LTC Poll

[Katsmeow]

There was a prior LTC poll but it didn't ask all the things I'm interested in. There have been some LTC threads recently that inspire this pot.

[Corporateburnout]

I have a 3 year policy with $200 daily benefits and 3% compounded inflation protection. DW was denied for health reasons.

[samclem]

I voted "don't have it--flawed products"
- Like some other folks here, I'd like a true catastrophic, high-deductible LTCI option, something that pays for either DW or I ("shared benefits") after we've spent about $150K (index it upwards annually for inflation) of our own funds for care.

But the truth is we can't do a very good job of self-insuring right now. If one of us needed this care (unlikely at our age--early 50's), it would be a tough road. The non-LTC spouse would have to cut back severely, and we'd probably have to shuttle assets into a trust and start the Medicaid-lookback-calendar-day-counting thing. Is that "right?"--I don't know, but this would be an in extremis case, it's legal, and if somebody wants to change the law they can.

An "in between" option would be a non-inflation protected LTCI policy on each of us--it's much cheaper than the "good" inflation protected policies. Examples (from the Federal LTCi calculator), for a 52 YO person:
1) $219K of coverage (3 years at $200/day) with 5% inflation protection = $180 per month.
2) Same as above, but without inflation protection: $53 per month.

For an unlimited coverage period and unlimited amount (but still $200/day), the rates are about 40% higher (which would be true catastrophic insurance for not a lot more--apparently the population needing care more than 39 months isn't too high)

So, it would be possible to buy some insurance now for a relatively modest fee, knowing that LTC costs are likely to outpace the policy's coverage limits. We'd self-insure for that (small but growing) annual gap between what the policy would pay and the likely costs. If we happen to get one of those "high and right" FIRECalc lines, we should be okay. Otherwise, it will be tough in 30-40 years to pay for this care, but at least the policies would pay for a part of the expense while we made other plans. And, if truly good "catastrophic" policies become available in a decade from now, we'd jump ship to that and wouldn't have nearly as much money "sunk" into this product.

The down side is that this approach does not qualify for the state Partnership Program--only inflation-protected plans qualify. That means we don't get an increased allowable asset ceiling for Medicaid qualification.

[Katsmeow]

I am sort of in the mid-range but think the product is flawed. I'm a little older than you are, so don't have to make money last as long. I keep thinking about it, but just don't feel confident the purchase would be a smart one. On the other hand, not sure that not purchasing is smart either....

[Carlos2]

My wife and I are 14 years apart. I bought a policy so that she would not become impoverished or have to change her standard of living if something happened to me. I bought a CA partnership policy but only because it did not cost anymore to have and I was meeting the criteria for a policy anyway. I have a $200/day, 90 day elimination period, 4 year policy. I got the same for my wife and if we don't use it for ten years, when one of us passes the other gets to keep their policy and not have to pay any future premiums. We both make six figure incomes so the $300/month premium for BOTH policies is affordable now and if it were to increase by 100% we can handle that too. Interestingly, CA partnership policies have never received a rate hike. I know that does not guarantee the future, but it's good to know. CA has allowed rate hikes for other types of LTCi. Overall, I feel good about my purchase even with all the naysayers running around out there. I have seen what can happen to people who don't have it and it's not pretty. Even if I could self insure, I think it's prudent to have a policy because you can really go under and even with the hikes, it's not been that bad to get a small policy.

[Marita40]

I bought a 3-year coverage Genworth policy a couple of years ago at age 55. I'm single and anticipate there will be no dedicated person to care for me if I need nursing, so I think it was a good decision. However, I remain somewhat conflicted given all the negative news on the matter. I'm feeling pretty secure about a financially secure retirement, but I doubt I'll be rich enough to afford expensive care. So my policy provides some peace of mind.

[JoeWras]

I have it but not sure how long we'll keep it. It has optional inflation, but that includes a premium rise. We denied it on the last adjustment. It is also limited per day and per life.

We got it a few years ago primarily in case something happens to us when young. This would be to help the other spouse while we're still very active. We have friends going through this, and it has been hell without the added LTC coverage. It has forced them into very difficult self home care.

But we may drop it as we become more strong FI. Especially if we increase the war fund due to continued OMY.

[Jack_Pine]

Good poll. I selected the second to last category for now but may move into the first category at some point. Or may be the self insure if I can get comfortable with a dollar amount that is enough for two.............

[MichaelB]

We don't have any, the products aren't suitable for us, so we self insure. The costs are very high so I realize we may have affordability issues if that time comes.

[pb4uski]

I looked at it about 12 months ago, but cost, potential premium increases, potential of benefits lagging NH costs, etc have caused me to not pull the trigger so we are self insuring even though we are probably on the bubble as to whether or not we should self-insure based on our wealth.

[ER Eddie]

I picked "Other," because I don't have LTC insurance, and the reasons is that I believe I am too young to have to consider that right now ... the advice I've gotten has been that I don't need to worry about it until I'm in my 60's. So I'll revisit the subject in another 10 years.

[Ready]

I'm a relative novice on LTC, but my father does not have it, and now we spend $3K per month for him to live in a nursing home. From what I've researched, there are limits on how much coverage you purchase (number of years of coverage before it expires), as well as limits on how much per day they will cover.

If $3K per month is the worst case scenario for not having LTC, it seems like a relatively low risk to me. However, seeing what the nursing facility he's at looks like, it's a dreadful place to live. If I wanted to stay at home and have full time nursing care, would most LTC policies cover that, or a portion of it?

What do you think is the worst case cost per month if you get really sick and don't have LTC?

[samclem]

Quote:

Originally Posted by JoeWras I have it but not sure how long we'll keep it. It has optional inflation, but that includes a premium rise. We denied it on the last adjustment. It is also limited per day and per life.

A note to those in a similar situation: If you've got a policy that allows you to buy inflation coverage "as you go" and you have any idea that you might keep the policy and that you'll need to have the increasing dollar amounts, it's likely a good idea not to skip any opportunities to buy more coverage in the early years of the policy. The "inflation catchup" gets >very< expensive as the policyholder ages (because it's really just buying more LTCI on a now older person). So, based on my back-of-the-envelope figuring it appeared the best approach for us would be to keep up with the optional upgrades, if needed, until the premiums get unaffordable, and to not consider buying upgrades after that point. Caveat: I'd go back to buying the additional coverage later if, for some reason, it looked highly likely we'd use the policy.

[samclem]

Quote:

Originally Posted by Ready What do you think is the worst case cost per month if you get really sick and don't have LTC?

Here's a web site that shows approximate nursing home costs for the US. For most of the US, average costs are about $200-$250 per day, or about $6000-$7500 per month (twice the $3000 per month you are paying). That approx $200-$250/day is average, not the nicest nursing homes.

Federal LTC Insurance: Cost of Care Near You

[Corporateburnout]

Quote:

Originally Posted by Ready I'm a relative novice on LTC, but my father does not have it, and now we spend $3K per month for him to live in a nursing home. From what I've researched, there are limits on how much coverage you purchase (number of years of coverage before it expires), as well as limits on how much per day they will cover. If $3K per month is the worst case scenario for not having LTC, it seems like a relatively low risk to me. However, seeing what the nursing facility he's at looks like, it's a dreadful place to live. If I wanted to stay at home and have full time nursing care, would most LTC policies cover that, or a portion of it? What do you think is the worst case cost per month if you get really sick and don't have LTC?

Most policies cover home care up to the coverage amount. As for the worst case cost it depends on the state you live in. In MA where I live the monthly cost range between 8K to 10K per month.

[Ready]

Quote:

Originally Posted by samclem Here's a web site that shows approximate nursing home costs for the US. For most of the US, average costs are about $200 per day, or about $6000 per month (twice the $3000 per month you are paying). That approx $200/day is average, not the nicest nursing homes. Federal LTC Insurance: Cost of Care Near You

Thanks, very helpful. Is there a typical (or average) age that one should consider signing up if they are going to do so? I'm 46, and I can't imagine making LTC payments for the next 20-30 years just in case I need the coverage.

[samclem]

Quote:

Originally Posted by Ready Is there a typical (or average) age that one should consider signing up if they are going to do so? I'm 46, and I can't imagine making LTC payments for the next 20-30 years just in case I need the coverage.

I've read that people should consider buying it between their mid-fifties and their mid sixties. I think Consumer Reports gave an estimate, you might want to check there (or in our threads here) if you'd like more info. Costs do start to go up very dramatically with age. I'm in my early 50's, and if I buy I probably won't wait until I'm past 60.

[Ready]

Quote:

Originally Posted by samclem I've read that people should consider buying it between their mid-fifties and their mid sixties. I think Consumer Reports gave an estimate, you might want to check there (or in our threads here) if you'd like more info. Costs do start to go up very dramatically with age. I'm in my early 50's, and if I buy I probably won't wait until I'm past 60.

I pulled up the Consumer Reports article...it suggests buying before you turn 60. So I guess I don't need to think about this for a while.

It also suggests that people with more than $2.5M in liquid assets can feel comfortable self insuring, while people with less than $500K in liquid assets should not purchase LTC because they will likely qualify for Medicaid.

And, it appears some companies have been increasing premiums almost 100% recently. This is really where LTC makes no sense to me. What kind of insurance is that if they can raise their prices that much?

[Carlos2]

Quote:

Originally Posted by Ready Thanks, very helpful. Is there a typical (or average) age that one should consider signing up if they are going to do so? I'm 46, and I can't imagine making LTC payments for the next 20-30 years just in case I need the coverage.

The sweet spot for buying LTC is in the early to mid 50's. However, it is important to remember that this is insurance. You are leveraging the risk. I had a friend who had a stroke at age 42. She had a lifetime LTC policy. The stroke left her not being able to walk and bathing herself. The reason she had the policy was because her husband who was in his mid fifties had bought one and together that reeceived a discount so she had on too.

My point is that one never knows when they may need the policy so you're covered if something does occur. You could have a car accident and need extended care, health insurance won't cover what long term care doees.

Also remember that as you get older more health issues could arise to prevent you from gettting coverage. Things like high blood pressure, high cholestrerol, stroke, heart attack or something could make you ineligibile for the insurance when you are in your 60's or make the premiums much more expaensive.

[samclem]

Quote:

Originally Posted by Ready It also suggests that people with more than $2.5M in liquid assets can feel comfortable self insuring, while people with less than $500K in liquid assets should not purchase LTC because they will likely qualify for Medicaid.

That "qualifying for Medicaid" idea is a tough one. You've got to spend almost all your liquid assets to get to that point, so a spouse could be in a bad spot. I think CR's advice may consider the fact that a person with a smaller nest egg (or retirement income from various sources) would likely have to significantly reduce their standard of living just to make the LTCI premium payments, so CU is recommending they roll the dice. If they lose they'll be in a bad spot, but at least they'll have Medicaid (when they are destitute). True enough, but it's a bad situation for the spouse.

There are no good answers for those of us in the middle.