance" or "physical assistance" to perform any two of the activities of daily living (e.g. bathing, dressing, eating, toileting, getting out of a bed or chair, and maintaining continence.) Also, benefits are paid if someone is cognitively impaired and needs to be supervised to avoid harming themselves or others.


Cycle: I think retaining control of when you make the move to independent, to assisted, to nursing (if needed) is priceless.
WoW2012: This is a common misunderstanding about long-term care insurance. Long-term care insurance claimants decide if they want to stay at home or move to an assisted living facility or move to a nursing home. The insurance companies do NOT make that decision.
While I do believe most policies rely on a definition of disability as being unable to perform two of the six ADLs, my mother's policy does not include the sixth ADL, bathing. Policy was written by Traveler's in 1997 and has been sold a few times since. Presently handled by Brighthouse Financial, and all in, they have been much more pleasant to deal with than Gen Re (I think that was the company involved when my father was dying).

The current LTC carrier appears to have used the standard six ADL definition in determining my mother's eligibility, as my mother would not otherwise qualify for benefits. I have the feeling they did not pull the policy when approving, but instead relied of their own standard definitions. I may be wrong, but something one of the reviewers said on the phone led me to believe this.

Also, the definition of eating simply means moving food to mouth from plate. It does not include the process of obtaining groceries, preparing meals, safely transporting meal from oven to table, etc. I am not saying that the LTC carrier should provide coverage for these other functions, but just pointing out that the definition is quite tight and an elderly person may require assistance for years before qualifying for the LTC benefits.

LTC insurance is so very different from medical insurance that we, and the Medicare population, are used to. The insured may *think* the LTC policy should reimburse her as soon as care is needed, but that is not the way the policies are written.

The insured is on her own to navigate the system and obtain & submit requested documentation in order to be approved for benefits. Lots of scanning & emailing, with follow-up phone calls. Once benefits have been approved, the process is much easier, especially if one hires aides from an agency, but until approval, anticipate many, many months of documentation in order to have benefits approved. This would be different if the insured had suffered a stroke or the like, but for the slow physical decline of aging, it can be a challenge to document. My mother stopped driving two years ago, and was finally in-benefit 20 months later. I don't know how the typical insured can manage the paperwork on her own. By the time one requires care, the ability to manage the process is often gone. I saw the same with my father.

I agree with you 100% that the LTC carrier has no involvement in deciding where or how the insured receives care. My life would be a lot easier if my mother were to move into some sort of assisted living facility, but that is another topic entirely.
Last edited by HereToLearn on Mon Sep 24, 2018 12:32 pm, edited 1 time in total.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 12:28 pm

bsteiner wrote:
Sun Sep 23, 2018 6:20 pm
It looks like National Guardian has a lifetime policy (though not in New York), but the maximum deductible is only 6 months. It looks like One America's policies are hybrids with life insurance or an annuity, which means you have to also buy something that you probably won't need or want.

Can you get National Guardian to offer a 3-year deductible? That should significantly reduce the cost, since you would only be insuring against the risk of needing care for a long time.
The reason insurers do not offer 3-year deductibles on traditional LTC insurance policies is because of the costs involved in getting a policy approved for sale in each state.

Most insurers are licensed in 49 states. Insurance is regulated on a state level. Each new LTCi product has to be approved by each state UNLESS that state participates in the Interstate compact (32 states do).

The insurers can dramatically lower their costs of product creation by offering a product that will be accepted by all 32 states and all they have to do is file the product for approval in one of those states.

Therefore, they choose benefit options that are likely to be approved by all 32 states.

Even if some states would approve a 3-year elimination period, it's not worth the costs to the insurers to do the special filings to get the policy specifically approved in each of those states.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 12:40 pm

HereToLearn wrote:
Mon Sep 24, 2018 12:26 pm

The insured is on her own to navigate the system and obtain requested documentation in order to be approved for benefits. Once benefits have been approved, the process is much easier, especially if one hires aides from an agency, but until approval, anticipate many, many months of documentation in order to have benefits approved. This would be different if the insured had suffered a stroke or the like, but for the slow physical decline of aging, it can be a challenge to document. My mother stopped driving two years ago, and was finally in-benefit 20 months later. I don't know how the typical insured can manage the paperwork on her own. By the time one requires care, the ability to manage the process is often gone. I saw the same with my father.


My relative needs hands-on assistance for bathing (she's physically unable to bend down and wash from her knees down. She is able to dress herself but because she has balance issues she needs "standby assistance" when she gets dressed each morning and undressed each night. The staff at the assisted living facility shower her 3 to 4 times per week and they are there every morning and at night while she dresses/undresses. Her long-term care policy is paying 100% of the cost of her care.

It took only 3 weeks for her long-term care claim to be approved.


She was receiving care at home at the time. We'd contacted one of the national home care agencies and they handled the claim for us. This particular home care agency processes thousands of long-term care insurance claims every year. All my relative had to do was sign a couple of HIPAA forms and the home care agency took care of the rest.

If you think about it, it only makes sense to have a home care agency do this.
I don't file my own medical insurance claims, do you?
Of course not. My doctor's office files the claims with my insurer.
It's true for long-term care insurance, too. It makes a lot more sense to have the home care agency file the claim for you. They have a financial incentive to set up a system to speedily process long-term care insurance claims. And it works.

adamthesmythe
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Re: Long Term Care

Post by adamthesmythe » Mon Sep 24, 2018 12:42 pm

pintail07 wrote:
Sun Sep 23, 2018 5:37 pm
There are "long term" policies that will pay benefits for life. Self insuring is great as long as you don't need it. If you do have insurance after a few months of claims all premiums are more than returned in the form of claims. Self insuring can cost much more if one goes on claim. There are some concepts that can protect you from future rate increases.
Let's turn it around. If you CAN'T get a policy with unlimited benefits, there is no (on average) benefit to YOU in having LTC insurance. You can pay for a decade or two of care for one spouse. You should direct your efforts toward preserving some reasonable fraction of your assets for the other spouse in the worst-case care situation.

A limited-term policy would only "save" you 5-10% of your assets, before you would be on the hook for the remaining cost, which is nearly unlimited.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 12:52 pm

TN_Boy wrote:
Sun Sep 23, 2018 7:11 pm

A policy with a deductible longer than the average assisted living stay should be quite affordable -- many people wouldn't need it, and many of the people triggering the policy would use it for only a modest amount of time.
The #1 seller of long-term care insurance offers the following choices for elimination period:

1) 365 days
2) 180 days
3) 90 days
4) 60 days
5) 30 days
6) 0 days

A 365-day elimination period is only 5% cheaper than a 90-day elimination period.

The longer the elimination period, the more expense involved in trying to get the policy approved by regulators in each state.

The longer the elimination period, the greater the risk of complaints and possibly even class action lawsuits.

Family members are almost always upset about (and complain about) a 90-day elimination period even though a 90-day Elimination Period parallels the federal requirements for a 90-day certification period.

In this litigious environment, there is no way any long-term care insurer will ever again offer a 730 or a 1095 day elimination period on a traditional long-term care insurance policy.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 12:59 pm

TN_Boy wrote:
Sun Sep 23, 2018 7:14 pm
JoeRetire wrote:
Sun Sep 23, 2018 5:46 pm
ready53 wrote:
Sun Sep 23, 2018 3:04 pm
With our assets ($4.9M after we sell the house) is self-insuring the best route
Yes
+1

With your income stream and financial assets you appear to be fine even if one of you winds up needing a lot of care.

I bet ready53 has collision insurance on his car, even though he paid cash for it.
(I bet you do, too.)

Why? Because it's easy to see yourself getting into a car accident.
It's very difficult to image yourself needing extended care.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 1:03 pm

mlebuf wrote:
Sun Sep 23, 2018 9:02 pm
Hi Ready 53,

This is a no-brainer. At your level of wealth you do not need LTC insurance. Manage your money prudently with a balanced portfolio and you and your spouse will be well equipped to pay any costs of long term care. Here's wishing you both a great retirement.
HNW people see long-term care insurance like an options contract (e.g. a “put” or a “call”).
If they (or their spouse) needs long-term care, they exercise the option and “put” the loss onto the insurer.
In this case, the cost of this option for Ready53 would be about .13% of his portfolio each year.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 1:12 pm

Cyclesafe wrote:
Mon Sep 24, 2018 10:18 am

Yes, one can come up with a combination of circumstances where hospice and a DNR would not preclude a potentially long stay in a nursing home. Nevertheless, with hospice and a DNR the chances of a stint in a nursing home are low.
DNR's don't work for people with alzheimer's or dementia or parkinson's or rheumatoid arthritis or even someone who has just become old and frail.

(A DNR is only going to work for someone whose heart stops or they stop breathing for some reason.)

Yet long-term care insurance works for people with alzheimer's or dementia or parkinsons or rheumatoid arthritis. And it's working for my old and frail relative.

She lives in an ALF and she has a DNR. The DNR did not prevent her from spending the last year and a half getting care, first at home and now in the assisted-living facility.

Even more importantly, most people who need long-term care NEVER go to nursing homes. According to the CBO, only 13% of the people who need long-term care are in nursing homes. 80% of the people who need long-term care receive their care at home. IOW, for every person in a nursing home there are SIX people getting care at home.
Last edited by WoW2012 on Mon Sep 24, 2018 1:37 pm, edited 1 time in total.

jimishooch
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Re: Long Term Care

Post by jimishooch » Mon Sep 24, 2018 1:12 pm

i'll post this link again,

my wife and i could easily "fund" our own long term care but went with a paid up joint policy with lifetime benefits...family history, peace of mind and preservation of portfolio were key in the decision.


https://www.oneamerica.com/wps/wcm/conn ... a24c9144d1

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 1:19 pm

JoeRetire wrote:
Mon Sep 24, 2018 11:02 am

If you have a lot of assets such that you can afford to pay for your long term care, then it makes sense not to purchase insurance.
I deal with a lot of HNW people and that's generally not how they look at it.
The more money someone has the more sense it makes to own long-term care insurance because the more money you have the premium becomes a very, very small percentage of your portfolio.

Why not allocate a small portion of investment income to protect principal? If their portfolio is $1,000,000, for 40 basis points per year a 59-year old couple can protect their portfolio from probably the only thing that can ruin their retirement plans.

WoW2012
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 1:28 pm

Steelersfan wrote:
Mon Sep 24, 2018 11:53 am
I've been retired for several years so have read all the posts on LTC here and have considered this question multiple times. I have half the number of people, half the assets, and half the annual retirement income, and I feel very comfortable self insuring.
For the sake of their loved ones, if someone is going to "self-insure" they should make a plan for long-term care. The plan must include answers to two simple questions:
1) Who will provide the care?
2) How will the care be paid for?

And, for the sake of loved ones, the plan should include a prioritization of all assets and which asset to liquidate first, then second, then third, then fourth, then fifth, then sixth, etc… then last, until Medicaid can kick in.

If that's not done the loved ones, in many cases, end up sacrificing their own careers, their own families, and/or their own health to try to preserve the assets.

WoW2012
Posts: 288
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 1:35 pm

adamthesmythe wrote:
Mon Sep 24, 2018 12:42 pm

Let's turn it around. If you CAN'T get a policy with unlimited benefits, there is no (on average) benefit to YOU in having LTC insurance. You can pay for a decade or two of care for one spouse. You should direct your efforts toward preserving some reasonable fraction of your assets for the other spouse in the worst-case care situation.

A limited-term policy would only "save" you 5-10% of your assets, before you would be on the hook for the remaining cost, which is nearly unlimited.
Adam, you must not be familiar with current LTC insurance offerings.
Regardless of which state the OP lives in, he and his wife could buy a policy with 10 years of shared benefits. In most other states they could buy a policy that has 15 years of shared benefits.

That would equate to A LOT more than just "5-10%" of the OP's net worth.

JoeRetire
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Re: Long Term Care

Post by JoeRetire » Mon Sep 24, 2018 2:17 pm

WoW2012 wrote:
Mon Sep 24, 2018 12:06 pm
JoeRetire wrote:
Sun Sep 23, 2018 5:46 pm
ready53 wrote:
Sun Sep 23, 2018 3:04 pm
With our assets ($4.9M after we sell the house) is self-insuring the best route
Yes

If your portfolio is $4 million, would you alter your investment mix to gain an extra 0.2% per year, if the new investment mix could result in you losing hundreds of thousands of dollars? That's what you're recommending ready53 do.
I don't insure against unlikely occurrences I can easily afford to handle out of pocket. That's what I'm recommending ready53 (with a $4.9M portfolio) consider doing. That's what I recommend everyone consider doing.

FWIW, my wife and I have long term care insurance. I don't consider us wealthy enough to easily pay for potential long term care out of pocket (at least not yet).

Usually your advice on insurance is spot on, highly informative, and doesn't come across as nothing more than a hard sell. But confusing investments and insurance is a mistake, IMHO. I wish you hadn't gone there.

WoW2012
Posts: 288
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Re: Long Term Care

Post by WoW2012 » Mon Sep 24, 2018 3:01 pm

JoeRetire wrote:
Mon Sep 24, 2018 2:17 pm

I don't insure against unlikely occurrences I can easily afford to handle out of pocket. That's what I'm recommending ready53 (with a $4.9M portfolio) consider doing. That's what I recommend everyone consider doing.

FWIW, my wife and I have long term care insurance. I don't consider us wealthy enough to easily pay for potential long term care out of pocket (at least not yet).

Usually your advice on insurance is spot on, highly informative, and doesn't come across as nothing more than a hard sell. But confusing investments and insurance is a mistake, IMHO. I wish you hadn't gone there.
Long-term care insurance is just like any other hedge.
HNW people use long-term care insurance to protect against the downside.
I'm not confusing investments and insurance.
They are two separate things, but they work hand in hand.
What's a "put"? It's nothing more than an insurance policy on an investment.
What's long-term care insurance? It's essentially a "put". If the loss occurs, you put the loss on the insurer.
When all the emotion is removed from the decision to buy long-term care insurance, it's simple logic.
HNW people look at long-term care insurance as portfolio insurance.
Buy owning long-term care insurance the OP would lose about 13 basis points (that's 13/100th's of one percent) from his overall return each year.
By not owning long-term care insurance the OP gains an extra 13 basis points each year, but leaves hundreds of thousands of dollars at risk.
A put that costs only 13 basis points is pretty much a no-brainer.

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