Another "Should I self-insure" for LTC Question

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WoW2012
Posts: 177
Joined: Sun Dec 23, 2012 11:28 am

Re: Another "Should I self-insure" for LTC Question

Post by WoW2012 » Thu Mar 08, 2018 5:04 pm

skepticalobserver wrote:
Thu Mar 08, 2018 4:56 pm
WoW2012 wrote:
Thu Mar 08, 2018 4:52 pm
Yes, I have that mediocre, group Federal LTCi
I hope this is a facetious comment because that's the plan my wife (an annuitant) and I are looking at. As I understand it's one of the few (if any) that offer lifetime coverage. The premiums are hefty but we are not spring chickens.
The FLTCIP is OK.
There are two other policies that have a lifetime benefit period: National Guardian Life and OneAmerica.
But those policies are not available in every state.

If a Long-term care partnership policy is available in your state and suitable for you, then you don't need a lifetime/unlimited benefit period.

The only other downside to FLTCIP is that it is not governed by the Rate Stability Regulation.

ChrisC
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Location: North Carolina

Re: Another "Should I self-insure" for LTC Question

Post by ChrisC » Thu Mar 08, 2018 5:49 pm

WoW2012 wrote:
Thu Mar 08, 2018 5:04 pm
skepticalobserver wrote:
Thu Mar 08, 2018 4:56 pm
WoW2012 wrote:
Thu Mar 08, 2018 4:52 pm
Yes, I have that mediocre, group Federal LTCi
I hope this is a facetious comment because that's the plan my wife (an annuitant) and I are looking at. As I understand it's one of the few (if any) that offer lifetime coverage. The premiums are hefty but we are not spring chickens.
The FLTCIP is OK.
There are two other policies that have a lifetime benefit period: National Guardian Life and OneAmerica.
But those policies are not available in every state.

If a Long-term care partnership policy is available in your state and suitable for you, then you don't need a lifetime/unlimited benefit period.

The only other downside to FLTCIP is that it is not governed by the Rate Stability Regulation.
I was being facetious, as I'm very much pleased with the mediocrity offered by the Federal Long Term Care Insurance Program. I take great comfort in having US OPM negotiate suitable rates and other conditions with the insurance carrier every seven years, the cycle for contract renewal.

WoW2012
Posts: 177
Joined: Sun Dec 23, 2012 11:28 am

Re: Another "Should I self-insure" for LTC Question

Post by WoW2012 » Thu Mar 08, 2018 5:55 pm

ChrisC wrote:
Thu Mar 08, 2018 5:49 pm
WoW2012 wrote:
Thu Mar 08, 2018 5:04 pm
skepticalobserver wrote:
Thu Mar 08, 2018 4:56 pm
WoW2012 wrote:
Thu Mar 08, 2018 4:52 pm
Yes, I have that mediocre, group Federal LTCi
I hope this is a facetious comment because that's the plan my wife (an annuitant) and I are looking at. As I understand it's one of the few (if any) that offer lifetime coverage. The premiums are hefty but we are not spring chickens.
The FLTCIP is OK.
There are two other policies that have a lifetime benefit period: National Guardian Life and OneAmerica.
But those policies are not available in every state.

If a Long-term care partnership policy is available in your state and suitable for you, then you don't need a lifetime/unlimited benefit period.

The only other downside to FLTCIP is that it is not governed by the Rate Stability Regulation.
I was being facetious, as I'm very much pleased with the mediocrity offered by the Federal Long Term Care Insurance Program. I take great comfort in having US OPM negotiate suitable rates and other conditions with the insurance carrier every seven years, the cycle for contract renewal.


:sharebeer

texasgal47
Posts: 68
Joined: Thu Apr 25, 2013 11:30 am

Re: Another "Should I self-insure" for LTC Question

Post by texasgal47 » Thu Mar 08, 2018 6:33 pm

Just want to add that the LTCi premium did help in reaching the threshold for using medical deductions on Federal income tax this year. However, I learned that the IRS caps the amount of the insurance that can be deducted per age group, along with a small continuing increase for inflation. For filers above age 70, the highest LTCi premium deduction allowed was about $5100 in 2017 and $5200 in 2018.
Last edited by texasgal47 on Thu Mar 08, 2018 7:05 pm, edited 1 time in total.

ChrisC
Posts: 654
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Location: North Carolina

Re: Another "Should I self-insure" for LTC Question

Post by ChrisC » Thu Mar 08, 2018 7:03 pm

texasgal47 wrote:
Thu Mar 08, 2018 6:33 pm
Just want to add that the LTCi premium did help in reaching the threshold for using medical deductions on Federal income tax this year. However, I learned that the IRS caps the amount of the insurance that can be deducted per age group, along with a small continuing increase for inflation. For filers above age 70, the highest allowable LTCi premium deduction allowed was about $5100 in 2017 and $5200 in 2018.
Yes, having that deduction for LTCi helps mitigate the financial brunt of paying for those premiums. And so does the ability to pay for LTCi through HSAs, as an eligible medical expense subject to reimbursement or payment by an HSA. I started paying for my LTCi premiums, going forward, in 2015, so I get to deduct my HSA contribution and then use my HSA for paying LTCi. I haven't even reimbursed my LTCi premium payments from 2008 to 2014.

Diogenes
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Re: Another "Should I self-insure" for LTC Question

Post by Diogenes » Fri Mar 09, 2018 12:51 am

RudyS wrote:
Thu Mar 08, 2018 10:15 am
plannerman wrote:
Tue Mar 06, 2018 3:43 pm
I don't want to sound like a broken record, but there is another alternative. If you are a 71 year old widow, and not already in a retirement community situation, you need a plan on where you are going to live out your remaining golden years. I suggest you look into CCRCs with "Life care". The community, rather than an insurance company, essentially insures the tail risk of the unlikely event of you running out of money for long term care.

plannerman
That's exactly the plan DW and I have. Still in good health so we'd qualify for entry. Doing site visits right now. Actually, our desire not to use up the kids' "potential" inheritance is more a factor than running out of money. Of course that's personal. Until I found out about CCRC's here, I didn't even consider that option.
This is an interesting and possibly more workable option that seems to be growing while the LTCI market continues to fade. Let us know what you find out about their economics and any transparent sources of information.

WoW2012
Posts: 177
Joined: Sun Dec 23, 2012 11:28 am

Re: Another "Should I self-insure" for LTC Question

Post by WoW2012 » Fri Mar 09, 2018 1:08 am

Diogenes wrote:
Fri Mar 09, 2018 12:51 am


This is an interesting and possibly more workable option that seems to be growing while the LTCI market continues to fade. Let us know what you find out about their economics and any transparent sources of information.

It's not fading.
It's molting.


8-)

skepticalobserver
Posts: 918
Joined: Tue Jul 29, 2014 11:29 am

Re: Another "Should I self-insure" for LTC Question

Post by skepticalobserver » Sun Mar 11, 2018 9:50 am

Regarding CCRC's and related retirement community developments, see this recent NYT article, "7 Ways to Judge a Retirement Community’s Financial Health."

https://www.nytimes.com/2018/03/09/busi ... ealth.html

LarryAllen
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Location: State of Confusion

Re: Another "Should I self-insure" for LTC Question

Post by LarryAllen » Sun Mar 11, 2018 10:05 am

I'd drop it in a second. Waste of money and you can easily self-insure.

WoW2012
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Joined: Sun Dec 23, 2012 11:28 am

Re: Another "Should I self-insure" for LTC Question

Post by WoW2012 » Sun Mar 11, 2018 10:10 am

Paying the new, higher premium works out to her "losing" less than three-tenths of one percent return on her portfolio. Most reasonable people would think it makes sense to sacrifice three-tenths of one percent of a return on your portfolio in order to avoid losing hundreds of thousands.

Jackson12
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Re: Another "Should I self-insure" for LTC Question

Post by Jackson12 » Sun Mar 11, 2018 11:47 am

I see the OP has made some decisions after thinking through the financial and other variables.

For those who have been reading along and are considering the pros and cons of long- term health care plans, I'm wondering:
How does LTC insurance which meets requirements for state partnership plans come into play and affect the cost: benefit analysis?

If you're looking for LTC plans, might be worth asking about state partnership eligible plans.

Many states have offered- and I believe some still do- partnership plans which offer " dollar for dollar" matching for insurance plans from long/ term care insurance companies, essentially up to doubling the benefits of a plan . John Hancock and Genworth offered these partnership plans.

Basic info here: https://www.ltcfeds.com/help/faq/miscel ... rship.html

As an example: someone buys a LTC plan from an insurance company of their choice. If It meets state partnership plan eligibility. it can essentially double the policy benefits.

Let's say the LTC plan covers $300,000 worth of LTC costs. With a dollar for dollar match from a state partnership approved plan, there would be up to $300,000 in additional benefits....$600,000 in total. ...one dollar of additional benefits for every dollar of insurance benefits used.

In addition , the partnership plan allows a special benefit applying to Medicaid eligibility: lets say the total of $300,000 LTC benefits are exhausted. , individuals with partnership plans are still allowed to keep outside assets of $300,000 and still meet Medicaid eligibility,its requirements.
This eliminate the far stricter spend down rules for Medicaid eligibility.

Finally, Parnership plans offer reciprocity in just about every state. So if you buy a plan in one state but decide you need to move closer to family living elsewhere, you can use the benefits there.




I

pintail07
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Re: Another "Should I self-insure" for LTC Question

Post by pintail07 » Sun Mar 11, 2018 4:03 pm

Let's say the LTC plan covers $300,000 worth of LTC costs. With a dollar for dollar match from a state partnership approved plan, there would be up to $300,000 in additional benefits....$600,000 in total. ...one dollar of additional benefits for every dollar of insurance benefits used.
Are you sure about that? My understanding is that in your example you could exempt 300,000 of assets that would need to be spent down. You could then qualify for Medicaid but why would you do that?

Jackson12
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Re: Another "Should I self-insure" for LTC Question

Post by Jackson12 » Sun Mar 11, 2018 4:16 pm

pintail07 wrote:
Sun Mar 11, 2018 4:03 pm
Let's say the LTC plan covers $300,000 worth of LTC costs. With a dollar for dollar match from a state partnership approved plan, there would be up to $300,000 in additional benefits....$600,000 in total. ...one dollar of additional benefits for every dollar of insurance benefits used.
Are you sure about that? My understanding is that in your example you could exempt 300,000 of assets that would need to be spent down. You could then qualify for Medicaid but why would you do that?

No, the assets do not need to be spent down. State partnership eligible plans are exempt from the usual spend down requirements. I do need to make a math correction, though, which I've done under the bold face part of this comment.

Here's the exact wording found here but there are plenty of other sites with the same info: https://www.ltcfeds.com/help/faq/miscel ... rship.html

" in a state that chooses to participate in the Long-Term Care Partnership Program, once you have used part or all of your maximum lifetime benefit (MLB), your assets would be protected up to the amount paid under the policy. You would not need to spend those assets before qualifying for that state's Medicaid program"

To be clear I should have noted that he $600,000 in "additional benefits" breaks down like this:
1. $300,000 of long-term care coverage plus an additional

2. $300,000 of protected assets which do not have to be spent down to qualify for Medicaid coverage.

More info here, which gives an example where one person has $200,000 of LTC insurance. After counting the additional protected assets, the spouse still at home would keep $315,000 of assets while his or her partner was still eligible on Medicaid .

Under current Medicaid rules ( last i looked) a spouse could only keep $115,000 of assets. LTC insurance leaves significantly more for the spouse...or, I assume, others. .

https://www.kiplinger.com/article/insur ... ion-t.html

wrongfunds
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Re: Another "Should I self-insure" for LTC Question

Post by wrongfunds » Sun Mar 11, 2018 8:57 pm

WoW2012 wrote:
Sun Mar 11, 2018 10:10 am
Paying the new, higher premium works out to her "losing" less than three-tenths of one percent return on her portfolio. Most reasonable people would think it makes sense to sacrifice three-tenths of one percent of a return on your portfolio in order to avoid losing hundreds of thousands.
Why should the comparison be made with the portfolio size percentage return? Why not compare it with "hundreds of thousands" that is being protected with this insurance. I believe it is disingenuous comparison that you have been doing,

WoW2012
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Joined: Sun Dec 23, 2012 11:28 am

Re: Another "Should I self-insure" for LTC Question

Post by WoW2012 » Sun Mar 11, 2018 9:35 pm

wrongfunds wrote:
Sun Mar 11, 2018 8:57 pm
WoW2012 wrote:
Sun Mar 11, 2018 10:10 am
Paying the new, higher premium works out to her "losing" less than three-tenths of one percent return on her portfolio. Most reasonable people would think it makes sense to sacrifice three-tenths of one percent of a return on your portfolio in order to avoid losing hundreds of thousands.
Why should the comparison be made with the portfolio size percentage return? Why not compare it with "hundreds of thousands" that is being protected with this insurance. I believe it is disingenuous comparison that you have been doing,

My question has nothing to do with the insurance policy.
It's a basic investment risk question.

Would she put her portfolio in an investment that could lose hundreds of thousands of dollars in order for her to earn an extra 3/10ths of one percent each year?

WoW2012
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Re: Another "Should I self-insure" for LTC Question

Post by WoW2012 » Mon Mar 12, 2018 11:08 am

wrongfunds wrote:
Sun Mar 11, 2018 8:57 pm
WoW2012 wrote:
Sun Mar 11, 2018 10:10 am
Paying the new, higher premium works out to her "losing" less than three-tenths of one percent return on her portfolio. Most reasonable people would think it makes sense to sacrifice three-tenths of one percent of a return on your portfolio in order to avoid losing hundreds of thousands.
Why should the comparison be made with the portfolio size percentage return? Why not compare it with "hundreds of thousands" that is being protected with this insurance. I believe it is disingenuous comparison that you have been doing,
Here's a better way to say it.
Would John Bogle risk losing 20% of his portfolio in order to earn an extra three-tenths of 1% each year?

You're suggesting she risk losing 20% (or more) of her portfolio in order for her to earn an extra three-tenths of 1%.

Diogenes
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Re: Another "Should I self-insure" for LTC Question

Post by Diogenes » Mon Mar 12, 2018 12:32 pm

wrongfunds wrote:
Sun Mar 11, 2018 8:57 pm
WoW2012 wrote:
Sun Mar 11, 2018 10:10 am
Paying the new, higher premium works out to her "losing" less than three-tenths of one percent return on her portfolio. Most reasonable people would think it makes sense to sacrifice three-tenths of one percent of a return on your portfolio in order to avoid losing hundreds of thousands.
Why should the comparison be made with the portfolio size percentage return? Why not compare it with "hundreds of thousands" that is being protected with this insurance. I believe it is disingenuous comparison that you have been doing,
+1

ChrisC
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Location: North Carolina

Re: Another "Should I self-insure" for LTC Question

Post by ChrisC » Mon Mar 12, 2018 3:26 pm

Diogenes wrote:
Mon Mar 12, 2018 12:32 pm
wrongfunds wrote:
Sun Mar 11, 2018 8:57 pm
WoW2012 wrote:
Sun Mar 11, 2018 10:10 am
Paying the new, higher premium works out to her "losing" less than three-tenths of one percent return on her portfolio. Most reasonable people would think it makes sense to sacrifice three-tenths of one percent of a return on your portfolio in order to avoid losing hundreds of thousands.
Why should the comparison be made with the portfolio size percentage return? Why not compare it with "hundreds of thousands" that is being protected with this insurance. I believe it is disingenuous comparison that you have been doing,
+1
You know I would be inclined to agree with this thought if you offerred some tangible reasons for this view that this is a "disingenious comparison." How so?

We frequently make "gross comparisons" of premiums paid against policy coverage limits for all types of insurance, but why is that comparison not equally disingenious or not the most meaningful yardstick? Intuitively, we sense that insurance is not a good deal unless we have an extremely high leveraging of premium to insurance coverage but in those instances we're looking a gross premium amounts against gross policy coverage. In the OP's case, taking the traditional conventional view, we would be using her current and projected gross premiums against her current and projected policy coverage.

But why not take into account the small fraction or percentage that the premium (current and projected) represents in your net worth against the policy coverage, current and projected. Don't we do this all the time for many types of insurance? Rental insurance is a good example where we procure policies that cost us so little, not because we think we might use the policy coverage, but simply because it's so cheap and insures a lot.

hoops777
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Re: Another "Should I self-insure" for LTC Question

Post by hoops777 » Mon Mar 12, 2018 4:40 pm

texasgal47 wrote:
Mon Mar 05, 2018 1:08 pm
To provide more portfolio information regarding my specific situation, the portfolio portion at this time for my two heirs is $400,000 in r-ira with an 85/15 AA for that portion only. $860,000 is in t-ira which I consider for my retirement and ltc costs, invested at a 40/60 AA in that account.

In taxable, $900,000 is invested entirely in VTSAX which I have earmarked entirely for heirs due to step up in basis at death. That $900,000 is currently yielding yearly about $15,000 in taxable dividends which are being set aside at this time for rebalancing. By the end of this year there should be almost $70,000 in that MMA. Another $205,000 is in taxable in I-bonds ($95,000 basis) which initially reach maturity in 2030 and are unevenly allocated over 4 consecutive years currently yielding from about 4% to over 6% interest per year. Total portfolio AA is 60/40 with a 5% variance allowed in either direction.

I have no problem using I-bonds, t-ira, taxable dividends, or the home for huge future expenses such as cancer tx or for expensive care. My home value should continue to increase with inflation. If I were to live in LTC or assisted living, my home would be sold immediately to help supplement those expenses. As I see things, my heirs are already set up nicely considering future growth of those two portions alone (r-ira and VTSAX in taxable acct.) allocated strictly for their future use.

If I stop paying into the LTC-i policy, I would instead take about $5000 per yr. to pay additional taxes to convert more funds than originally planned into the roth. Or the funds would be invested in a 500 index fund in taxable where the basis could be easily tracked if I wanted to use those assets (500 index only) in the future as another source for care (provided no bear market at that time). Someone mentioned investing a large amount in cd's in taxable for ltc. That would push me into an even higher Medicare and part D premium bracket. Even tax free minis look like a bad deal for my situation given the low rate of return and the fact that the Medicare premium and Part D are calculated using AGI. A new 500 index fund would increase that as well but I calculate the potential for markedly increased growth would cover the cost of those additional premiums. As you can see, a lot of moving parts to consider if one wants to self-fund.
So how would you be if the stock market crashed for several years right when you needed LTC?
K.I.S.S........so easy to say so difficult to do.

R. ANDERSON
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Re: Another "Should I self-insure" for LTC Question

Post by R. ANDERSON » Tue Mar 13, 2018 7:48 am

I trust that by now you have read the March 18 edition of the AARP Magazine. It's worth finding and reading for the latest on long term health care statistics in the article The Latest On Long Term Care. Nobody but you can help you make the decision to forgo your current coverage. But you sound pretty sharp and pretty well funded so whatever you do will very likely be the right thing. Try not to let the PERFECT rule out the good. Were I in your position I would ask myself: how much have I already put into this policy and can I easily afford to keep paying into it. I would also ask myself how critical is it that I maximize the amount I leave to my heirs.

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