Long Term Care Options

[Gearhead Jim]

It's interesting that people who would never self-insure a $425k house, will consider self-insuring a potential $425k LTC liability.

Our house insurance and our LTC insurance are both about that amount, and we pay almost exactly the same premium per year, except that we pay two premiums on the LTC. Of course, we'd also be paying two house premiums if we owned a second home.

It would be interesting to see some data about the odds of needing either full or partial coverage for either the house or the LTC. And at what time, which can make the LTC self-insurance more viable if you are confident you won't need it for many years. If only we knew...

[d]

It's interesting that people who would never self-insure a $425k house, will consider self-insuring a potential $425k LTC liability

it is interesting, but they are too disimilar to equate. there's no mortgage-holder to require the LTC insurance; the potential HO loss is current while the LTC is largely a future event; the fire/casualty business is well known and financially sound while the LTC business has an uncertain future; one generally can prepare to self-insure LTC, but for HO, the funds are likely tied-up in a mortgage payment ... etc. etc. etc. that said, and there's more that could be said, if i could find LTC coverage for the same premium as my HO, with similar $ coverage, i wouldn't hesitate to buy it.

[chinaco]

Originally Posted by youbet

Is the $3,000,000 for a single or a couple?

Will LTC insurance pay for assisted living. I thought that the events for payout for most policies mean nursing home care, not assisted living. Or perhaps this is something you can option into (and pay for) the policy?

We have LTC. Bought it through DW group plan that was offered. I will have to check if ours cover assisted living... not sure. I do remember that it covers home health care and NH. It has an indexing component to it for inflation. I will find the policy and check. Since it cover HH, I would assume it would cover assisted living... seems very similar.

[ChrisC]

Originally Posted by d

it is interesting, but they are too disimilar to equate. there's no mortgage-holder to require the LTC insurance; the potential HO loss is current while the LTC is largely a future event; the fire/casualty business is well known and financially sound while the LTC business has an uncertain future; one generally can prepare to self-insure LTC, but for HO, the funds are likely tied-up in a mortgage payment ... etc. etc. etc. that said, and there's more that could be said, if i could find LTC coverage for the same premium as my HO, with similar $ coverage, i wouldn't hesitate to buy it.

It is both interesting and more similar than you give credit. If you've paid off your mortgage, you will still likely buy HO insurance; I'm unaware of any owner of residential real estate who wouldn't insure his primary residence, even after the mortgage has been paid. I pay for HO insurance and don't have a primary mortgage; just a small HELOC where the lender doesn't require coverage. Most of us wouldn't self-insure our cars, either, regardless of whether state law requires insurance coverage. The major difference, of course, is that insurance coverage for homeowner's and auto just doesn't cover damage to our property, but third party liability coverage.

LTC doesn't just cover damage done to our bodies as we get older. It covers situations where middle age or even younger people become disabled and in need of assisted-living from horrific accidents or medical problems; I've seen several co-workers and friends become paraplegics or in a vegetative state after accidents or major surgery; one friend of mine went in for hip-replacement surgery and has never been the same, just now remarkably coming out of a vegetative state.

BTW, my LTC policy is much cheaper than the combined cost of our HO and Auto policies. And I'm confident that MetLife and John Hancock, the insurers, will be around for a while.

[Rich_in_Tampa]

Originally Posted by ChrisC

BTW, my LTC policy is much cheaper than the combined cost of our HO and Auto policies. And I'm confident that MetLife and John Hancock, the insurers, will be around for a while.

ChrisC, I am glad for you that your LTC insurance brings you peace of mind. It may well prove to be the right decision for you.

But it is a marginal call for many. There is no guarantee that the premiums won't increase dramatically or unaffordably as the terrain changes (decades worth) and you may later find it unaffordable or unwise, in which case your hard-earned premiums all those years are for nothing. Even if you do use the policy, the odds say it will be in your 70s or 80s (though tragic younger cases do arise rarely). Or its limits of coverage may leave you widely exposed given the escalating costs. Or, the entire health system may be revised in the next 10-30 years and your premiums may have gone to something that is at least partially covered by a Medicare-like program. Or John Hancock and other major carriers may run into trouble or drop out of the LTC business. And would-be premiums invested for 20 or more years are not trivial.

Bottom line is that it is a very chaotic and unpredictable situation. I don't claim to know what will unfold, but choosing to skip LTC insurance is an understandable decision for many. Only time will tell. Glad your decision is comfortable for you. I have deferred buying LTC insurance myself but will keep an open mind.

[d]

consider the example previously given "a $425k house" vs "a potential $425k LTC liability" and "exactly the same premium per year". the HO is insuring against a potential loss during a given year, vs the LTC liability which is a lifetime maximum. they are clearly not directly comparable. (over a period of years, the potential HO liability is a multiple of the $425k.) i've no doubt that MetLife and John Hancock "will be around for a while", but there is considerable uncertainty of what the LTC coverage (adequacy) and premiums (and hence their affordability) might be in the future.

[samclem]

When crunching the numbers on LTC, you may want to see if the premiums are deductible for state tax purposes. They are in Ohio (subject to some limits).

Another thing--many states are participating in a relatively new program that allows those who have LTC policies to protect more of their savings. Example: If you buy a $250K LTC policy and wind up needing LTC, then when your personal assets are spent down to $250K you'll qualify for care under Medicaid. If you hadn't bought insurance, you'd have to spend your assets down to a very low level (a few thousand dollars, IIRC) before qualifying for Medicaid.

[Goonie]

I just purchased a LTC policy the other evening. I had been pondering, studying, and doing some research on LTC policies since last year, and finally made the decision to bite the bullet and get covered. It covers Home Health, Assisted Living, and Nursing Home. The HH does not necessarily have to be given by a nurse or other med professional, it can be given by a friend or relative, or anyone else that I choose.

There's a list of six or eight (I don't recall off hand and am too lazy to go look right now) normal daily tasks that one is supposed to be able to perform on their own. If there are at least 2, that I can't perform or perform properly, I qualify for assistance...whether HH, AL, or NH. My family physician is the one that makes the determination.

I got the 90 day lifetime elimination period, $150 a day, unlimited inflation adjustment with NO max, I was going to get the 5 year plan...but for the few dollars more I opted for the 10 year plan (even though the agent tried to talk me out of it....I wanted the added peace of mind). Also, if I collect on it at any time, whether for a few days or weeks, or even months or years, and then I get to be well enough to care for myself again, and I don't use it again for at least 180 days, the lifetime payout amount goes back up to the original amount.

I just recently turned 50, and my premium is $183 per month ($2196 per year). That may (or may not) seem like a lot to some folks, but it gives me peace of mind. And IMHO, that's what counts! Besides, as I posted somewhere else around here today, the money to pay for the premiums is covered by the money that I used to spend on eating lunch out everyday at w*rk, and money that was formerly used to purchase safety gear, and w*rk clothes...especially extreme weather clothing, and other equipment and materials that were needed for my former j*b, that the employer didn't provide.

I have a friend, and former co-w*rker, that is a couple years younger than I am, who had a motorcycle accident. He ended up in ICU for some time, then in a normal hospital room for a few weeks, then into a nursing home for a few months. He is now at home, and has home health care coming in, as well as some there for 24 hour assistance (fortunately that person is a relative and NOT charging a fee!). The good news is that he has very good medical insurance, so while the hospital and doctor bills are huge, insurance covers a big chunk of it. The bad news is he didn't have LTC, so all of the nursing home, assisted living, and home health bills are HIS!!!

I don't want to be in a situation where I'd have to liquidate my assets, and/or spend all of my retirement savings/investments to pay for costs of LTC, when I can have the LTC coverage for a relatively reasonable cost.

I'd rather have it and not need it, than need it and not have it!

[youbet]

Originally Posted by Goonie

I just recently turned 50, and my premium is $183 per month ($2196 per year).

So...... if I understand correctly, your premium for the first ten years will be $2196/yr and after that some unknown higher amount?

Did they give you some indication of what goes into figuring the higher amount ten years from now? Could it be a large increase?

[chinaco]

Originally Posted by samclem

Another thing--many states are participating in a relatively new program that allows those who have LTC policies to protect more of their savings.

Can you point to a source of information that outlines the rules for each state an article?

[mathjak107]

we looked at many policies and we are still deciding . it looks like the best values seem to be in the policies that pay the actual bills and you have to use proffessional care givers rather than friends or relatives. theres a big premium worked in to the policies that just give you a certain amount a day regardless of your bills.

[samclem]

Originally Posted by chinaco

Can you point to a source of information that outlines the rules for each state an article?

The states that already offer protection of assets are: California, Connecticut, Indiana, Iowa, and
New York.

The 2005 Deficit Reduction Act re-opened the program to allow more states in. Here's a paper outlining this portion of the Act

http://www.cms.hhs.gov/DeficitReduct...artnership.pdf

There are limits to the amount of assets you can protect ths way, and te policy has the qualified by the state. It would probably be best to talk to a company representative of the policy you are considering to find out if your state has joined the program and if a particular policy qualifies. The Feds are doing this to encourage people to buy LTC policies, thereby reducing the strain on Medicaid. BTW, the "lookback" timeframe for Medicare eligibility was also increased (to 5 years, I think). When they need LTC, people sometimes transfer their assets to someone else (or a trust) in order to qualify for Medicaid. Now, such transfers need to occur more than 5 years in the past. That is, you give your money to your kids and the clock starts--in five years Medicaid will cover your LTC costs. That's a long time to wait for a bedpan. And, the coverage provided by Medicaid is nothing to crow about. "Welcome to the warehouse."

[ChrisC]

Originally Posted by Rich_in_Tampa

ChrisC, I am glad for you that your LTC insurance brings you peace of mind. It may well prove to be the right decision for you.

But it is a marginal call for many. There is no guarantee that the premiums won't increase dramatically or unaffordably as the terrain changes (decades worth) and you may later find it unaffordable or unwise, in which case your hard-earned premiums all those years are for nothing. Even if you do use the policy, the odds say it will be in your 70s or 80s (though tragic younger cases do arise rarely). Or its limits of coverage may leave you widely exposed given the escalating costs. Or, the entire health system may be revised in the next 10-30 years and your premiums may have gone to something that is at least partially covered by a Medicare-like program. Or John Hancock and other major carriers may run into trouble or drop out of the LTC business. And would-be premiums invested for 20 or more years are not trivial.

Bottom line is that it is a very chaotic and unpredictable situation. I don't claim to know what will unfold, but choosing to skip LTC insurance is an understandable decision for many. Only time will tell. Glad your decision is comfortable for you. I have deferred buying LTC insurance myself but will keep an open mind.

Well, I'm not sure I made the right decision to purchase this LTC policy. We are revisiting this decision annually, and if we get to the point where we can self-insure, we might just abandon the policy. We pay around $2160 in coverage, annually, for two of us, ages 53, 56; my premiums have never gone up since I purchased 3 years ago, we have a daily benefit allowance of $150 per day with an automatic inflation adjustment, which has already kicked in, covers 5 years of LTC, and it's "sponsored" by the Federal government, my employer.

If my hard earned premiums are not used for the coverage, I'm happy for that, much the same way I'm happy if I never have to use my HO premiums -- for me, this brings me contentment and peace of mind in knowing that I've covered a risk where the gravity of the harm is very substantial. We're all creatures of our history and the historical experiences we have encountered, particularly as we deal with aging parents, has strongly dictated our policy coverage. I'm keeping an open mind too, and might get rid of this policy if events change dramatically.

[Gearhead Jim]

Originally Posted by youbet

So...... if I understand correctly, your premium for the first ten years will be $2196/yr and after that some unknown higher amount?

Did they give you some indication of what goes into figuring the higher amount ten years from now? Could it be a large increase?

If the plan is like ours, the ten years refers to the amount of time they will pay benefits. In our case, we chose the 5 year plan. But it's actually 5 yrs x $235 per day, total $428,000. If we need it, we have the option to take a lesser amount for a longer period, the total amount available stays at $428k.

[Rich_in_Tampa]

The psychology of risk management is interesting. In our society, you can rarely go wrong by recommending insurance coverage for an accepted risk. And for those with sufficient funds and low tolerance for the risk in question, it may be the right decision.

But everyone has a threshhold for every risk -- even health, homeowners, life, disability. It emerges as either the price above which you are no longer willing to pay for protection or the rarity of the risk. For me, I have a lower threshhold for risks which might impact not only me but my loved ones.

Add to that the opportunity cost of the premiums, the real if low possibility that the insurer may not meet their obligations when the benefits come due, and inevitably changing lifestyles, needs, and government environment in which all this takes place.

No wonder we are all confused about LTC. It's one of those topics that just paralyzes me into indecision. I am not willing to rely on the insurance carriers to tell me what is best, but when I turn to expert recommendations I get more confused than ever. So, for now I'm just saving best I can.

[Gearhead Jim]

Very true.

For those who are still trying to decide, remember that there usually comes a point in your life when the insurance companies will no longer write you a policy because of health issues. Or the premiums will become too high to afford. We can't postpone the decision forever.

Something like that happened to my mother. We kids urged her to get LTC insurance for many years but she could never decide. Finally her health deteriorated to the point that she needed care but couldn't get insurance. So she just paid out of her own pocket, getting a lesser level of care than she wanted and always worrying about running out of money. When she died, she had enough money left for about 6 more months of her assisted living. That worked out ok for her, but her life would have been a living hell if she had lasted another two years.

If you have the resources to self-insure, that's fine; and a reasonable choice. But if you don't have the resources, then you're doing something similar to assuming a SWR of 6% will work out fine. It may in fact be fine, but the consquences of guessing wrong are pretty awful. None of us want to go back to work at Walmart when we're 80, we should be equally careful to avoid needing LTC that we can't afford.

[mathjak107]

for life in new york we would need 400 a day at a cost of over 5,000 a year for the 2 of us. its alot of money

[youbet]

Originally Posted by Gearhead Jim

her assisted living.

Hopefully she would have picked a plan that covered assisted living, not just NH care. One of my school chums thought his MIL, who was slipping mentally, could move into a nice assisted living apartment where staff would remind her to take her meds and feed her supper every night and have her ltc pay for it. Nope! She couldn't get documentation that she was unable to perform some number of qualifying events. I think you have to be careful that your expectations and the policy details are in synch.

her life would have been a living hell if she had lasted another two years.

By this I assume it would have been a living hell due to being on medicaid. I agree. I cringe at the thought of DW being in a NH on medicaid and therefore my financial plans take that into account.

To me, joining a risk pool, via ltc insurance, to avoid medicaid or spousal impoverishment makes sense. I just wish the ltc industry would get cleaned up, simplified, regulated, etc., so purchasing a policy would be straight forward and easily understandable.

Most people who buy ltc insurance will pay in much more than they take out. That's how insurance works and I have no problem with that! For those that sadly need to collect, it could be a huge life benefit........if it works the way you expect, if it's actually there for you, if you weren't ripped off by a bag dragging salesperson, if the devil wasn't in the details, if the rules don't change and on and on. If buying ltc insurance was no more complicated than buying my home owner's policy, and if I could cover DW and myself for $200 a day inflation adjusted for ten years for an annual, can't be increased ever premium of $5K or $6K, I'd do it.

Perhaps the plan offered to federal employees needs to be offered to all citizens for the same price and under the same oversight and regulations?