How many of you have or are planning to have long term care insurance?

[Brat]

"Board and care" is also known as adult foster care.

We purchased paid up in 10 years from Allianz in our mid 50s, 90 day wait period, 5% compound increase in daily rate, unlimited years. All but one of our parents required long term care for an extended time (years). Two were in adult foster care with varying experiences.

 

[Alan]

For me, I thought buying a policy would be more expensive.

So having enough money, as usual, is relative. I set aside a portion of my portfolio, add to it with a monthly amount as though I was buying LTCi. It accumulates via my contributions and real "compound interest". If I need it for LTC care it is there. If I *really need* it worse for something else it is also there. Adjust the amounts according to your own budget and expectations. Again, this just seems best for *me*, and I don't count myself rich by any means ... well by some means, I suppose.

Same here. I have a Roth IRA set aside for LTC costs if needed. It currently stands at $66k and I put $5k/year into it. (we are aged 56 & 55).

 

[veremchuka]

LTC not only provides for old age but when young too. I knew a woman that rode on my commuter van to work. Several years later after I left the van I heard that she was in a very serious car accident (could have been a stroke, a fall, anything really), she was in her later 40's I'd guess. She ended up in a long term rehab facility learning how to walk, talk, hold a fork, you get the picture! Devastating expenses, so you don't have to be 75 to need LTC.


I have 2 policies. I bought the first thru a group plan in work but stupidly did not get the inflation protection because it cost too much... profoundly stupid. I was 51 at the time, rates were low as it was a group plan and I was young. After I retired I realized that $200 a day w/o inflation protection wasn't going to cut it in say 2032. When I retired, I looked at what could derail my retirement and I bought another LTC policy (along with earthquake insurance even though I am not in an area prone to quakes) and this time with the 5%/5% inflation but at $100 a day, I was older and the rates had risen. 1st policy is $449 a year, the second is $1310 a year, rates had risen! Both policies are for 2 years, 90 day elimination period, includes home care, nothing fancy. I did an analysis of what 2 years in a nursing home would cost and the LTC policies are worth every penny IF I need them. No one knows when it comes to insurance, we buy it in case but hope to not need it.


LTC policies are complex and you will need to study what the various costs and riders are. Stay with a large well known insurance company – you need to know they'll be there if you need this in 25 years. Also you need to get LTC when you are healthy, any incidence of chronic illnesses in you or your family will disqualify you. Anything the insurance company sees that they don't like will jump your premium. My quote jumped from $1010 to $1310 due to a very minor thing and there was nothing I could do. So far the premiums have not risen.


I probably could self insure if I did not care about leaving money for a sibling but that is very important to me so LTC makes sense even though I do not have kids and am divorced. If not for that I may have passed on it but again a car accident can change your plans in a heartbeat.

 

[treypar]

I am not planning on it as I think that I have enough assets to sel insure.

 

[WhoDaresWins]

We have "board and care" here in PA. It is called Domiciliary or "Dom" Care. The homes are licensed by the state, can have up to 3 boarders and fall under the oversight of local Area Agencies on Aging (although residents can be as young as 18). Typically, residents are reasonably independent in the areas of ambulation, toileting, personal care and the like, but need assistance with shelter, meals, taking medications, safe socialization, budgeting and getting to doctor's appointments. The residents live as part of the family....in a way sort of like foster care...and the provider gets a check for each resident (in the neighborhood of $900-$1000 per resident I think). Supervisory visits are made by caseworkers and the homes have to meet certain safety code requirements.

 

[sn2792]

We are not purchasing LTC. We met with a financial planner and he felt we had enough money to self-insure.

 

[67walkon]

I investigated LTC insurance. IMO, it is too expensive for what you get. The coverage is limited.

 

[samclem]

We are not purchasing LTC. We met with a financial planner and he felt we had enough money to self-insure.

Just a check: If this financial planner is getting paid as a percentage of your portfolio, he's not an impartial source of advice (since any money you use to pay for insurance reduces his pay). No matter how he gets paid, what he "feels" isn't as significant as what you have determined for yourself, maybe with his help. (You probably knew all that already!).

 

[Delawaredave5]

Policies I've seen look like they cover $150/day (about $50k/year) for 2 or 3 years max.

If you self insure and if a couple was spending $50k year during retirement and one spouse required LTC, then your expenses would go up by $50k/year - but your "regular expenses" would go down (one spouse in nursing home - other spouse ain't going to be vacationing in Europe...).

So maybe your "regular expenses" go down to $30k, then add $50k for nursing home, and your "total expenses" go to $80k.

If these are reasonable numbers, your "self insure exposure" could be looked at as $30k/year x 2 years = $60,000. Then you'd contrast that exposure versus paying maybe 20 years at $1,500/year for LTC insurance, or $30,000.

Both pretty close. Would suggest if you have better than a 50/50 chance of needing LTC for 2 years, you should go for it. I don't think the probabilities are that high.

Maybe too many assumptions in above....

 

[dgoldenz]

Policies I've seen look like they cover $150/day (about $50k/year) for 2 or 3 years max.

If you self insure and if a couple was spending $50k year during retirement and one spouse required LTC, then your expenses would go up by $50k/year - but your "regular expenses" would go down (one spouse in nursing home - other spouse ain't going to be vacationing in Europe...).

So maybe your "regular expenses" go down to $30k, then add $50k for nursing home, and your "total expenses" go to $80k.

If these are reasonable numbers, your "self insure exposure" could be looked at as $30k/year x 2 years = $60,000. Then you'd contrast that exposure versus paying maybe 20 years at $1,500/year for LTC insurance, or $30,000.

Both pretty close. Would suggest if you have better than a 50/50 chance of needing LTC for 2 years, you should go for it. I don't think the probabilities are that high.

Maybe too many assumptions in above....

I think you forgot the compounding rate of inflation in LTC. Where are you finding nursing homes for $50k/year? Average price in the US today is $75k/year. By 2030 it is expected to be $200k/year. By 2040 it is expected to be $300k/year. Ever known anyone with dementia that was in a nursing home for 7-8 years?

Call me biased because I'm an insurance agent, but I think a lot of people in this thread (and in general) are highly underestimating the potential cost of LTC.

We are not purchasing LTC. We met with a financial planner and he felt we had enough money to self-insure.

Hopefully your planner explained the potential cost of LTC to you since I don't think he'll be writing you any checks if you need extended care. I can't tell you how often this conversation happens:

Me: Are you sure $500k is enough life insurance to cover all of your needs? $1M is only $30/month more.
Client: Well my financial planner says that's all we need, so I'll just go with that. We can always add more later.

-A year goes by, phone rings-

Same client: Hey, I'd like to add another $500k of life insurance, but I had a stroke three months ago. What can I do?
Me: -facepalm

 

[NW-Bound]

We all know that other countries have universal health care, which the US does not have. For retirees, once we get to Medicare eligibility age, that's one less unknown to plan for. With that out of the way, we still have to worry about LTC.

I do not know how Europeans or the Canadians arrange for LTC. Can anyone enlighten me on this matter?

 

[Goonie]

I took out a LTC policy 4 years ago when I was 49. There's a 90 day elimination period, it started at $170/day coverage and includes 5% compounding inflation protection, coverage for up to 10 years of care, it pays 100% for in-home care, assisted living care, or nursing home care. My monthly premiums are $184.

Sure, I have it for the coverage itself, but I also have it for my peace of mind.

I have several close friends who have needed long term care at fairly young ages....early 40's to mid-50's. Illnesses, diseases, catastrophic health problems, and accidents show no respect of a person's age. A very close friend of mine was diagnosed with MS when he was 39. As years passed, his health steadily declined. He had to have around the clock care and assistance for 3 or 4 years. After many various and sundry MS related health problems, several strokes, and a couple of bouts with pneumonia, he passed away a week before Christmas 2009 at age 52. He didn't have LTCi, and used up all of his assets, and (fortunately for him) his sister and BIL helped him financially for the last couple of years out of their pocket.

Three other friends of mine have suffered traumatic brain injuries (TMI) in their 40's, and have required long term care. None had LTCi and had to dig into their life savings and other assets to cover costs. Thankfully they all had that money saved up...unfortunately, now they don't! The nest egg that they'd been saving for their retirement years got cracked, and that money is gone. I doubt that any of those three will ever be able to be gainfully employed again, and so the ability to rebuild their nest egg is gone. Are they broke? No. Will they be able to financially afford the quality of life that they'd planned on? No.

Will I need long term care? I dunno! But if I do, my LTCi will keep me from needing to crack my nest egg! That's the peace of mind that I want....that's the peace of mind that I have!

 

[dgoldenz]

I took out a LTC policy 4 years ago when I was 49. There's a 90 day elimination period, it started at $170/day coverage and includes 5% compounding inflation protection, coverage for up to 10 years of care, it pays 100% for in-home care, assisted living care, or nursing home care. My monthly premiums are $184.

Sure, I have it for the coverage itself, but I also have it for my peace of mind.

I have several close friends who have needed long term care at fairly young ages....early 40's to mid-50's. Illnesses, diseases, catastrophic health problems, and accidents show no respect of a person's age. A very close friend of mine was diagnosed with MS when he was 39. As years passed, his health steadily declined. He had to have around the clock care and assistance for 3 or 4 years. After many various and sundry MS related health problems, several strokes, and a couple of bouts with pneumonia, he passed away a week before Christmas 2009 at age 52. He didn't have LTCi, and used up all of his assets, and (fortunately for him) his sister and BIL helped him financially for the last couple of years out of their pocket.

Three other friends of mine have suffered traumatic brain injuries (TMI) in their 40's, and have required long term care. None had LTCi and had to dig into their life savings and other assets to cover costs. Thankfully they all had that money saved up...unfortunately, now they don't! The nest egg that they'd been saving for their retirement years got cracked, and that money is gone. I doubt that any of those three will ever be able to be gainfully employed again, and so the ability to rebuild their nest egg is gone. Are they broke? No. Will they be able to financially afford the quality of life that they'd planned on? No.

Will I need long term care? I dunno! But if I do, my LTCi will keep me from needing to crack my nest egg! That's the peace of mind that I want....that's the peace of mind that I have!

Good post. Even the best laid plans can go awry....and in case anyone is wondering, 40% of all people that need LTC are between the ages of 18 and 64, so it's not just the old and frail.

 

[FIREd]

I do not know how Europeans or the Canadians arrange for LTC. Can anyone enlighten me on this matter?

I have never heard of LTC insurance in Europe.

My grandfather spent about 5 years in a nursing home. The cost of the nursing home was split in two parts: medical costs were paid by the national health care system + supplemental insurance, and living costs were paid by his social security plus income generated by renting his vacant house. This is going to be my mom's strategy as well.

My grandmother spent her last few years at home. She had a nurse coming to the house twice a day. The cost of the nurse was covered in large part by the national health care system + supplemental insurance. Family members helped her with cleaning, grocery shopping etc...

In both cases, the impact of LTC on their estate was minimal.

 

[Alan]

We all know that other countries have universal health care, which the US does not have. For retirees, once we get to Medicare eligibility age, that's one less unknown to plan for. With that out of the way, we still have to worry about LTC.

I do not know how Europeans or the Canadians arrange for LTC. Can anyone enlighten me on this matter?

In the UK there are NHS and private LTC facilities. The NHS facilities are means tested as to whether the patient has to contribute to costs or not. It used to be the case that the value of the main home owned by the patient and spouse was taken into account but I believe that may have changed, or may not. Back in 1998 DW's patients transferred their house to their children to avoid having to borrow against it if LTC in a nursing home was required (as it happens, it wasn't needed).

The NHS provides financial support to put off the need for going to a home in various ways. e.g.

• Someone providing lots of care to a spouse or parent gets paid an allowance.
• Disability allowances to buy or lease a car or pay for other transport. House modified to make it easier for access (hand and grab rails, chair lifts up stairs etc).
• House visits by nurse for assistance above that provided by carer (eg MIL needed catheter changing every week or so).
• Subsidized call systems to make it easy for the person call for help - an aunt of mine (who died this month) even wore a device that could indicate she may have fallen, and monitored when she got out of bed at night so that an alert would be sent if she hadn't returned to bed within a fixed time. My Dad's basic call center costs were ~£10/month and my aunt's only cost ~£13/month despite the extra 'smart' devices.

 

[chinaco]

All of this talk about LTC does reinforce one idea.... FIRE... Sooner the better.


The most common situations for LTC seems to be get old, have problems, need hands-on care, degrade, and die!


My concern is not about death... but leaving a healthy aging spouse financially ruined.


Put it like this... if one has the luxury of planning the financials for LTC (has enough money)... better plan to enjoy some of it while one is still young (in relative terms) and healthy!

 

[chinaco]

It seems there are two goals... paying for the immediate care (with some combination of funds) and trying to protect assets for the surviving spouse.

An idea that someone had in a previous thread was to use a life policy that provides for the surviving spouse.

I read where some life policies are beginning to be designed with an LTC feature (in the form of a rider).

There could be some liquidity risk if a spouse lingered for a long time since the survivor would not have access to the money till death of the insured.

But Term policies end so some sort of permanent insurance (for each person) might be needed. If you think LTC is expensive... wait till you look at the cost of something like whole life or UL!


Of course... assuming the policy does not lapse... it is a fairly sure bet... because you will eventually die!

 

[rescueme]

Just a check: If this financial planner is getting paid as a percentage of your portfolio, he's not an impartial source of advice (since any money you use to pay for insurance reduces his pay). No matter how he gets paid, what he "feels" isn't as significant as what you have determined for yourself, maybe with his help. (You probably knew all that already!).

We are going the same direction (self-insure), but not on the advice of a financial planner but rather the suggestion of our elder law attorney.

Unlike a "financial guy", he has no stake if we do/do not have an LTC policy, since we pay him by the hour, not by the size of our portfolio.

Secondly, unlike most other professions, he (and others in his practice) have had a lot of dealings over the years with folks (many with like net worth such as ours) and the different "life challenges" that come up, including those that required long term care, along with the subsequent costs involved.

In our case (and for our case only, based upon his past experience in the question and our estate situation), he's advised that we self-insure, with the risk of reducing our estate value (to be used for care of our disabled son) vs. current and unknown future costs involved with the product.

It's an easy decision to make for those that have little or many assets. We "in the middle" are certainly the ones who have the hardest time making such a decision (and my crystal ball is cracked).

 

[obgyn65]

This site may be helpful : How much does long-term care insurance cost? « LTCShop.com

 

[walkinwood]

How does one ascertain the reserves needed to self-insure for LTC?

If you have done the calculations, please share the main points or, if possible, your spreadsheet.

I definitely fall into the no-plan-for-LTC category & have learned a lot reading LTC related threads on this forum.

 

[rescueme]

How does one ascertain the reserves needed to self-insure for LTC?

If you have done the calculations, please share the main points or, if possible, your spreadsheet.

I definitely fall into the no-plan-for-LTC category & have learned a lot reading LTC related threads on this forum.

Without a personal, trusted adviser to review your entire situation (including financial, lifestyle, and personal goals), there are some calculators available. How good are they? I have no idea. But since you asked the question:

Long-Term Care Self Insurance : Calculator: Long-Term Care Self Insurance

 

[kaneohe]

It's an easy decision to make for those that have little or many assets. We "in the middle" are certainly the ones who have the hardest time making such a decision (and my crystal ball is cracked).

Is there a generally agreed upon quantitative definition of "the middle" zone?

 

[rescueme]

Is there a generally agreed upon quantitative definition of "the middle" zone?

For me (and me alone) it would be those who can't afford to pay the cost of a long-term care insurance policy with unlimited benefits, yet their assets are too high to qualify for Medicaid to pay their long-term care expenses.

As far as total assets targeted for possible long term care (e.g. self-insure)? For each person/family, it would depend on their specific situation so I would not put a specific dollar amount on assets to say if you should/should not get LTC. Those who have strong support from family/friends to keep them in their home and those affected that don't need a hospital setting (i.e. they can get support from a visiting nurse organization) could get by with less, IMHO.

Those that are "on their own" without that support would probably go to a nursing home/skilled nursing facility earlier - which would certainly cost more.

 

[Independent]

How does one ascertain the reserves needed to self-insure for LTC?

If you have done the calculations, please share the main points or, if possible, your spreadsheet.

I definitely fall into the no-plan-for-LTC category & have learned a lot reading LTC related threads on this forum.

If I'm thinking of buying the typical 3 year maximum benefit policy, then it seems the simple calculation is (daily benefit) x 3 x 365. For a $200 daily benefit, that's $219,000.

I need to think about inflation in LTC costs, so if I set up a $219k fund today I also need to keep the investment earnings inside the fund to offset the increasing cost. A typical "inflation" provision in LTC insurance just increases the max benefits by 5% per year. So if your fund can earn a nominal 5% you can stay even. Of course nobody knows how fast real costs will increase.

If I'm single and own a $219k house, I could assume that I'll sell the house to pay for my LTC needs. That seems kind of logical as the biggest LTC costs are generally incurred when people are living in facilities, not at home.

I do this math and figure that I can self-insure the first 3 years of LTC needs. However, that still leaves the risk of a very long disability. Like Sam, what I really want is the policy with the 3 year waiting period and no cap (a lifetime benefit). But such policies aren't available. Last I checked, the premium rates for lifetime benefits with typical waiting periods were going up much faster than the premium rates for limited periods. Insurance companies are just like me, they don't want the open-ended risk.

 

[Alan]

Without a personal, trusted adviser to review your entire situation (including financial, lifestyle, and personal goals), there are some calculators available. How good are they? I have no idea. But since you asked the question:

Long-Term Care Self Insurance : Calculator: Long-Term Care Self Insurance

Nice little calculator - thanks.

According to it, I believe I am a good candidate to self insure, assuming that our pensions and SS don't evaporate and our LTC fund and existing investments don't totally collapse either.

As was said earlier in the thread, everyone's situation is different, but we are very fortunate to have a lot of funds supporting a high income that we can easily cut back by 60% should we need to.