What is Considered LTC Self-insure Safe Level?

[samclem]

Quote:

Originally Posted by Fermion So you could just set up 72T with the payment over your lifetime, then there would be eligibility for LTC medicaid.

Yes, but the vast majority of those periodic payments would go to the nursing home. And, in some cases, the assets of a Medicaid recipient can be clawed back from the estate (e.g. the remaining balances in 401K and IRAs) to pay for the cost of care. So, it's probably best to set up a trust and get those assets totally out of the possession of the Medicaid recipient. Again, I'm no lawyer, so talk to someone who knows about this.

IMO, any strategy depending on shielding assets from Medicaid consideration are subject to a fair amount of risk. States and the federal government will be scrounging around for any available assets to fund these programs, and a few news accounts of how the the evil rich take money from Medicaid will get the rules changed quickly.

[Fedup]

I have 6-figure budget for when my husband turns 75. It's from investments and income so it's can support 20 years and longer. My husband is healthy so that's why the 20 years plus. His family has some dementia issue.
But if I have to set an amount, it would be $500k per person.

[imoldernu]

Something that doesn't get much discussion here, but thoughts on protecting a surviving spouse. Depends on amount of personal assets to be protected.

http://www.early-retirement.org/foru...ml#post1214332

Post #34

[athena53]

I haven't thought of it as a specific amount. My SS, plus a couple of small pensions, plus 4% of my investable assets, should cover anything, including memory care. I'd be selling my house and most other expenses (car, travel, home maintenance) would go to zero. I'm widowed at this point and would not under any circumstances marry a guy who might have to rely on Medicaid for LTC.

[samclem]

Quote:

Originally Posted by samclem We can reduce that amount by any $$ in the nest egg that would not be required to support the SWR for a single-person household.

How I see this working: Jack and Jill have $1.2 million that they will use to provide $48K per year in living expenses in retirement (4% rule, = $4,000 per month). But, if either Jack or Jill were to need LTC, they figure the living expenses for the remaining person "outside" would be just $3K per month (one less vehicle to operate/insure, tax deductions due to big LTC medical expenses, less travel/vacation costs for just one person, reduced dining out and grocery expenses for one person, etc, etc). So, that $1000 in reduced monthly spending reduces the size of the required portfolio by $1000 x 12 x 25 = $300K. That $300K presently in their portfolio is available for the LTC expenses of the first person to need it (= over three years at $250/day). Add in possibly 1/2 of the couple's total "take" from SS to pay for LTC, and the money would go even farther.

[youbet]

Quote:

Originally Posted by Fermion How does the lookback thing work on 401k and IRA assets as well as future SS income? If you and your spouse are 60 and have a million in one 401K plus a few hundred thousand in Roths, plan to take SS at 70, can they make you start SS early to pay for LTC or make you tap the 401K or IRA of either spouse? Our plan is to exhaust almost all of our money in taxable accounts by the time we are 60, leaving all remaining assets in Roth and 401K. The Roth IRAs by then will be large enough to replace our yearly spending needs until we draw SS. So there would be no big nest egg outside of those funds. This also provides some level of bankruptcy protection and legal protection.

My understanding is that in Illinois, qualified dollars (IRA, 401k, 403b, etc,) are not generally except from being considered for Medicaid financial qualification.

Understandably, states are trying to crack down on relatively wealthy folks pleading for the dole to pay for their late life needs. Investigate the policies of the state where you plan to be at NH time and understand the details there.

[youbet]

Quote:

Originally Posted by Fermion What about pensions? It really is not fair to include 401K and IRA and not include private and public pensions. And if you do include pensions, how do you make a person cash in their pension?

Again, only referring to Illinois.

Here, pension and SS income is applied towards NH costs after a allowable amount is set aside for the stay at home spouse.

There is no "cashing in" of a pension. The check comes each month.
The stay at home spouse gets some and the balance goes to the NH. Then, Medicaid picks up the balance.

My widowed MIL is in a NH on Medicaid. She exhausted all assets in about 2 years and her only income is SS. The SS check goes straight to the NH who applies it to her bill after setting aside a pittance for her "personal money." The NH then tries to get Medicaid dollars from Illinois (can you imagine what a joke that has to be?) to make up the difference.

Here, if you're in a NH on Medicaid, it means you've spent down most of your assets and the stay at home spouse is living on a very modest income. And I suppose that's the way it should be. Why should working middle class families pay taxes so a wealthier person/couple can retain or gift wealth and have the state pay for their care?

[Live And Learn]

Quote:

Originally Posted by samclem Edited to add: Okay, here's a ballpark estimate (despite all I wrote before): IIRC, most people require less than 3 years of LTC. Let's assume that is a nursing home, and in my location that would cost $250/day. So, we'd need $275,000 to fund that. If we go to 5 years (and depend on Medicaid after that, per above), then the number is $450,000. It doesn't matter if that care is required tomorrow or 30 years from now--if we assume we can get investment returns that equal the increase in LTC costs. For the second member of the couple, no additional "set-aside" is required because LTC costs out to 5 years (and probably a lot farther) would be covered by sale of the house and spend-down of the nest egg that was intended to cover regular living expenses during retirement. SS checks will also be coming in, they can help pay for LTC as well, helping the nestegg to last longer. So, in this very simplified case, (and taking some risk regarding the Medicaid rules and investment returns matching LTC costs), the couple would need to set aside between $275K and $450K to self-fund LTC. We can reduce that amount by any $$ in the nest egg that would not be required to support the SWR for a single-person household. Either way, self-funding (even if we take some risk) takes a big chunk of change. Too bad, as it >likely< won't be needed, but would need to be kept on hand even well into old age, so it will likely go unspent and become part of the estate. It sure would be nice if we could buy true LTC insurance that we could believe in.

Excellent thought process. I actually only set aside 18 months, so $175k. But my "Plan B" is to buy into a non-profit religious organization run CCRC that guarantees continuing care when I am between 70 and 75 if it looks like my portfolio may not carry me to EOL.

[Bestwifeever]

Quote:

Originally Posted by youbet ....Here, if you're in a NH on Medicaid, it means you've spent down most of your assets and the stay at home spouse is living on a very modest income. And I suppose that's the way it should be. Why should working middle class families pay taxes so a wealthier person/couple can retain or gift wealth and have the state pay for their care?

Completely agree. We aren't protecting anything or worrying about lookbacks or whatever. That's why we worked and saved, to pay our way so our kids won't have to worry about it.

Our house is our final LTC insurance plan--we'd just sell it and use the equity to pay for care if the nest egg ran out (knock on wood, probably not likely). The one not needing care would rent a tiny place, hopefully near enough to visit the other one, but if it's DH in an apartment, he's probably going to have a stream of wealthy women offering to help him out

[audreyh1]

Quote:

Originally Posted by imoldernu Something that doesn't get much discussion here, but thoughts on protecting a surviving spouse. Depends on amount of personal assets to be protected. http://www.early-retirement.org/foru...ml#post1214332 Post #34

For me LTC is all about protecting the surviving spouse rather than assets for the heirs. But in our case (big knock on wood) a big draw for one should still leave plenty for the survivor.

We're not expecting to rely on Medicaid so we aren't worried about assets, lookbacks, etc. Again, big knocks on wood.

DH occasionally reminds me that if things go to hell financially for us, it likely means a lot more people are even worse off.

[aja8888]

Quote:

Originally Posted by Bestwifeever ..(snip)....... but if it's DH in an apartment, he's probably going to have a stream of wealthy women offering to help him out

Hey, I need to factor that scenario into our plan.

[rodi]

I've always looked at out paid-off SoCal house as our LTC insurance. Dementia runs in DH's family... cancer tends to wipe out my family before LTC is needed. But we've watched extended family and neighbors hit the point of needing LTC.

If DH needs a memory unit while I'm still alive/independent, I would sell our house and downsize into a smaller place - that would free up $300-500k... without touching our nest egg. If we both need to go we'd be able to pull out somewhere between $800k $1M from the house.... which should be adequate.

A long term neighbor (known her since we moved to the neighborhood when I was 4 and her older son was my first kiss.... when I was 5 years old.) just moved to a memory unit a few weeks ago. This was not a surprise... her dementia has been getting worse. I've been helping the daughters as they readied for and implemented the estate sale... House (same model as ours) is going on the market this week. They know this will be more than enough to cover their mom's care in a nice/high-end facility.

Our former next door neighbors sold and moved to assisted living 2 years ago. He had dementia - but she was able to care for him... until her hips disintegrated and her congestive heart disease physically limited her ability to be care giver. Their paid for house was enough for about 10 years of LTC in a nice place.

I think my house as LTC is a reasonable solution. It helps to have a paid off house in a pricey market.

[youbet]

Quote:

Originally Posted by Bestwifeever Completely agree. We aren't protecting anything or worrying about lookbacks or whatever. That's why we worked and saved, to pay our way so our kids won't have to worry about it.

That would be us too.

I don't have a set amount set aside for NH care. But I have done a lot of work testing various scenarios to see if one of us would be impoverished if the other was in a NH. Using primarily FireCalc, I entered scenarios (changed annual spending and/or changed the portfolio) to account for NH eventualities. What if I went into care next year at $100k/yr additional expense over our current budget and I lived 7 years? What if I died in 3 years (50% pension to DW as survivor) and then 2 years after that DW enters a NH for 8 years? Etc. Etc. I've done a bunch of these and we seem to be able to work them all out so there is no impoverished spouse problem.

We're also doing some CCRC contract A investigating. We're not sure a CCRC is for us because we wouldn't like being there if we went in too early. And if you wait until some medical issue has raised its head, you might not get in. It's a tight window to hit the "sweet spot." But we're checking them out.

Quote:

Our house is our final LTC insurance plan

Yep. Without me here to help with the grunt work, DW would quickly tire of the house. And I really have no interest in being here by myself.

[Fedup]

It depends how bad the dementia is but for my MIL, it costed her about 60 GBP a day, so it's about 1800 GBP per month, so less than 24,000 GBP per year. I think I might hire people to come and take care of my husband in the initial stage. Maybe more comfortable for him and I don't have to downsize. But seriously, I doubt I would have to downsize. It's more the size of the estate to be left for heirs. I tend to go for the route that gives me the best value, not because of money issue.

[samclem]

Quote:

Originally Posted by Bestwifeever Completely agree. We aren't protecting anything or worrying about lookbacks or whatever. That's why we worked and saved, to pay our way so our kids won't have to worry about it.

If someone is considering an ironclad, indefinite commitment to "paying their own way" strictly through dependence on their own assets (no insurance, no annuity, no Medicaid)--it's a pretty big lift and a very big chance for leaving a lot of money on the table (or, having to delay retirement so long that it happens after one's health gives out). With an open-ended commitment to "pay one's own way" indefinitely at $250/day, one needs a dedicated, fenced-off kitty of $2.2 million (assumption: 4% rule style withdrawals will meet the NH bill).

Maybe this isn't what you are talking about.

[Bestwifeever]

Quote:

Originally Posted by aja8888 Hey, I need to factor that scenario into our plan.

If we go into a grocery store together and then go to two different aisles, by the time we meet up again, a woman is asking his opinion about something. He has a very friendly face and demeanor. There must be a way to monetize this!

[Bestwifeever]

Quote:

Originally Posted by samclem If someone is considering an ironclad, indefinite commitment to "paying their own way" strictly through dependence on their own assets (no insurance, no annuity, no Medicaid)--it's a pretty big lift and a very big chance for leaving a lot of money on the table (or, having to delay retirement so long that it happens after one's health gives out). With an open-ended commitment to "pay one's own way" indefinitely at $250/day, one needs a dedicated, fenced-off kitty of $2.2 million (assumption: 4% rule style withdrawals will meet the NH bill). Maybe this isn't what you are talking about.

Maybe it is.

I certainly get it that some people want to preserve their nest eggs and not have to pay for NH care out of their own pocket.

[youbet]

Quote:

Originally Posted by samclem If someone is considering an ironclad, indefinite commitment to "paying their own way" strictly through dependence on their own assets (no insurance, no annuity, no Medicaid)--it's a pretty big lift and a very big chance for leaving a lot of money on the table (or, having to delay retirement so long that it happens after one's health gives out). With an open-ended commitment to "pay one's own way" indefinitely at $250/day, one needs a dedicated, fenced-off kitty of $2.2 million (assumption: 4% rule style withdrawals will meet the NH bill). Maybe this isn't what you are talking about.

Not too many NH scenarios go on "indefinitely." Even my MIL, who appears ready for eternal life in the NH, will pass someday. Maybe.

Think up a bunch of NH scenarios varying who goes, when they go and for how long. Change income assumptions accordingly (pensions gone or down 50%, etc.). Reduce expenses by savings such as selling the house and living in a modest apartment. And add the cost of the NH. Use FireCalc to see how you do.

I agree that being FIRE'd so conservatively that you can take a substantial hit for NH costs likely means leaving a pile at the end if you need no/little NH care. But, we have to make choices. Ya can't keep it and spend it too!

I'm comfortable that we can cover all but extreme NH scenarios without impoverishing the other. But it comes with a price. We're living a more financially conservative life than we would if we knew there would never be any NH costs.

[audreyh1]

Quote:

Originally Posted by Bestwifeever If we go into a grocery store together and then go to two different aisles, by the time we meet up again, a woman is asking his opinion about something. He has a very friendly face and demeanor. There must be a way to monetize this!

When women look longingly at my husband in the grocery store I know it's because they want something off the top shelf!

I've even had some ladies squeal with excitement to see him walk down the aisle towards them! He's 6ft 4in tall and has long arms.

[daylatedollarshort]

Quote:

Originally Posted by Bestwifeever If we go into a grocery store together and then go to two different aisles, by the time we meet up again, a woman is asking his opinion about something. He has a very friendly face and demeanor. There must be a way to monetize this!

I have the same thing happen with DH these days. If you find a way to monetize it let me know.