Long term care - slight reassurance from Scott Burns

[Rich_by_the_Bay]

The numbers are still intimidating but Scott Burns offers some guidance and reassurance:

AssetBuilder - Will Nursing Care Take All Your Money? Maybe Not. - AssetBuilder Inc., Registered Investment Advisor

 

[daylatedollarshort]

That is a good article. Thanks for the link.

 

[2B]

I've felt that the whole LTC issue has been overblown. My father paid and paid for a policy he never used but he didn't want to be a burden on his children. The premium was raised every so many years to crazy levels but he had an "opportunity" to reapply to see if he qualified for a lower rate. The insurance company was deselecting the high risk people through premium hikes.

My in-laws didn't have any insurance and are probably close to the worst case scenario. My MIL fell and broke her hip. She spent the next two years in full blown skilled nursing until she finally died. Almost as soon as my MIL was in nursing care, it was obvious that my FIL had Alzheimer's. He spent close to 7 years in assisted/memory/nursing before he finally died.

What I saw was once the process started no money was spent anywhere else. We got rid of their house. His pension and SS came close to covering one in skilled nursing. Savings covered the other one's costs. Once my MIL passed away, there was very little that came out of savings. I'd have to dig through all their financials to be precise but I don't think the total demand on their savings was over $150k. For most of the people that inhabit this forum, that's not anything that most can't self insure for.

My plan is basically to rely on the value of the house if other savings are depleted. There is no intention to sell the house and live off the proceeds. It's there if all else fails. That's one of the reasons I cringe at every reverse mortgage commercial. If someone gets a reverse mortgage that immediately tells me that they can't afford to live in it and that they are liquidating their last remaining asset to stay there. These are the people that may be in for a very rude shock when LTC comes around.

 

[athena53]

We're self-insuring, too. DH is 76 and due to health issues, we don't expect that he'd linger in LTC for years. I'm 15 years younger and my parents are still living independently in their mid-80s. Family members who have needed nursing homes haven't lasted very long after moving in. DH refers to it as "face-to-the-wall syndrome"- you lose the will to live.


I suspect that a lot of people are planning on Medicaid nursing homes as their plan for LTC. As their numbers increase, straining state government budgets, I suspect that what they get will be food and shelter and not much else.

 

[MichaelB]

Nice link, Rich.

The concluding paragraph

Viewed another way, 72.7 percent of those dying won’t need nursing home care, and 65 percent of the 27.3 percent of those who do will die within a year of admission. This suggests that about 90 percent of the population will either have no need for a nursing home stay or will stay less than a year. In other words, the probability of exhausting your financial assets is pretty low.

 

[ERD50]

Nice link, Rich.

The concluding paragraph

Viewed another way, 72.7 percent of those dying won’t need nursing home care, and 65 percent of the 27.3 percent of those who do will die within a year of admission. This suggests that about 90 percent of the population will either have no need for a nursing home stay or will stay less than a year. In other words, the probability of exhausting your financial assets is pretty low.

Yes, but OTOH, we routinely insure against things that have a far less than 10% chance of happening.

But if the $62K median number for private nursing home care is accurate, even a 10 year stay, while painful financially, could be self-insured by many here, w/o leaving the other spouse destitute (consider pensions/SS).

-ERD50

 

[ronin]

Another recent article on the topic by Michael Kitces:

kitces-how-to-fix-ltc-insurance

A 2013 study suggests the average nursing home stay could be as short as just over a year. The researchers found that previous studies may have failed to recognize how often people enter facilities but recover and are discharged. This means even those with two to three years’ worth of cumulative stays may be doing it with a series of shorter long-term care events, not one extended high-impact event.

Why does this matter? Because, as noted earlier, if the need for long-term care is actually a rather high-probability but fairly low-impact event — with 50% probability of needing care, but stays averaging little more than a year — then traditional LTC insurance may be little more than prepaying long-term care expenses, and not really functioning as effective insurance.

 

[Tadpole]

REWahoo, in a previous thread, gave a link to a Genworthy study of costs by state that I will repeat here:
https://www.genworth.com/corporate/about-genworth/industry-expertise/state-maps.html


Scott Burns estimate is lower than the Genworthy estimate of US median cost of $77,380. Burn's is close to the Genworthy estimate for the state of Texas where I think Burns lives. In my area, the Genworthy estimate is in the high $80s and I understand from neighbors that it is really higher than this for good quality - more than $100K. Can one shop across state lines?

 

[growing_older]

Yes, but OTOH, we routinely insure against things that have a far less than 10% chance of happening.

Unfortunately, finding a LTC policy which actually covers LONG TERM stay in such a facility is nearly impossible. Virtually all the policies have 3-5 year limits on payouts, so these not actually insuring against the particular situation that we most need to be insured against.

 

[Bikerdude]

REWahoo, in a previous thread, gave a link to a Genworthy study of costs by state that I will repeat here:
https://www.genworth.com/corporate/about-genworth/industry-expertise/state-maps.html


Scott Burns estimate is lower that the Genworthy estimate of US median cost of $77,380. Burn's is close to the Genworthy estimate for the state of Texas where I think Burns lives. In my area, the Genworthy estimate is in the high $80s and I understand from neighbors that it is really higher than this for good quality - more than $100K. Can one shop across state lines?

Semi private skilled nursing home average cost in CT is currently $142,200 per yr.

 

[2B]

Scott Burns estimate is lower that the Genworthy estimate of US median cost of $77,380. Burn's is close to the Genworthy estimate for the state of Texas where I think Burns lives. In my area, the Genworthy estimate is in the high $80s and I understand from neighbors that it is really higher than this for good quality - more than $100K. Can one shop across state lines?

Semi private skilled nursing home average cost in CT is currently $142,200 per yr.

I've heard that there are great LTC options available in India and Mexico for next to nothing compared with US rates. That makes it tough to visit if you are interested in doing so. The same logic applies to looking in other states.

When my in-laws were in LTC, it was obvious that the further we looked outside of the 610 loop (central area of Houston) the more the price dropped. We could have reduced the costs by close to 20% but would have had an hour or more drive to get to their facility.

 

[rodi]

If the person enters skilled nursing homes, a few times, but for shorter stays... keep in mind that medicare DOES cover the first 100 days if the person transfers from a hospital to a nursing home. It's not 100% coverage - but it's significant coverage.

Example of my step mom: She broke her hip. She was in the hospital for 2 weeks, then transfered to a rehab/nursing home for 5 weeks. Her total out of pocket was well under 10k. Granted, as a PhD nurse educator she was a motivated patient who did her full rehab with a great attitude... (Didn't hurt that she'd taught about 1/2 of the RNs and nurse practitioners that were involved in her care.) A person with less motivation to do the exercises and push oneself might have had a few more weeks in rehab.

Example 2 - my aunt. Broke her hip in a really bad way. Spent 3 weeks in the hospital then 2 weeks in rehab (which wasn't really enough). Again - medicare kicked in and covered both parts. She does not have a lot of financial resources, so it was very good she was covered by medicare and did not stay so long she'd be moved to medicaid.

Folks do pop in/out of skilled nursing homes when they're old. Especially with broken hips.

 

[Tadpole]

If someone is in a nursing home for several years will Medicare cover the first 100 days of each year or does it only cover temporary/short term stays?

 

[braumeister]

If someone is in a nursing home for several years will Medicare cover the first 100 days of each year or does it only cover temporary/short term stays?

My understanding is that each time you have to be admitted to a hospital for three days before going to the NH. That's a pretty significant hurdle, IMHO.

 

[Brat]

Ditto: Only stays after a 3-day hospitalization.

 

[rodi]

If someone is in a nursing home for several years will Medicare cover the first 100 days of each year or does it only cover temporary/short term stays?

As the others said - it's not 100 days per year... it's the first 100 days after a transfer from a hospital stay (of 3 days or longer).

But my point was that often people go into a nursing home for a longer recovery than practical at a hospital... then go home... Then have another issue and repeat...

My next door neighbors did this several times over the last few years. Unfortunately, the medical incidents were occurring more frequently and they recently moved to assisted living. (He's 90 with dementia, she's 88 with congestive heart issues, a hip/ligament issue, etc.) Between them they were in the hospital/rehab 3 or 5 times in the last few years (between both of them.)

 

[MichaelB]

As the others said - it's not 100 days per year... it's the first 100 days after a transfer from a hospital stay (of 3 days or longer).

But my point was that often people go into a nursing home for a longer recovery than practical at a hospital... then go home... Then have another issue and repeat...

Yes, and the 100 days need not be consecutive. The hospital / rehab days continue to add until the patient has 60 consecutive days out of the hospital, then the 100 day clock resets.

 

[Options]

He's 90 with dementia, she's 88 with congestive heart issues, a hip/ligament issue, etc.) Between them they were in the hospital/rehab 3 or 5 times in the last few years (between both of them.

...

There is no way I would allow myself to continue to live if I was in either of their conditions, let alone go into a nursing home like that. No way to "live" IMO. YMMV.

BTW, this is not the first time Burns has mentioned the rather low probability of needing LTC. Search his other posts.

 

[Tadpole]

Thanks everyone for the explanation. Leaving Medicare aid out of my LTC calculations was correct in our case.

 

[jim584672]

Medicare covers skilled nursing for a short time if the result will be a recovery. If the person will not recover, for example has dementia, then Medicaid will have to step in.

 

[Brat]

I recall when my parents were discharged from a hospital to a care facility they had to participate in the recovery process, for example work with PTs to regain mobility. Once my Dad threatened to quit because he wanted to go home. Mom told him that unless he could, basically, take care of his daily needs at home he would stay put because she was too frail to be a home care nurse.

 

[imoldernu]

The information so far discussed is limited to insurance and depletion of capital assets, but no one has mentioned keeping the home, (for a married couple with one going into a nursing home) depleting the assets to the allowed amount, and having medicaid paying nursing home costs. This would allow the remaining spouse to live in the home, keeping a portion of the community assets, and any ongoing income from Social Security.

Instead of trying to explain this here, some time spent on this elderlaw site can help. Financial advisors may, or may not explain this. Facing the situation, going to a lawyer experienced in elderlaw could be the best choice. The link is only to the assets requirements.
Medicaid's Asset Rules | ElderLawAnswers

There are more specifics on the Q&A Page, here:
ElderLaw Answers
For those with substantial assets to protect, this would not apply.

 

[2B]

The information so far discussed is limited to insurance and depletion of capital assets, but no one has mentioned keeping the home, (for a married couple with one going into a nursing home) depleting the assets to the allowed amount, and having medicaid paying nursing home costs. This would allow the remaining spouse to live in the home, keeping a portion of the community assets, and any ongoing income from Social Security.

Instead of trying to explain this here, some time spent on this elderlaw site can help. Financial advisors may, or may not explain this. Facing the situation, going to a lawyer experienced in elderlaw could be the best choice. The link is only to the assets requirements.
Medicaid's Asset Rules | ElderLawAnswers

There are more specifics on the Q&A Page, here:
ElderLaw Answers
For those with substantial assets to protect, this would not apply.

We consulted an elder law attorney on my in-laws. He recommended having them declared incompetent which we already had done and told him in the beginning of the visit. He also said he could produce some backdated trusts (over 5 years old) that would let us put them into Medicaid facilities. We could keep the money. All this would have only cost us $5k. DW and I had to take a shower ASAP after this visit to wash the slime off.

 

[Rich_by_the_Bay]

There is no way I would allow myself to continue to live if I was in either of their conditions, let alone go into a nursing home like that. No way to "live" IMO. YMMV...

It's not always that clean. Despite advanced directives, POAs, family unanimity and other planning steps, it can get complicated fast.

Example: white night cousin (who hasn't seen the patient for years) from across the country flies in at the last second and goes on a rampage against a DNR order and throws the whole plan on its ear. Advanced planning can mitigate this but not always.

Example: Competency can be difficult to diagnosis in the presence of certain drugs, complications and can fluctuate.

Example: Well-meaning doctor may exaggerate the benefits of a proposed treatment plan or may play down the risks.

Your points are very well taken. Make sure if you can that your POA for health care is strong, knows your wishes, and is prepared to hold the ground on your behalf. Dying is hard.

 

[imoldernu]

We consulted an elder law attorney on my in-laws. He recommended having them declared incompetent which we already had done and told him in the beginning of the visit. He also said he could produce some backdated trusts (over 5 years old) that would let us put them into Medicaid facilities. We could keep the money. All this would have only cost us $5k. DW and I had to take a shower ASAP after this visit to wash the slime off.

Which exactly explains why planning is so important. When we bought our current home as some insurance against either of us being left in dire straits, we breathed a sigh of relief when we passed the 5 year lookback period. Instead of protecting a low priced manufactured home, buying one with 8 times the value could help to protect our limited assets. As I mentioned in some previous posts, we watched dear friends see their nest egg depleted because of selling their precious (expensive) home to downsize into a manufactured home with a less than $40K value. They thought they we doing the right thing, but when the wife went into the nursing home for 5 years, they paid out of their nest egg, leaving him to live on his Social Security when she passed away..

Nothing illegal in doing this preplanning.