LTC - I have none. Betting on an alternative.

[Amethyst]

Umm..I thought that was Aunt Grasshopper who was in the horrible unit? You described Aunt Ant's facility as "high cotton."

Oh well.

Yeah, first off, I openly admit its all me and my opinion, observation, and personal desires.
Aunt Ant had to work low-wage jobs until she was 80. The low wages combined with no spouse made it nearly impossible to save for retirement. Her last couple jobs were pure charity by her employer. A security guard. Picture an petite 80 year old security guard with nothing more than a whistle. At any rate, when she became unable to work due to the physical, schedule, and beginning onset of memory issues, she moved from a subsidized apartment to a fully funded government provided health facility.

I visited her at that facility. Judging by the asbestos tile floors used in supermarkets in the 1970's, I knew about how old the building was. All the tenants shared rooms. Some tenants shouted constantly asking for help or attention. (Almost like extreme variations of Turrets Syndrome) To escape this, roommates would hang out in the halls. Walking the narrow halls meant weaving through wheelchairs and gurneys. Noisy, echoing hallways. Due to the age of the building, floors, drafty windows, nothing ever looked clean. As I sat and talked to my Aunt, we reminisced about the old days. But, were constantly interrupted by door alarms that went off anytime a "memory" patient got too close to the door. Fire alarm volumes. This happened about every 10 minutes. The staff had to investigate every alarm, which meant you heard the piercing noise until they validated it was a false alarm and then, reset the door. I don't how people could work in that environment, much less live in that environment.

In a nut shell, this was my sampling of what you get when you don't plan and are 100% relying on the government to care for you.

So, now that I'm still working and in my early 50's, I want to plan for something better than what I observed. That's why I'm not ruling out any options (except maybe buying a Metlife plan....), but investigating everything.

 

[OHjosh]

Need some input on LTC insruance

Hi first time on this forum after a long absence. Now 61, I finally FIREd. I have a LTC policy but it has gone up 25% in the last two years. There are all these options for lowering and stabilizing the premium. Exclusion period? How many years? 50% coverage of average daily rate of nursing home cost or total cost coverage? Anyone have some ideas, including best companies to go with? Thanks.

 

[audreyh1]

Umm..I thought that was Aunt Grasshopper who was in the horrible unit? You described Aunt Ant's facility as "high cotton."

Oh well.

Agreed. Many of us were trying to understand what the OP's objections were to "Aunt Ant's" high cotton retirement situation other than she was apparently living in a retirement community with other old folks.

Hmmmm......

 

[Dan A]

When they offer a LTC policy that starts after 6 - 12 months in a care facility, I will strongly consider buying one. Right now they are just to expensive and have no guarantee that they will not price me out of the market just as I approach the time I may need it the most.

Some companies do offer long term care insurance with a 365 day elimination period and no waiver for home health care. Unfortunately, there are two drawbacks. One, the coverage is not much cheaper - about 5% less than the typical 90 day elimination period. Two, as you state, they might price you out of the market as you approach the time you need the coverage.

IMO, the uncertainty surrounding potential premium increases make buying coverage that you will likely not use for 20+ years is one of the main reasons LTC insurance has not been very successful.

 

[Dan A]

Hi first time on this forum after a long absence. Now 61, I finally FIREd. I have a LTC policy but it has gone up 25% in the last two years. There are all these options for lowering and stabilizing the premium. Exclusion period? How many years? 50% coverage of average daily rate of nursing home cost or total cost coverage? Anyone have some ideas, including best companies to go with? Thanks.

OHJosh, that stinks. The state insurance commissioners try to make it pretty hard to increase rates, but many products were priced so poorly to start, it has left them with no choice. Otherwise, the state ends up with a big block of business with a very financially unstable insurance company backing it.

How long have you had your policy? Are you in relatively the same health as when you bought it? If you can afford the increase, I would be inclined to keep the coverage as you have it. My guess is that even with a 25% increase, it is likely still less expensive than getting a new policy. The industry has learned its lesson and is trying to price new products to avoid having to raise the prices in the future. That being the case, new products premiums have gone up substantially.

Without knowing the specifics of your overall financial situation, I am not inclined to say much more, but I usually ask these questions.

1) How long would you be able to cover your own costs if LTC was required? Let's say you have a year or two at home at $20K to $40k and then $60k to $80K in a nursing home after that. Forget inflation for now. Let's base it on your current situation. I ask this because it gets at whether 1) you need LTC insurance to actually pay for LTC, 2) you might be better off relying on Medicaid as an insurer of last resort, or 3) you are really insuring an inheritance. If you are insuring an inheritance, extend the elimination period as your first choice. If you are going to need it to help pay for care, I would be inclined to shorten the benefit period as opposed to lowering the monthly amount. Many policies will automatically extend the benefit period if funds were not used fully during the benefit period.



If you had to spend this amount, would it significantly impact the lifestyle of your spouse or others who still rely on your for financial support? I ask this because it confirms the answer to the first question and properly frames the decision. LTC insurance is much more about the people taking care of the LTC recipient and relying on the LTC recipient financially than the LTC recipient. If this is why you have it, it is probably still worth it at the new price.

 

[Running_Man]

+1
I looked up a very highly regarded CCRC locally. Looked at there "financial position" statement. Their bonds are rated BBB-.

I would think handing over your savings to cover end of life care would be done in a place you thought was safe. Do you invest your safe money in assets rated BBB-?

Well are there CRCC rated A? As they are usually small business with a risk if they could not replace tenants I would doubt you would see very many with ratings above BBB-, maybe some are BBB+ but it would be interesting to get bond ratings on these CRCC. Most are probably not even rated if they don’t have public debt.

 

[tn3sport]

Agreed. Many of us were trying to understand what the OP's objections were to "Aunt Ant's" high cotton retirement situation other than she was apparently living in a retirement community with other old folks.

Hmmmm......

My bad. I mixed up the alias. Was trying to mask their real names and ended up only confusing the matters.

Yeah, the horrible conditions were for the grasshopper.

To answer the question: What did I not like about the Ant (high-cotton) facility? It was primarily costs. It was crazy expensive, had a two year waiting list, and as other have pointed out had an endowment rider. Beyond that, its actually a nice place to visit with marvelous active programs and facilities. I would just rather be at the river, in my own home, until the day I croak.

 

[joeea]

I'm going all-in that the autonomous vehicle will provide that freedom.

Here's how I see the autonomous vehicle playing a part in my LTC:
- DR. visits: Easy, jump in the car and tell it to take me there.
- Groceries: shop online and auto delivered.
- gym or recreation: jump in car and tell it to take me there.
- socialization: jump in car and tell it to take me there (community center, church, park, etc)
- travel: jump in car, tell it to take me to airport, cruiseport, and return itself home.
- Major surgery: might be a problem. Would likely have to call one of the kids to help. But, who knows, maybe out-patient care will provide an automated ride home.
- Memory health support: This is a tough one. Have not figured this out yet. If I get a memory decease, I'll need 3rd party help. Might be able to afford in-home care for a while, but ultimately will need to be institutionalized. Which sucks.
- What am I missing?

What do you think?

I think you need to understand what a LTC plan covers before you decide you don't need one. Right now, based on what you listed, you seem to be confusing Long-Term Care with an Assisted Living Facility. They aren't the same.

 

[LARS]

I think you need to understand what a LTC plan covers before you decide you don't need one. Right now, based on what you listed, you seem to be confusing Long-Term Care with an Assisted Living Facility. They aren't the same.

Not to be pedantic, but LTC insurance can most assuredly be used to pay for Assisted Living Facility, assuming recipient meets criteria of assistance with x number of daily living activities. It, of course, can also be used to pay for Nursing Home care.

 

[joeea]

To me, the problem with long term care insurance is that it is a prepayment plan, rather than an insurance policy.

In what way is LTCi more of a prepayment plan than other types of insurance?

We can probably afford $150,000 in combined long term care out of pocket, which probably has a 30 or 40% chance of happening.

Hmm.

In my part of the country, $150,000 wouldn't last all that long and costs are increasing at greater than the rate of inflation. And if you are talking about both spouses, I'm not sure I'd agree with your 30-40% figure.

What happens if your $150,000 is exhausted?

 

[joeea]

Not to be pedantic, but LTC insurance can most assuredly be used to pay for Assisted Living Facility, assuming recipient meets criteria of assistance with x number of daily living activities. It, of course, can also be used to pay for Nursing Home care.

I agree. But as you say, the caveat is "assuming recipient meets criteria". None of those criteria were expressed by the OP.

As I said, LTC isn't the same as Assisted Living. And an autonomous vehicle doesn't cover the same needs. The "bet" doesn't seem to be covering what was planned.

 

[Huston55]

In what way is LTCi more of a prepayment plan than other types of insurance?

He didn't actually say, "...more of a prepayment plan than other types of insurance." He simply said LTCi is more of a prepayment plan than it is insurance. I agree with that statement given that most LTCi policies are for fixed periods (not life), do not guarantee total coverage of LTC costs, and have unknown costs. The link in the post below reflects my thoughts.

Exactly! This is the reason we chose to NOT buy LTCI.

The link below is to the first in a short series of excellent posts by Darrow Kirkpatrick @ "CanIRetireYet", where he analyzes LTCI. Links to subsequent LTCI posts can be found on the site.

Long-Term Care Insurance: Beyond the Sales Pitch - Can I Retire Yet?

 

[joeea]

He didn't actually say, "...more of a prepayment plan than other types of insurance." He simply said LTCi is more of a prepayment plan than it is insurance. I agree with that statement given that most LTCi policies are for fixed periods (not life), do not guarantee total coverage of LTC costs, and have unknown costs.

You can purchase LTCi for any period of time. My parents have a policy that covers them for life. I purchased a 3-year coverage plan in order to reduce costs.

Many insurance products don't cover all costs - most have caps or maximums. For example, Medicare covers 80% I believe.

I don't know what you mean about unknown costs. Perhaps you mean that premiums are not fixed forever? If so, most health insurance premiums change every year. Same with my automobile insurance.

I don't understand the use of the term "prepayment plan" in this context. What I meant was "In what ways is LTCI a prepayment plan while other insurance is not?"

 

[redduck]

You can purchase LTCi for any period of time.

Do you know of a company that currently offers lifetime LTCi?

 

[samclem]

Do you know of a company that currently offers lifetime LTCi?

A restricted case, but lifetime LTCi is still available through the Federal LTC insurance program (available to federal employees and some family members. It is self-supporting, no government subsidy.) "Lifetime coverage" has no cap on total benefits or the duration of the payout period. The premiums are about 25% higher than for a 5 year payout (same daily payout).

The Federal LTC Insurance Program Premium Calcualtor.

It's not available to everyone but does give some indication of how at least one insurance company would price "lifetime" benefits compared to those of fixed duration.

 

[redduck]

^^
My significant other has lifetime long-term care insurance with Calpers.
She currently pays $7,000 a year premium for a $265 daily benefit. She opted for the no inflation rate option. In the last two years the premiums were raised by 85%. And, like Federal LTC, it is not available to everyone.

The Federal LTC would cost someone her age (73) with the same benefits (but, with a $250 daily benefit) $9216 yearly (assuming that I'm doing the math correctly).

 

[Huston55]

You can purchase LTCi for any period of time. My parents have a policy that covers them for life. I purchased a 3-year coverage plan in order to reduce costs.

Many insurance products don't cover all costs - most have caps or maximums. For example, Medicare covers 80% I believe.

I don't know what you mean about unknown costs. Perhaps you mean that premiums are not fixed forever? If so, most health insurance premiums change every year. Same with my automobile insurance.

I don't understand the use of the term "prepayment plan" in this context. What I meant was "In what ways is LTCI a prepayment plan while other insurance is not?"

Yes, that's part of what I meant, that premiums are not fixed. But, that's really an understatement given the history of LTCi premium increases. Are there exceptions (like Federal employees or CalPERS employees)? Sure, but, they are exceptions. And, even for those 'lucky' few, having premiums almost double in two years (like redduck's SO) makes one question the wisdom of buying the product.

Do you know of a company that currently offers lifetime LTCi?

What I said in my previous post was, "...most LTCi policies are for fixed periods (not life), do not guarantee total coverage of LTC costs, and have unknown costs."

So, I think the more important question to joeea is: Is there a LTCi product that offers a life benefit, is COLAd to cover total (or at least a significant majority of) LTC costs, and which has predictable & acceptable premium costs?

If not, then I think we're back into the 'prepayment' territory so eloquently described by Darrow Kirkpatrick in his post that I linked.

And, IMHO, even if such a product exists, given the very real potential for difficulty actually using the LTCi (see Nords' lengthy posts regarding his father's LTCi experience), then we might still be in the territory of questionable value.

 

[Walt34]

+1
I looked up a very highly regarded CCRC locally. Looked at there "financial position" statement. Their bonds are rated BBB-.

I would think handing over your savings to cover end of life care would be done in a place you thought was safe. Do you invest your safe money in assets rated BBB-?

Well are there CRCC rated A? As they are usually small business with a risk if they could not replace tenants I would doubt you would see very many with ratings above BBB-, maybe some are BBB+ but it would be interesting to get bond ratings on these CRCC. Most are probably not even rated if they don’t have public debt.

According to what I read when I did some reading about it after bingybear's comment, that is generally the case. Many CCRCs on firm financial footing don't bother to get rated because they don't need the financing. I have no idea what the criteria are for a higher rating - could it be that CCRCs are generally so small a business that they are inherently incapable of getting a much higher rating?

 

[Huston55]

According to what I read when I did some reading about it after bingybear's comment, that is generally the case. Many CCRCs on firm financial footing don't bother to get rated because they don't need the financing. I have no idea what the criteria are for a higher rating - could it be that CCRCs are generally so small a business that they are inherently incapable of getting a much higher rating?

I think that bond ratings are not the best way to evaluate the financial stability of CCRCs. Reviewing their IRS990 ( with the knowledge or a guide to know what you're looking at) is probably a better way.

There are also some standard metrics called "key ratios" (occupancy rate, reserves, etc) that many agencies reference. I've read about them but am not yet knowledgeable enough to discuss them.

 

[meierlde]

Just to be precise if you are on original medicare there are 3 parts Part A hospital covers up to 60 days in a hospital after a 1316 deductable, part B which covers outpatient services and physicians pays 80% after a 183 deductable. Part D for drugs varies with the plan. And yes the premiums for part B and the deductables go up each year. You can buy medigap plans to cover the Part A deductable and the cost sharing beyond day 60 as well as taking the hospital stay to 365 days. Medigap depending on the plan pays the 20% not paid by medicare.

 

[Marita40]

Just opened my annual premium statement for my Genworth policy and my eyes popped. 26% increase. I am so conflicted over this matter! My policy has risen more than $1000. in 5 years. I'm 60, and can't imagine what the premium may be when I'm 80.
Very conflicted.....I now wonder whether the gig is that they just keep forcing you into lower categories of coverage for lower prices until you've paid years into the system and there's hardly any coverage left.

 

[ejman]

Just opened my annual premium statement for my Genworth policy and my eyes popped. 26% increase. I am so conflicted over this matter! My policy has risen more than $1000. in 5 years. I'm 60, and can't imagine what the premium may be when I'm 80.
Very conflicted.....I now wonder whether the gig is that they just keep forcing you into lower categories of coverage for lower prices until you've paid years into the system and there's hardly any coverage left.

This is what happened to me... The price increases got to the point where it didn't make sense to keep paying more and more as I got older with no limit in sight. I converted my policy ( originally unlimited time span and 5%/year inflation coverage increase) to a fixed amount 10 year limit. I know coverage value will decrease with inflation but it's just a flawed product. I would love to have a truly catastrophic LTC policy. I.E. no coverage for say 2-3 years (can cover that from my assets) but unlimited coverage for periods >2-3 years. Unfortunately no such product exists to my knowledge.