Long Term Care Insurance 60% premium hike--yikes!

[mathjak107]

pretty high percentages , but i did hear around 77% would need care of various types and lengths . of course like i said ,which group are you or your spouse ?

it is no different than retirement planning to 95. we all aint making it but we just don't know who is .

 

[Ready]

todays policy's are very different . they are clearly worded and have none of the double talk older policy's did.

the steps to collect are very defined now .

What protections does your policy offer against extreme price increases? Is there a cap to how much it can increase each year, or is there just a requirement to get state approval for large increases?

 

[Mulligan]

My father passed away last year after spending three years in assisted living/nursing care. The first year he was in a very nice place with a restaurant serving three meals a day. His fee was $4,000 per month. After his ability to function declined, we needed to move him into a smaller facility where they could watch him 24 hours per day. The room was smaller, and the service not quite as nice. The fee there was $3,000.



He did not have LTC, but between his pension and SS, he earned about $3,000 per month. So there was a small deficit that needed to be covered by savings each month, but nothing that was going to devastate him.



Had he purchased LTC, he would have been covered for up to three years of coverage. So even in the more expensive place, that would have represented $144,000 in coverage. So if self insuring for $144,000 is out of the question, then you may have to consider LTC.



However, looking at the retirement figures that most of the forum members have posted over the years, I would suspect that for the majority, a worst case of $144,000 would not bankrupt them. And to get that $144,000 in worst case protection, he would have likely had to pay $30,000-$40,000 in coverage. Taking that money and investing it would likely result in a future value of around $65,000, so the net savings is really not all that significant.



And, many policies have all types of limitations and exclusions regarding when you can receive coverage. For my Dad, we elected to decide when the time was right and where he would reside.

I will follow the above path as my strategy. So much easier being single to avoid dealing with pros/cons of LTC. My pension check can cover the nursing home bill. I would sign over my house to my GF to protect her. Look back period would be long expired before I could see scenario where that would ever come into play.


Sent from my iPad using Tapatalk

 

[bingybear]

on the other hand , as i said above my co-worker is coming up on 200k in expenses only 1-1/2 years in since his stroke .

all which would have been covered under our policy..

Older policies often had much better coverage. I was quoted (ok proposals based on our input data) from the same company. In the middle of the year they quite offering one policy and started another one "that was more correct based on present actuary calculations". Based on the total potential payment, the insurance cost/$ benefit increased by 60%, the elimination period doubled to 6 months, and I don't recall much else had changed... but both were based on $150/day. It looks like your co-worker was paying about $365/day. Those plans would not cover very well in these cases assuming all of your co-workers expenses were LTC (not medical included).

....

I'm guessing REWahoo's chart will not come through.. but I wanted to note that this only includes those who are in LTC at end of life based on the statement on the chart. So some of the important data is missing.

pretty high percentages , but i did hear around 77% would need care of various types and lengths . of course like i said ,which group are you or your spouse ?

it is no different than retirement planning to 95. we all aint making it but we just don't know who is .

I agree. I've run the fido RIP to 115 to see what income I could likely expect. Interesting results.
The question is when you plan out to age 95 or whatever, do you then go buy an annuity to cover the expenses (to insure your income)? Some do, some don't. For LTCI, I have not seen unlimited coverage these days except for what might be had in a partnership plan with unlimited asset protection. This appears to only be available in NY and IL. So each person needs to plan how they will cover LTC. The wild card is if you spend 5, 10, 15+ years in LTC. For most plans issued now, the individual is on the hook for most of the $. Look at it this way, you planned your retirement to age 95 and you end of being one who live to 108. So, did you buy the annuity? -- and was it inflation indexed?

 

[mathjak107]

Older plans had lifetime coverage but the fine print made them hard to get much

 

[mathjak107]

What protections does your policy offer against extreme price increases? Is there a cap to how much it can increase each year, or is there just a requirement to get state approval for large increases?

What cap does your auto insurance have ?
None. Your premium covers you year to year. It isn't like you are paying in advance.

If it gets to high you drop it. Like anything in life we can no longer afford.

In the mean time you had coverage up to that point same as your car or auto insurance

 

[Ready]

What cap does your auto insurance have ?
None. Your premium covers you year to year. It isn't like you are paying in advance.

If it gets to high you drop it. Like anything in life we can no longer afford.

In the mean time you had coverage up to that point same as your car or auto insurance

I don't think most people look at LTC that way. With home and auto insurance, you have an equal likelihood from year to year that you may need to file a claim.

With LTC, it is sold as something you are "buying into", where you get a lower premium for signing up when you are young and healthy, and very unlikely to need it, and in return for doing so you are spared the premiums that an older person would pay if they wait until later in life to begin.

If you truly look at each year of your LTC policy as a standalone, and you believe that at your current age it still makes sense to have it for just this year, then your logic is fine.

Another big difference between home insurance and LTC is the percentage of cost relative to the total exposure. My $1,200 in homeowners insurance guarantees replacement of a $1.2M structure, so I'm paying .1% for coverage of a total loss.

With most policies capping out at 3 years, and $200/day, that represents $219K in coverage limits. And if the value of the premiums you pay each year is totaled up, and then returns are added in, you may find your total premiums paid were around $60K. At least that is what the numbers came out to for my father.

So you are paying $60K to insure against $219K, representing 27%, versus .1% for homeowners insurance. That's quite a difference, and it changes my perspective entirely on the value of this insurance.

Finally, with auto insurance, if premiums go up, you can always shop around for a new carrier with no penalty. With LTC, if you cancel your policy, you lose any money that you put into the system that supposedly prevented you from paying the higher rates in later years. So fair market competition doesn't come into play with LTC as it does with home and auto.

You sound really convinced that LTC is the right decision for you, and I'm not trying to suggest that for you it is not. However, I'm not sure if you're trying to convince others here that it makes sense, or if you are trying to convince yourself.

 

[REWahoo]

With LTC, it is sold as something you are "buying into", where you get a lower premium for signing up when you are young and healthy, and very unlikely to need it, and in return for doing so you are spared the premiums that an older person would pay if they wait until later in life to begin.

^ Much like term life insurance, and I view LTC insurance the same way.

I'm willing to pay the annual premiums for the coverage until such time as 1) I'm in a position to self-insure, or 2) the premiums increase to the point I no longer see a favorable cost/benefit ratio.

Hopefully 1) will happen before 2) and I'll have happily "wasted" all the money I spent paying those premiums - just like I did on my term life insurance policy.

 

[mathjak107]

Exactly like term life.

 

[GravitySucks]

Condolences nunthewiser

Sent from my Nexus 7 using Early Retirement Forum mobile app

 

[Nunthewiser]

Condolences nunthewiser

Thanks Gravity and MichaelB. As it happens we are both Syracuse natives and now Florida residents ( or were, in her case).

I too would be interested in a catastrophic policy, but something like she had is just too unlikely to pay off relative to the premium cost. Added to that the annoyance of dealing with a insurance co to "bring me a rock...no, bring me another rock" before they start to pay. no thanks.

Also, once you have paid into their plan, it becomes difficult to do what you think you should do on your own nickel before the plan criteria is invoked. You cant just say , well I am 90 and I feel like I would like a bit of pampering for assisted living, but I really could take care of myself. Too bad, so sad...that's not up to you unless you want to pay for it.

 

[bingybear]

^ Much like term life insurance, and I view LTC insurance the same way.

I'm willing to pay the annual premiums for the coverage until such time as 1) I'm in a position to self-insure, or 2) the premiums increase to the point I no longer see a favorable cost/benefit ratio.

Hopefully 1) will happen before 2) and I'll have happily "wasted" all the money I spent paying those premiums - just like I did on my term life insurance policy.

Exactly like term life.

One difference with term from my perspective. I just terminated my term policy that I had for 20 some years. I know when and how much the premium increases would be and when they would occur when I applied for the policy. What I never knew was how much of a dividend would reduce may semi-annual payment. I never expected it, but it was always nice to have.

For me, I think I'll self insure until I find a plan that looks more reasonable. Being 54, I may have a bit of time to look. Likelihood at this age of needing it is likely low sans recovery from an accident.

 

[Independent]

It would be helpful if we had stats .... .

I can provide stats. This is inter-company data for people with LTC policies. Download the first pdf file here:
https://www.soa.org/research/experience-study/ltc/research-ltc-study-1984-report.aspx

Look at Figure 6, page 36.

and maybe Figure 3, on page 14.

But, LTC insurance is so complex, with so many variables, it's hard to dig through to the information you may want.

 

[pb4uski]

It really doesn't exist. Kitces bemoaned the lack of this option, which should be much cheaper.

Agree - fishy response.

I inquired about such a catastrophic policy (similar to a regular policy but with a long exclusion period) from a broker and never got a good response. I would think it would be affordable because the risk of claims is low.

 

[pb4uski]

What cap does your auto insurance have ?
None. Your premium covers you year to year. It isn't like you are paying in advance.

If it gets to high you drop it. Like anything in life we can no longer afford.

In the mean time you had coverage up to that point same as your car or auto insurance

I don't think most people look at LTC that way. With home and auto insurance, you have an equal likelihood from year to year that you may need to file a claim.

With LTC, it is sold as something you are "buying into", where you get a lower premium for signing up when you are young and healthy, and very unlikely to need it, and in return for doing so you are spared the premiums that an older person would pay if they wait until later in life to begin. ....

Ready has it right... there is definitely a pre-funding aspect to LTC that is somewhat similar to whole life where the premiums are level but the risk of a mortality claim increases with age. LTC just does not usually have as long a time horizon as whole life. But a big difference is that whole life premiums are fixed and can't be increased like LTC premiums can.

If LTC premiums were like car insurance they would skyrocket with age... probably more than term insurance does.

 

[mathjak107]

I would say more like universal life.

The premium cost for insurance internally rises with age until eventually if you are letting the policy support itself it will eat itself up and vanish just as the odds go up you will die unless you pay more premiums.

But in any case lets hope they finally got the pricing correct. Our bill is due in october so we will see when we get it what the premium looks like.

 

[pb4uski]

No, not like UL. What you refer to as the premium cost for insurance is known and visible in a UL policy but not in whole life or LTC.

 

[mathjak107]

Correct , but the fact is still the ul is designed to self extinguish eventually as you turn more likely to die.

I have an old one i have not fed in 25 years and is just running on accumulated value.

I made the kids the owner so i don't get the statements but i would think at some point over the next 15 years it will burn itself out with no additional money added.

Which is fine. My kids had the policy all these years since my wifes son has a share in a family business instead.

But we have been selling off the real estate the last 12 years so all the kids will share equally in what is left and the business will be gone and the policy likely extinguished on its own

 

[pb4uski]

But the other differences are that whole life and LTC require that you keep paying premiums to keep the policy in force for the original contractual benefits where with UL you can pay whatever you feel like. Very different.

 

[mathjak107]

But as i said the similarity is that the more likely you will need it the more likely either the ul will self extinquish without adding money or in the case of ltc coughing up higher and higher premiums ,whether known or not.

I wouldn't be surprised if at some point down the road the ltc plan we have will just be to expensive.

We pay 6900.00 a year for the two of us and get a 1600.00 state tax credit plus whatever we manage to take on the federal.

We have 350 a day , 5% inflation adjustments . Assisted living coverage and total asset and income protection if medicaid picks up the tab after 3 years.

 

[bclover]

we realized that if we tried to self insure in reality a large chunk of money had to be kept safe ,liquid and secure and not at risk since an extended downturn could wipe out a major portion of that money.

just losing the ability to invest that chunk would negate the fact we could have invested it ,paid a premium and had more left over .

most folks who claim they will self insure do not , they just leave everything invested and hope they do not need it or get caught.

one other factor too is the stay at home spouse makes alot of decisions as well as being concerned for their own survival.

many expenses ,and things for the spouse that needs care gets pushed aside for fear of over spending from their own funds they will need.

all in all when we looked into the insurance there were so many advantages that we had to be foolish not to protect ourselves.

the real deal is all about the stay at home spouse, not the spouse that needs the care..

one major problem with thinking family members will help care for you.

if there are siblings look out.

one always steps up to the plate and the rest step back.

more families have been broken up over this . i had issues in my own family when my dad spent 5 years in a home.

if wives are involved good luck. once they start with why are you helping when your brothers or sisters are not divorce can be in the cards.

usually the one that steps up takes the financial hit as well as in their time and they begin to resent the others.

our estate attorney told us the bulk of all his business now is those who called their plan "self insuring "

in reality there was no plan other than just keep the money fully invested with the rest and hope you don't need it .

now when something happens the stay at home spouse goes in to survival mode and wants to preserve as much of that money that was called self insuring money as they can , usually with only partial success at that point .

we figure we will do the insurance thing until we can't afford it if it gets that high as opposed to the alternatives which end up not really being a plan if the time hits ..

usually there is nothing different in place or ready to go with so called self insuring plans . nothing is ever a problem until it is a problem as they say and it all sounds like a plan until it isn't as likely any elder care attorney can tell you ..

LOL and that's why God invented Living wills and other legal documents.

So, not sure who your estate attorney is but from my small circle of folks, those of us who have estate attorneys also have actual plan on how we are to be taken care of.

Now onto family, with all due respect that is a crazy argument for buying a poor product

I was the stay at home spouse when my dh was diagnosed with terminal cancer. Not sure about your backbone but mine is firmly in place and our situation was extremely easy. LOL. MY WISHES ARE OBEYED. My sister and brother in law at better sense to come in and have the nerve to tell me what kind of care to give my husband. I made the decisions, not my in laws, not my siblings not my children, although my kids did get to voice their opinions. seriously dude, after 30 years of marriage your siblings can come into your marriage and start dictating stuff?
I could have cared less (and still don't although it's a moot point) if they never spoke to me again.

so yes I do have a plan in place (written down with instructions) on how to disperse my wealth in case of a health crisis. I have a competent attorney and since my sons are still in their early 20s and college students I still have a trusted friend and my sister who are legal executors.

self insure does not equal no plan

 

[pb4uski]

But as i said .....

Ok, you're totally right mathjak.

 

[Nunthewiser]

Food for thought...

As with any other contract of any magnitude , read the terms and conditions. Here is what it took to start the cash flowing on my late mother's Genworth contract:

"The Genworth policy my mom has lists these six criteria for payment:
BATHING- Washing oneself by sponge bath;or in either a tub or shower, including the task of getting into or out of the tub or shower
DRESSING- Putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.
TRANSFERRING- Moving into or out of a bed chair or wheelchair.
TOILETING- Getting to and from the toilet, getting on and off the toilet and performing associated personal hygeine.
CONTINENCE- Ability to maintain control of bowel or bladder function, the ability to perform associated personal hygeine.
EATING- Feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or interveneously.

She needs to be deficient on 2 of the 6. On good days she can pass all of them, but she's freaking 95 years old and just shouldn't be living by herself or with a lot of checking on, at least. "

So, the definition of terms is important. You can't just be old and feeble, but need to fit the contract language to collect.

 

[mathjak107]

LOL and that's why God invented Living wills and other legal documents.

So, not sure who your estate attorney is but from my small circle of folks, those of us who have estate attorneys also have actual plan on how we are to be taken care of.

Now onto family, with all due respect that is a crazy argument for buying a poor product

I was the stay at home spouse when my dh was diagnosed with terminal cancer. Not sure about your backbone but mine is firmly in place and our situation was extremely easy. LOL. MY WISHES ARE OBEYED. My sister and brother in law at better sense to come in and have the nerve to tell me what kind of care to give my husband. I made the decisions, not my in laws, not my siblings not my children, although my kids did get to voice their opinions. seriously dude, after 30 years of marriage your siblings can come into your marriage and start dictating stuff?
I could have cared less (and still don't although it's a moot point) if they never spoke to me again.

so yes I do have a plan in place (written down with instructions) on how to disperse my wealth in case of a health crisis. I have a competent attorney and since my sons are still in their early 20s and college students I still have a trusted friend and my sister who are legal executors.

self insure does not equal no plan

A will and living will have zero to do with asset protection if that is important to the stay at home spouse . For many that is the reason for having the insurance in the first place. To buy time to protect assets for the spouse or family so they can continue on in a similar lifetyle and not be driven down to be impovershed to get help when assets are gone.

 

[Ready]

Food for thought...

As with any other contract of any magnitude , read the terms and conditions. Here is what it took to start the cash flowing on my late mother's Genworth contract:

"The Genworth policy my mom has lists these six criteria for payment:
BATHING- Washing oneself by sponge bath;or in either a tub or shower, including the task of getting into or out of the tub or shower
DRESSING- Putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.
TRANSFERRING- Moving into or out of a bed chair or wheelchair.
TOILETING- Getting to and from the toilet, getting on and off the toilet and performing associated personal hygeine.
CONTINENCE- Ability to maintain control of bowel or bladder function, the ability to perform associated personal hygeine.
EATING- Feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or interveneously.

She needs to be deficient on 2 of the 6. On good days she can pass all of them, but she's freaking 95 years old and just shouldn't be living by herself or with a lot of checking on, at least. "

So, the definition of terms is important. You can't just be old and feeble, but need to fit the contract language to collect.

I've read through those terms in the contracts, but I've always wondered just how difficult it is to prove you are deficient in these areas. How can the insurance company challenge you if you say you can't eat by yourself or get yourself dressed? Who is going to validate these claims? Is a doctor going to ask you to undress and dress up while they watch? Is stating you are deficient good enough, or do the insurance companies make it difficult to prove?

And if a doctor's note is required, how hard would it be to find a doctor who would acknowledge that a 95 year old can't dress or feed themselves?