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Assessment of Status of New Federal LTC Insurance in final health bill.
Old 12-31-2009, 07:53 PM   #1
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Assessment of Status of New Federal LTC Insurance in final health bill.

Here's an updated assessment from LA Times reporter James Oliphant on the prospect for voluntary long-term care insurance in the final health care bill.

He believes the LTCi program will make it into the final bill, despite the fact that a majority of senators voted against it. It looks like you'll have to be employed in order to get onboard (??why?? again the legislation misses a chance to break this employer/insurance link!!) and there's no consensus about how much the premiums are likely to be--guesses range up to $240/mo for a benefit of $75/day. That's not a great deal for most folks, but some estimates indicate the premiums will be lower.

As mentioned previously, with all the coming "gimmees" for the working poor, there's going to be a big market for easy, low-paying jobs for ERs to play at in order to get all the baubles (think of it as a partial return on the big taxes to be paid in the future). This federal LTCi is another program that might make such employment worthwhile, especially if one had a pre-existing condition or if it looks like the taxpayers will be pumping money into the thing to keep it afloat--which seems very likely.

"Leave no ill-advised federal subsidy behind."
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Old 01-01-2010, 10:17 AM   #2
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I don't understand why anyone would contribute to LTC right now if they can just buy it later for the same price. I was following the bill before that had a mention of $75/day but not at a 5% compounding benefit. What good will $75/day do 20 years from now when it will cost $500+/day for a nursing home? Of course, the self-employed get screwed again with this type of thing. I don't get the thinking behind this one.
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Old 01-01-2010, 10:45 AM   #3
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Originally Posted by samclem View Post
(??why?? again the legislation misses a chance to break this employer/insurance link!!) "
Sam,
Altho many of us saw this legislation as a chance to re-engineer the current health care system, Congress chose to maintain the status quo, as you've observed.

The best thing that came out of this legislation is the elimination of pre-existing conditions. That's a big thing for many.

-- Rita
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Old 01-01-2010, 11:03 AM   #4
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I don't understand why anyone would contribute to LTC right now if they can just buy it later for the same price. I was following the bill before that had a mention of $75/day but not at a 5% compounding benefit. What good will $75/day do 20 years from now when it will cost $500+/day for a nursing home? Of course, the self-employed get screwed again with this type of thing. I don't get the thinking behind this one.
My biggest problem with LTCI is that (especially for younger folks) they tout the benefits of locking in a low rate by starting young... but they can (and do) wind up jacking up your rates anyway in the future. In other words, the main selling point for younger folks buying LTCI is all but null and void because the premiums WILL likely be raised on you from time to time.

The only other benefit to buying it young is to lock it in while you are insurable. But it's my opinion that it's rare to need LTCI before age 60 or so, and in the next 16 years before I turn 60 there are likely to be a lot of changes in how it's bought, sold and regulated.
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Old 01-01-2010, 11:11 AM   #5
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My biggest problem with LTCI is that (especially for younger folks) they tout the benefits of locking in a low rate by starting young... but they can (and do) wind up jacking up your rates anyway in the future. In other words, the main selling point for younger folks buying LTCI is all but null and void because the premiums WILL likely be raised on you from time to time.

The only other benefit to buying it young is to lock it in while you are insurable. But it's my opinion that it's rare to need LTCI before age 60 or so, and in the next 16 years before I turn 60 there are likely to be a lot of changes in how it's bought, sold and regulated.
I agree. Part of the problem is that since LTC insurance is so new to the market (only been around for ~30 years), the actuaries are basically guessing at how things will turn out in the future. It would be nice if a company came out with a guaranteed premium LTC, sort of like a non-cancellable disability insurance policy that has premiums locked in until the policy expires (up to age 67, disability works a little differently). The problem is that it could completely kill the financials of the company if they offer it and underestimate the true cost. Out of all the living expenses and types of insurance that you pretty much have to buy throughout your life (health insurance, life insurance, disability, homeowners, auto, etc), LTC would surely fall towards the bottom of my personal list since there is a slim-to-none chance that I will ever use it for 40+ years. All of the other types of insurance can have an immediate impact if something catastrophic happens.
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Old 01-01-2010, 11:14 AM   #6
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And another problem is the stability of the insurer for policies that might not pay off for 40 years. A government underwritten plan might alleviate this concern.
But I agree with others--the details that have leaked out so far don't make the current proposal sound very appealing. Those who will climb aboard will be those who are especially likely to need the care (adverse selection), so the rates will either be out-of-sight or other taxpayers will called upon to pump money in.
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Old 01-01-2010, 11:17 AM   #7
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Those who will climb aboard will be those who are especially likely to need the care (adverse selection), so the rates will either be out-of-sight or other taxpayers will called upon to pump money in.
If it turned out to be the latter, and it was an income-based subsidy, that would be yet another reason to try to engineer an asset rich/income "poor" retirement.

But in this case I suspect that wouldn't work, because in other income/need-based government health care programs (such as Medicaid) the eligibility is highly asset-tested as well as income-tested (which is why my disabled brother on SSI and Medicaid isn't going to share in the inheritance from my mom's estate, but rather will have a special needs trust set up).
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