Long Term Care Annuity ?????

[rkser]

I need help in deciding whether I need this Long Term Care Insurance/Annuity. Please advice-

I am 55 & DW is 50, I take prescription medications but DW does not take any. We work 3 days a week together in our part time Doctor's office practice and would both like to retire completely at 65 when Medicare starts.

We can invest upto 300K from taxable acc & maybe a little more from retirement accounts(Qualified annuity) if we do decide to buy this annuity.

I have read many articles in Kiplinger's, NYTimes and other financial magazines about a good probability that some of us will eventually need Long Term Care for an average of 3 yrs in our life time. We are told that unless we buy it now, it will progressively get expensive and we may not even be eligible if we delay this for later.

I realize, that like any other insurance we may not get to use it (& that is a good thing) but if we do need it, it is there for us, shielding our assets from being used.

Have any of you or has any relative/friend of yours used the ins. benefits. I do understand that by linking the Annuity with Long Term Ins, I am increasing the instances we may get to use these monies, but do decrease the size of the benefit for any each of the situations.

I will appreciate If you can share your experience, which Ins. company was used, was Vanguard (my accounts holder) involved in any way, what are are the clauses to watch for, should I look for inflation indexed rider etc....

This is a daunting task, and I better deal with this beast now rather later. Any and all opinions are welcome, regards and thanks in advance.

 

[brewer12345]

Search the forum for LTC info. I would not buy any of these products, personally, but opinions differ.

 

[easysurfer]

Had a thread on this topic not long ago:

http://www.early-retirement.org/forums/f28/is-a-hybrid-a-good-idea-57916.html

I just paid my LTC Insurance (regular LTC policy, not annuity) premium a few days ago.

The cons against having it: The premium is expensive, and will I use ever use it?

To pros of having it: If I need it, it can be a godsend. Also, if you don't have much income, a portion of the premium may be tax deductible.

My friend is in a situation where she'll probably be going to a nursing home soon from an acute care hospital. She only has medicare so a nursing home stay is limited. One nursing home that she may get transfered to is said as very nice, but I think only medicaid and private pay covers. Now I'm looking to see if she qualifies for medicaid. Another nursing home that she has experienced (medicare accepted), I say, to be blunt is scary -- understaffed, takes forever for simple things like getting someone to make her bed.

Sure wish she had a LTC policy to go to a nice private pay nursing home, if needed, instead of a scary, scary place. With that in mind...paying the LTC policy each year isn't so painful but seems smart to me as if I had to go to a nursing home, I don't want to end up in a scary scary place.

 

[GregLee]

Sure wish she had a LTC policy to go to a nice private pay nursing home, if needed, instead of a scary, scary place. With that in mind...paying the LTC policy each year isn't so painful but seems smart to me as if I had to go to a nursing home, I don't want to end up in a scary scary place.

If I knew that buying an affordable LTC policy would keep me from winding up in that scary scary place, I'd buy it in a second. But there are a lot of problems here. For instance, how do I know that the LTC insurance will buy me a place any less scary than Medicaid would get me? How do I know that when I approach the time when I need LTC that the insurance company won't raise my premium until I have to drop the insurance before I have a chance to use it? If the insurance company can do that, I assume it will -- it is not in business for the sake of my welfare, but to make money.

 

[easysurfer]

If I knew that buying an affordable LTC policy would keep me from winding up in that scary scary place, I'd buy it in a second. But there are a lot of problems here. For instance, how do I know that the LTC insurance will buy me a place any less scary than Medicaid would get me? How do I know that when I approach the time when I need LTC that the insurance company won't raise my premium until I have to drop the insurance before I have a chance to use it? If the insurance company can do that, I assume it will -- it is not in business for the sake of my welfare, but to make money.

I agree. One really doesn't know. Who even knows what medicare/medicaid -- if there is one -- will look like years down the road?

But for this, I've decided (correctly or not) that what I pay now to (maybe) keep me out of a really scary place is worth it.

Anoter comparison, one can go to a really nice hotel and the place still has bed bugs. But I'll pay the price and still think it's more likely the nicer hotels don't have bed bugs than the cheap hotels. It's a guess. Yes.

 

[Brat]

We purchased joint (couple) LTC insurance in our 50s (1998), paid up in 10 years with a 5% compounding inflation rider based on what was then the standard nursing home charge. I hope that was money thrown away but it has given us peace of mind. Getting the insurers to pay out can be like pulling teeth as Nord has discovered but I will leave that dental work for our kids.

 

[Animorph]

I'm happy enough to self insure. With the normal 4% SWR, the most likely result is that you will have plenty of value left in your portfolio at the end. That's my LTC money. Won't need it for anything else at that point. Plus DW and I have individual portfolios I didn't count as retirement funds, so there's a backup plan.

LTC insurance is a little funny also, in that it covers the first $100/day for a possibly limited number of years (or whatever you buy). It's not exactly a catastrophic event coverage, since your spending is open ended and not capped. Not all that comforting, and expensive to boot.

 

[youbet]

I'm still looking for a LTC policy which has a 2 year waiting period. We can self-insure for the typical 2 - 3 year stay but would like to have inexpensive catastrophic coverage that would kick in if one of us winds up in a nursing home for many years.

I've checked with three different agents and all say that what I'm looking for is not available.

 

[chinaco]

Interesting!

I never gave LTC a thought until I got a little older (mid 40s) and saw what happened to family members... and even had to deal with those circumstances helping family members.


There are two key issues:

1. Access to care of choice and location of choice (if done right)
2. Asset protection

We have LTCi through work. It was such a good deal, I could not pass it up. The future could change that... Fortunately, we can self fund it necessary.

Money for access and choice does not solve all of the problems... someone has to manage the situation. Bad decisions can still be made. This is where being the person that helped a parent or relative gets some return... they have experience!


Asset protection. This is a planning exercise! The first thing is to figure out the Medicaid rules of your state. Not to game it... but to understand what the survivor will have to deal with and how to best approach it. Different states have very different rules! Some states will shield the surviving spouse better than others! Then look at your options to deal with funding (access and choice) issues and shielding.

 

[rkser]

Getting the insurers to pay out can be like pulling teeth as Nord has discovered.

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This is a wrench in all calculations for LTC Ins., at that moment in time one is at the mercy of the Ins. company I suppose. That is a major deterrant for me to pay up a huge amount of money and hope and pray that when I need the care the Ins. will pay.

Has anybody had any experiences - good or bad when the Ins. company had to pay the benefit ?

 

[donheff]

DW and I have a straight LTC insurance policy (not annuity) through the Federal contract. DW's father needed it (Alzheimers) and we had no problems getting it. I too worry about run-arounds from insurers but hope the size of the contract and the clout of OPM to take everybody elsewhere will help keep the insurer honest.

 

[rkser]

I too worry about run-arounds from insurers but hope the size of the contract and the clout of OPM to take everybody elsewhere will help keep the insurer honest.

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What is "OPM" & how do you suppose the size of the contract will help keep the Ins. honest??

Thanks

 

[Bestwifeever]

Like everything one contracts for in advance anymore, there is a worry about whether the provider will actually come through at the time the services/product is actually needed. As far as LTC insurance goes, though, our worries are more that the premiums would go up so high that we'd not want to continue the insurance, so we are considering ourselves self-insured.

 

[FinanceDude]

There are lump sum LTC contracts you can buy. Most folks hate to pay monthly or yearly premiums. My FIL was on Medicaid for 20 years before he died, and Medicaid is NOT the path to go down, trust me..........

 

[Brat]

My parents had a VERY old LTC contracts that, when I needed to apply for their benefits, were administered by GE. I had no problem with them paying. Periodically they would ask for a care report from the nursing home but it is reasonable for them to verify that the insured is still in need of services. My mother outlived the term of her LTC benefit. Based on my observations of long term care recipients women live much longer when frail and pose the greater financial risk.

"OPM", Office of Personnel Management, is the Federal counterpart of human resources in private industry. Like some large private employers they provide employees and annuitants the opportunity to purchase long term care insurance. OPM set standards for the contract and invited insurers to bid on the contract. It is completely funded by purchasers so no taxpayer support. Anyone can go to the OPM website and see the product and the cost, even play with the calculator. From what others have said on this forum there are less expensive policies from good insurers with the same benefits on the market. The additional cost may be partially attributable to the fact that OPM is the adjudicator of contract compliance and they write tight contracts.

Neither my nor my parent's LTC policies were through OPM, they predate that program. When I was shopping for LTC insurance we were offered a couple obviously low-ball policies. The risk of ever increasing rates was what caused us to look at paid up policies. A 90 day waiting period was the sweet-spot for contract cost. I think there was a 6 month option but the savings were minimal.

 

[donheff]

I too worry about run-arounds from insurers but hope the size of the contract and the clout of OPM to take everybody elsewhere will help keep the insurer honest.

--------------------------------------------------------------------

What is "OPM" & how do you suppose the size of the contract will help keep the Ins. honest??

Thanks

Brat describes it well. The Office of Personnel Management negotiates the LTC contracts that are available for Federal workers, just like it negotiates health insurance contracts. The contracts are well defined and the companies don't want to lose a large base of reliable participants. We hope they will be inclined to adhere to the contract terms so OPM doesn't go elsewhere which they can under the terms of the contract.

 

[ripper1]

I would hope to consider my family as my LTC. Everybody in my family helped out when an elder was sick or needed help. Basically LTC is for the children of older folk. It takes the burden off of them. That being said I am in my mid 50's and still considering it. Currently I am in pretty good shape for my age and would only get it for myself. I will be there for my wife.

 

[donheff]

Currently I am in pretty good shape for my age and would only get it for myself. I will be there for my wife.

What if you are not?

 

[Rich_by_the_Bay]

I would hope to consider my family as my LTC. Everybody in my family helped out when an elder was sick or needed help. Basically LTC is for the children of older folk. It takes the burden off of them. That being said I am in my mid 50's and still considering it. Currently I am in pretty good shape for my age and would only get it for myself. I will be there for my wife.

Many families anticipate providing this kind of support for aging and/or debilitated parents with all the best intentions. Some pull it off depending on the illness type, finances, location, presence of many other loved ones, etc.

But you never can appreciate in advance the specifics that may come into play. In my decades in health care such spoilers include incontinence, limitations in the health of the main care-giver, disruptive behavior by the aging family member 24/7, occurrence of even trivial illnesses like the flu which change a manageable scenario into one that was not.

My point is not that it cannot be done in some cases, but rather that such a strategy should provide for an "out" which may require "just in case" planning.

 

[W2R]

Getting the insurers to pay out can be like pulling teeth as Nord has discovered.

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This is a wrench in all calculations for LTC Ins., at that moment in time one is at the mercy of the Ins. company I suppose. That is a major deterrant for me to pay up a huge amount of money and hope and pray that when I need the care the Ins. will pay.

Has anybody had any experiences - good or bad when the Ins. company had to pay the benefit ?

Yes, we had the same experience as Nords. When my mother needed benefits from her LTC policy, which she had paid into for many years, they wouldn't pay up even though it was a very clearcut case. That was the LAST thing she needed when she was not doing well, believe me. She called and called, and wrote, got all the paperwork that they asked for, and still had no luck with them at all. Finally my brother and nephew called, wrote, and threatened to sue (my nephew is a lawyer), and this was what was required for her to get the benefits she had paid for.

I plan to self-insure.

 

[samclem]

I'm still looking for a LTC policy which has a 2 year waiting period. We can self-insure for the typical 2 - 3 year stay but would like to have inexpensive catastrophic coverage that would kick in if one of us winds up in a nursing home for many years.

I've checked with three different agents and all say that what I'm looking for is not available.

Let me know when you find it, because that's what we'd like, too. And shared benefits, but terminating on death of either spouse (with just one of us left, the LTC costs could be self-funded between monthly SS, pension, drawdown of savings at an accelerated rate, sale of home, etc.)
I'd think such a policy would be not very expensive.

 

[ripper1]

Yes, we had the same experience as Nords. When my mother needed benefits from her LTC policy, which she had paid into for many years, they wouldn't pay up even though it was a very clearcut case. That was the LAST thing she needed when she was not doing well, believe me. She called and called, and wrote, got all the paperwork that they asked for, and still had no luck with them at all. Finally my brother and nephew called, wrote, and threatened to sue (my nephew is a lawyer), and this was what was required for her to get the benefits she had paid for.

I plan to self-insure.

+1

 

[youbet]

Let me know when you find it, because that's what we'd like, too. And shared benefits, but terminating on death of either spouse (with just one of us left, the LTC costs could be self-funded between monthly SS, pension, drawdown of savings at an accelerated rate, sale of home, etc.)
I'd think such a policy would be not very expensive.

Interestingly, I had another chance to deal with an agent on this subject just this morning......

DW will be turning 65 and we've been looking at Medicare supplements and Part D plans. We had an agent/salesman representing Blue Cross / Blue Shield of Illinois over and listened to his pitch. Afterwards I brought up the subject of LTC insurance and he jumped to attention obviously anxious to get onto that subject.

Bottom line - when I told him what I was looking for, catastrophic coverage with a long waiting period, at least 10 years of coverage and correspondingly low premiums, he said he had nothing to offer from any of the six companies he represented.

It seems strange that most plans insure the 90 day - 3/5 yr range. That's the period many of us on this board could self-insure. Where DW and I could use some protection is the unlikely event one of us spends many years in a NH. We could easily self-insure for the more probable event of a 2 year or less stay.

I agree with your comments on shared coverage and am adding that to my requirements. Thanks.

Why would someone buy LTI that only covers, say, 3 yrs when the real danger that needs to be insured against is a long stay?

 

[samclem]

It seems strange that most plans insure the 90 day - 3/5 yr range. That's the period many of us on this board could self-insure. Where DW and I could use some protection is the unlikely event one of us spends many years in a NH. We could easily self-insure for the more probable event of a 2 year or less stay.

Why would someone buy LTI that only covers, say, 3 yrs when the real danger that needs to be insured against is a long stay?

I guess folks like those on this board constitute a market too small for insurance companies to market.
-- Sufficient resources (approx $150-$200KK) to fund a couple of years of care, if they had to.
-- Interested in true insurance to cover only calamities. The normal marketing approach doesn't work ("Our policies protect you right away. Look at the costs! Do you and your spouse have the money for that? What would it do to your kids? etc).
Q: Why wouldn't a consumer want insurance to start paying as soon as possible after the beneficiary meets the ADL criteria for payoff?
A: Because that consumer is price-sensitive, has analyzed his/her needs (crunched the numbers, looked at the assets he/she has, etc), and is looking for a targeted product that meets those needs at lowest cost. That's not a salesman's dream, it's his nightmare.

Anyway, someone will sell such a policy someday. If it prices out right, and if it looks like it's from a stable company, I would jump at it.

 

[FinanceDude]

Bottom line - when I told him what I was looking for, catastrophic coverage with a long waiting period, at least 10 years of coverage and correspondingly low premiums, he said he had nothing to offer from any of the six companies he represented.

There's not an insurance company in the world who could design that product, there would be no profit in it and they would have to promise benefits for 30 years, let's say?

It seems strange that most plans insure the 90 day - 3/5 yr range. That's the period many of us on this board could self-insure. Where DW and I could use some protection is the unlikely event one of us spends many years in a NH. We could easily self-insure for the more probable event of a 2 year or less stay.

Full NH coverage for a good place where I live is about $7,000-$8,000 a month. If you have $200K or so to put away just for LTC, that's fine. I think while some on this board could swing it, not all could.......

Why would someone buy LTI that only covers, say, 3 yrs when the real danger that needs to be insured against is a long stay?

With some carriers, you can change the specifics to some extent. Bottom line, LTC is not priced or underwritten like life insurance. If you want life coverage, you are going to pay a lot, which most folks are not going to pounce on. There are some risks you can't apply the Vanguard model to...........