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Old 11-14-2009, 10:37 AM   #41
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What I would be concerned about is that the premiums go up when you develop conditions that make you more likely to need LTC. The Health Insurance companies certainly do this, so the sick pay a whole lot more in premiums than the healthy.

If you paid for LTC insurance from age 55 to 65 and then developed diabetes or some other chronic illness, what is there to stop the insurance company from charging you the same rate as a 65 year old with diabetes starting LTC insurance for the first time?
A health insurance company can only charge individual policyholders the same premium that they charge all other individual policyholders in their demographic group. Contrary to popular belief and what the liberal media would like you to believe, they cannot single out an individual and raise their rates for developing a medical condition. Unhealthy people pay the exact same rate as healthy people if they bought the policy while they were healthy. The same applies to long term care insurance. That is why I say it is best to buy the coverage while healthy if you are going to do it eventually. The cost to buy it after you become unhealthy is much, much higher. You then pay that higher cost year after year after year. Makes a big difference.
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Old 11-14-2009, 10:55 AM   #42
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Originally Posted by dgoldenz View Post
A health insurance company can only charge individual policyholders the same premium that they charge all other individual policyholders in their demographic group. Contrary to popular belief and what the liberal media would like you to believe, they cannot single out an individual and raise their rates for developing a medical condition. Unhealthy people pay the exact same rate as healthy people if they bought the policy while they were healthy. The same applies to long term care insurance. That is why I say it is best to buy the coverage while healthy if you are going to do it eventually. The cost to buy it after you become unhealthy is much, much higher. You then pay that higher cost year after year after year. Makes a big difference.
I disagree.

I personally know 2 people where this happened after a heart attack and after lower back surgery. Both men in their 50's with individual policies and both saw their policies ramped up to the point they had to go uninsured.

I also heard a small business owner being interviewed where his insurance premiums for his employees dropped dramatically when an older employee with lots of health problems retired. He said he then essentially broke the law when interviewing new candidates by considering young healthy folks.
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Old 11-14-2009, 11:06 AM   #43
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I disagree.

I personally know 2 people where this happened after a heart attack and after lower back surgery. Both men in their 50's with individual policies and both saw their policies ramped up to the point they had to go uninsured.

I also heard a small business owner being interviewed where his insurance premiums for his employees dropped dramatically when an older employee with lots of health problems retired. He said he then essentially broke the law when interviewing new candidates by considering young healthy folks.
You are leaving out a few things:

-The heart attack and lower back surgery has nothing to do with their premium increases. The premiums were ramped up because everyone in their demographic block of business had a rate increase. The people you know cannot have their premiums increased 50%, 100%, 200%, 400%, etc without all policyholders having their policies increased by the same amount. This is the law, there is no getting around it.

-Small group insurance is a different market than individual health. Part of the problem with small group health insurance is that the premiums are in fact tied directly to the average age, health, and claims experience of ONLY that group. A 15-person group of 25 year old employees would pay a lot less than a 15-person group of 60 year old employees who have all had heart attacks. In the small group market, carriers are free to jack up rates as high as necessary based on claims experience. This is why the Republicans have proposed to allow small businesses to create/join associations that can provide a group health policy for everyone that is a member, rather than continuing this practice.

This is getting a little off topic from the OP though, so I'll just leave the health insurance stuff alone at that. There's a thread in another section where that can be addressed in further detail.
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Old 11-14-2009, 11:19 AM   #44
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You are leaving out a few things:

-The heart attack and lower back surgery has nothing to do with their premium increases. The premiums were ramped up because everyone in their demographic block of business had a rate increase. The people you know cannot have their premiums increased 50%, 100%, 200%, 400%, etc without all policyholders having their policies increased by the same amount. This is the law, there is no getting around it.

-Small group insurance is a different market than individual health. Part of the problem with small group health insurance is that the premiums are in fact tied directly to the average age, health, and claims experience of ONLY that group. A 15-person group of 25 year old employees would pay a lot less than a 15-person group of 60 year old employees who have all had heart attacks. In the small group market, carriers are free to jack up rates as high as necessary based on claims experience. This is why the Republicans have proposed to allow small businesses to create/join associations that can provide a group health policy for everyone that is a member, rather than continuing this practice.

This is getting a little off topic from the OP though, so I'll just leave the health insurance stuff alone at that. There's a thread in another section where that can be addressed in further detail.
The fact that health insurance rates have sky-rocketed and that the sicker you are the more you pay is why I don't trust the insurance companies from doing the same thing with LTC insurance. When looking into LTC insurance a few years ago I was talking to a friend at work who had bought LTC insurance at age 50 for him and his wife and their premiums were "fixed" for the 1st 10 years. Lo and behold, 4 years later he received a letter telling him that the premiums for him and his wife were being increased by 15% and this was possible because the State law had been changed to allow this.

This was why we decided to self insure but I realize that people who are much older, with no LTC bucket of money invested, are in a much more difficult situation.
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Old 11-14-2009, 11:30 AM   #45
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The fact that health insurance rates have sky-rocketed and that the sicker you are the more you pay is why I don't trust the insurance companies from doing the same thing with LTC insurance. When looking into LTC insurance a few years ago I was talking to a friend at work who had bought LTC insurance at age 50 for him and his wife and their premiums were "fixed" for the 1st 10 years. Lo and behold, 4 years later he received a letter telling him that the premiums for him and his wife were being increased by 15% and this was possible because the State law had been changed to allow this.

This was why we decided to self insure but I realize that people who are much older, with no LTC bucket of money invested, are in a much more difficult situation.
Health insurance, on average, results in frequent claims, so the premiums are frequently adjusted to reflect the increased cost of those claims. There are also a lot more moving parts to health insurance than LTC.

If his premiums were fixed for 10 years, I can guess what company that was with, but I am sure in the application he had to sign a page stating he is aware that the cost of coverage could increase after the guaranteed period. There is nothing wrong with wanting to self-insure if that is your prerogative and everyone is entitled to their own opinion. I'm not here to sell you an LTC policy and convince you as to why you need it....just making comments based on the questions asked so far. Hopefully what I've written so far is helpful in at least getting a better understanding on the things that lie beneath the surface.
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Old 11-14-2009, 11:41 AM   #46
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I'm not here to sell you an LTC policy and convince you as to why you need it....just making comments based on the questions asked so far. Hopefully what I've written so far is helpful in at least getting a better understanding on the things that lie beneath the surface.
Point taken. I just wanted to state my experience and why I made the decision at age 50 to start making my own arrangements. Many people on this forum don't believe SS is going to be there for them when they need it and start to plan for that event. Affordable LTC insurance 10, 20, 30 years from now is in a similar category of uncertainty IMO.
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Old 11-14-2009, 12:16 PM   #47
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Assuming you and DW are in mid-fifties and in good health. How much net worth would you need today to feel comfortable you can self insure Assisted Living/ Nursing Home. The need for assisted living, of course, may or may not happen and could be anywhere from 25 to 35 years from now.

Question is assuming no pension and you are not concerned with leaving an estate. Have my own views, but don’t want to influence others thoughts.
Lots of tangents in this thread, I'm going back to the original post.

Have you thought about running FireCalc?

Use one of the "average cost" links (here's MetLife's http://www.metlife.com/assets/cao/mm...ted-living.pdf) to estimate how much you would want so that you can pay for your own LTC. Put that number in as a lump sum estate target in FireCalc. Fill in all the other info, and run it. If you are happy with the result, you have "enough" to self insure.

If you like, you can then get a couple quotes for LTCi policies that would provide the same amount of money. Then run FireCalc again without the estate target, but with the additional annual spending for the LTCi premium. Compare.
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Old 11-14-2009, 12:40 PM   #48
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Federal employees who purchased LTC incurance through the government received a nasty surprise this year - when the contract was recompeted, the new carrier boosted premiums for most policy holders 20 to 25%. This program was sold to employees with an implied promise that premiums would never increase - thus the anger.
I think as Federal employees study the changes in the LTC program they might be as pleasantly surprised as I was when weighing these changes. First of all, there isn't a new carrier for the program; the program was jointly underwritten initially by Metlife and John Hancock; when the 7 year contract was re-competed, John Hancock was the sole insurance company standing. I'm in the age bracket where my premiums could go up 25 percent, which after 7 years of flat line premiums I don't find daunting or draconian. And I never assumed my premiums would never go up with the policy -- although I was under the impression that they would not go up during the contract cycle, which did occur.

With the new contract, I have the option of keeping my current policy coverage with the 25 percent increase in premiums, a policy which has a 5% automatic compund inflation adjustment. I also have three other options, one of which would lower my premiums, increase my coverage for some things like home care, and downgrade my automatic compound inflation protection to 4%. (Since I've had this policy, with the 5% inflation protection, my daily benefit protection and maximum lifetime benefit amount has increased significantly.) I anticipate that we might be in a serious deflationary period for a long time, perhaps like Japan where their Central Bank kept zero rates for nearly a decade, so the 5% inflation protection does not strike me as real appealing these days and improved medical technologies might result in lower medical costs down the road.

Anyway, I'm thinking for now that this is a good policy for us and we intend to keep it.
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Old 11-14-2009, 02:30 PM   #49
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- The two things I like about the Federal LTC program:
-- I think OPM will go to bat for policyholders if the carrier tries to perpetrate an outrage (unwarranted premium increases, reductions in promised benefits, problems with claims, etc)
-- No sales pressure or fees--the info is very clear and on the web site.
- The things I didn't like:
-- No ability to buy shared coverage with DW and I. This type of coverage seems a good way to increase the odds of usingthe coverage we pay for.
-- The rates aren't super for a person in good health.

Other things to consider:
- The possible health care reform abrew in DC could affect this issue, and it might pay to wait to see how things shake out. For example, the House bill includes an optional LTC insurance component.
- Medicaid is an option. Yes, it's not a great option, but it is there. As the law is written now, a couple's assets can be transferred so that an individual qualifies for LTC coverage under Medicaid after the 5 year lookback provision. So, if a couple can pay the bill for private LTC coverage for 5 years, they'd pay no more. No, the care won't be top notch. It will probably be depressing. But the partner on the outside will still have enough assets to maintain an independent life. There was a time when I would have been philosophically opposed to moving assets in this way to qualify for Medicaid, but I'm past that now--if the law is written to allow it, then a couple should do it. The tax rates to support all the present and future government entitlements are going to be staggering. If we don't take legitimate advantage of every one of these programs we can qualify for it isn't "being virtuous," it is "being a chump."
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Old 11-14-2009, 05:25 PM   #50
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Medicaid is an option. Yes, it's not a great option, but it is there. As the law is written now, a couple's assets can be transferred so that an individual qualifies for LTC coverage under Medicaid after the 5 year lookback provision. So, if a couple can pay the bill for private LTC coverage for 5 years, they'd pay no more. No, the care won't be top notch. It will probably be depressing.
my understanding is that alot of places, once you are in, wont kick you out when you run out of money and have to go on medicaid, so maybe the care wont be all that bad after all.
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Old 11-14-2009, 05:32 PM   #51
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I thank my lucky stars that dementia does not run in my family. We tend to live long healthy lives and/or die quickly when the time comes. Hence, my un-plan to just pay as I go for my care. It's risk but then isn't everything.
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Old 11-14-2009, 05:34 PM   #52
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my understanding is that alot of places, once you are in, wont kick you out when you run out of money and have to go on medicaid, so maybe the care wont be all that bad after all.
In PA, if you run out of money in a nursing home, they cannot kick you out. You then qualify for Medicaid. Some personal care homes and assisted livings will keep you if you have been full pay for a number of years. Now, if you had a private room, you might have a roommate if your money runs out. You should get an agreement like this in writing naturally.
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Old 11-14-2009, 08:14 PM   #53
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In PA, if you run out of money in a nursing home, they cannot kick you out. You then qualify for Medicaid. Some personal care homes and assisted livings will keep you if you have been full pay for a number of years. Now, if you had a private room, you might have a roommate if your money runs out. You should get an agreement like this in writing naturally.
This is true in virtually every place I've heard about, whether it's required by external Federal/State policies or something that facilities just do -- I don't know. But a good strategy has always been to find the best care or assisted living facilities on a private pay basis and then shift over to Medicaid when private resources have been depleted. The problem with spending down all assets and relying on Medicaid initially for long term care is that you limit your choices to only those facilities that accept Medicaid patients initially.
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Old 11-14-2009, 08:27 PM   #54
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This is true in virtually every place I've heard about, whether it's required by external Federal/State policies or something that facilities just do -- I don't know.
That was the case with my recently-deceased FIL. His facility would not admit new residents under Medicaid, only private pay. But had he survived long enough to exhaust his private pay resources he could continue to stay under Medicaid.
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Old 11-14-2009, 08:33 PM   #55
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This is true in virtually every place I've heard about, whether it's required by external Federal/State policies or something that facilities just do -- I don't know. But a good strategy has always been to find the best care or assisted living facilities on a private pay basis and then shift over to Medicaid when private resources have been depleted.
So, do they run a check to see how deep the patient's pockets are before accepting them? Obviously, the care facility is taking a big risk if the "full rate" private payments stop after 3 months and they have to take whatever Medicaid send them for 10 years.

Seems they could even ask for the patient to post a bond or some other arrangement to prevent all funds being put into trust shortly after the patient checks in.
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Old 11-14-2009, 08:58 PM   #56
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So, do they run a check to see how deep the patient's pockets are before accepting them? Obviously, the care facility is taking a big risk if the "full rate" private payments stop after 3 months and they have to take whatever Medicaid send them for 10 years.
You'd think they would want financial info in advance of acceptance but they didn't ask for anything* before accepting my FIL. He was still within the 100 days Medicare pays for skilled care when he was admitted, so we weren't even asked for advance payment of the first month's basic services.


* Other than our assurance he would be "private pay" once his Medicare eligibility was used up.
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Old 11-14-2009, 10:36 PM   #57
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A friend of mine (retired insurance guy) recommended that we consider a life insurance policy that has a LTC feature, rather than a regular LTC policy. He suggested two companies that offer these, but I have not checked them out. My understanding is that you can use the insurance value to pay for LTC, or, if LTC is not required, the payout is upon death.

Has anyone looked into this approach?

Advantage would be that there should always be a payout, either to heirs upon death or to pay for long term care.
I'm using this approach while I delay making a decision to buy LTCI. My life insurance policies are thru the Army Airforce Mutual Aid Association(AAFMAA). They allow a monthly withdrawl of 2.5% of the value of the policy per month to cover LTC costs including at home services. We chose to pay our polices off in a 7 yr period so this expense stops in another 30 months. With AAFMAA we can get 100% of our premiums back if we select to cancel the policies Plus the accumulated divies less expenses, currently the net dividend on our policies are about 5.8% (7.1% less expenses). Because both my wife and I have COLA'd pensions I think our needs for LTC insurance are not as great as some. But with rising LTC costs, it makes me wonder whether a small amount of LTCI may make sense.
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Old 11-15-2009, 12:28 AM   #58
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Lots of tangents in this thread, I'm going back to the original post.

Have you thought about running FireCalc?

Use one of the "average cost" links (here's MetLife's http://www.metlife.com/assets/cao/mm...ted-living.pdf) to estimate how much you would want so that you can pay for your own LTC. Put that number in as a lump sum estate target in FireCalc. Fill in all the other info, and run it. If you are happy with the result, you have "enough" to self insure.

If you like, you can then get a couple quotes for LTCi policies that would provide the same amount of money. Then run FireCalc again without the estate target, but with the additional annual spending for the LTCi premium. Compare.
This seems to me like the most straightforward way to approach this issue. What I don't understand is what people mean when they say they are going to self-insure. Does this mean they are going to accumulate a dedicated lump sum (separate from retirement funds) equal to some "average" number of years of care......which seems to come out to about 300K for 4 yrs or 750K for 10 yrs. If that is what the goal is, won't it always be cheaper to buy LTC insurance since you won't be buying all those years but only the statistical "expectation" of the years that you will need that care (plus insurance co. profits).
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Old 11-15-2009, 11:56 AM   #59
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This seems to me like the most straightforward way to approach this issue. What I don't understand is what people mean when they say they are going to self-insure. Does this mean they are going to accumulate a dedicated lump sum (separate from retirement funds) equal to some "average" number of years of care......which seems to come out to about 300K for 4 yrs or 750K for 10 yrs. If that is what the goal is, won't it always be cheaper to buy LTC insurance since you won't be buying all those years but only the statistical "expectation" of the years that you will need that care (plus insurance co. profits).
Some years ago we decided to start saving for LTC in a separate account excluded from our retirement savings so not part of the SWR when we RE.

Currently we are both 54 years old and the account, which is on automatic is a VG Wellington fund and we auto pay $200/month which an expense in our RE budget also. The account currently stands at $17.3k.

Will it be enough? Who knows, but we are planning on a very generous RE income with lots of fat ( >$30k/year above basic budget) so the additional LTC fund doesn't need to fund the whole amount. If there is only one of us left alive when LTC is needed then the whole RE income stream is available to pay for it.
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Old 11-15-2009, 12:30 PM   #60
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Anyone know approximate LTC premiums as a function of age when policy purchased or an online site w/ such info?
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