LTC Insurance and LTCFeds

[Rowdy]

Have been thinking about LTC insurance. I'm 50, and DW is 46. Some questions:

- Is there a sweet spot (in age) to purchase LTC insurance? I'm thinking perhaps at 55?
- Anyone have experience with LTCFeds insurance available to federal employees and military retirees? Pricing appears pretty good, and I figure they will be around when we might need it.
- Any other variants that one could use for LTC insurance (e.g. annuities, whole life, etc)?
- As a military retiree/veteran, I understand that I'm eligible for veterans homes; although not sure how this works or the cost.

Thanks.

 

[Nords]

You might have already read these, but here are three posts on military retiree medical insurance and LTC:

Military long term care insurance | Military Retirement & Financial Independence
Military long term care insurance (part 2 of 2) | Military Retirement & Financial Independence
Medicare, Tricare For Life, Medigap insurance, and Congress | Military Retirement & Financial Independence

Most people buy LTC insurance in their late 50s/early 60s, just before the annual premiums take a sharp upward spike. Other people are trying to hold off for another decade until the industry figures out how to realistically charge for their payouts. (Insurance companies have been charging way too little for way too long.) The FLTCIP is underwritten by Hancock & Met Life, and at least one of those should survive the coming "consolidation".

I don't think you can beat the federal price... without worrying whether any other company will still be in business when you're ready to file a claim.

My father purchased a Hancock policy in 1992 with a 20-year inflation rider at 5% APY. It's barely stayed ahead of the inflation rate of the care facility. If you feel you need a LTC policy then I'd recommend the inflation protection. $100/day in 1992 may have seemed pretty fair, and today it's grown to $240/day. I don't know if it'll still be ahead of the prices that the care facility will be charging in two more years.

However the trend over the last 10 years is that fewer people are aging in nursing homes and more of them in family homes. State Medicaid reimbursements to family members (for providing elder care) may be part of that trend. The reason you care is that the LTC of 20 years from now (and its insurance) may have drastically changed from today's parameters.

I think using other variants for LTC insurance is just paying more to a company to get them to do something different from the policy's original purpose.

Of course you could always self-insure... enter a care facility as a "private pay" resident and stay there while you're spending down your assets and going on Medicaid. The concern is that if you had other issues (behavioral problems or an extended hospitalization) the care facility might discharge you. As a Medicaid resident (not private pay) it would be very difficult to get into another facility.

I'm pessimistic about curing the various elder afflictions, but I suspect that "do not resucitate" orders and the euthanasia process (especially for Alzheimer's) will be much more common. By the time you and I get there, at least 40 million other Boomers will have blazed the trail.

My understanding of veterans' homes is that they're for indigent customers, and that they have very long waiting lists. I could be wrong.

 

[donheff]

DW and I picked up the Federal LTC in our 50s when it started. It is simply a contract with a private insurer so there is no guarantee beyond what someone else could get. The main advantage I see is that you have OPM administering the contract so there is additional clout on your side and expert staff making sure there are no "gotcha" clauses. DW's father picked up the insurance as well (parents are eligible under the Fed contract - sort of an eldercare benefit). He used it for the last year of his life (Alzheimer's) with no problems.

 

[Nords]

The main advantage I see is that you have OPM administering the contract so there is additional clout on your side and expert staff making sure there are no "gotcha" clauses.

I'd love to know what JH & Met Life think they know about the FLTCIP demographic. Do we tend to be more affluent workers/retirees with better access to higher-quality healthcare? Do we smoke & drink less? Do we exercise more because of our military background? Does that behavior extend to our immediate family members as well? Are we less likely to be exposed to gunfire, radiation, Agent Orange, and other harmful substances?

I'd like to think that we constitute a large pool of generally [-]healthier[/-] employed people who can negotiate bulk discounts.

 

[Rowdy]

Nords and donheff; good info, thanks.