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My mom's LTC Insurance
Old 09-07-2011, 04:34 PM   #1
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My mom's LTC Insurance

My mom has asked me for advice regarding her long term care insurance. She will soon be 81 and is in good health overall. Her mother lived to be 96. She has good health care coverage thanks to my dad who retired from the federal government many years ago. Her annual income from a pension and social security is about $50,000. Her net worth is about $360,000 with about $220,000 of that being her paid off condo, car and personal possessions.

She has a high end LTC policy she purchased from MetLife in 1996. Back then, the annual premium was $1,810. It's gone up significantly in recent years and she just got notice the new annual premium will be $6,112.

Mom can afford to keep it but is naturally concerned about how much is costs now. I've done a little research and have found the following figures for care in our area on an annual basis. If mom did need care, she'd want to stay in this area since my brother and I live nearby.

Nursing home, semi private room $86,140
Assisted living $54,800
Home Care $24,700

I'm inclined to advise her to keep up the policy. There is always the option of lowering the coverage - either the daily benefit or the period benefits are paid.

Any and all advice and suggestions will be most appreciated.
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Old 09-07-2011, 05:01 PM   #2
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In round numbers, it looks like she has income and assets to pay for 10 years of nursing home care. (50,000 income + 36,000 from assets). Inflation will eat into this, but that's still enough to fund several years of care.

If the $6k LTC premium is uncomfortable now it will only get worse as time goes by. I'd give serious thought to begin reducing the coverage to hold down costs. She's already at the point she can self-insure for longer than the average nursing home stay.
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Old 09-07-2011, 05:09 PM   #3
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What are terms of her policy? How much a day, inflation increase, etc.

How often has she experienced increases in premium?

Can she retain the policy and change any of the terms to reduce the cost (offset some of the financial risk)?
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Old 09-07-2011, 05:15 PM   #4
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What are terms of her policy?

How often has she experienced increases in premium?

How much a day, inflation increase, etc.

Can she retain the policy and change any of the terms to reduce the cost (offset some of the risk)?
Not entirely sure. I plan to call the MetLife rep to get some details. The last notice from MetLife contained this statement:

"Another letter will be provided to you prior to your billing anniversary date, when the premium increases will be implemented on your policy. That letter will specify the changes to your premium and explain several options available. For example, you can accept the new premium and keep your benefits at their current level, or you may be able to keep your premium at about its current level by electing to change your benefit options. Look for more details in that letter."

I asked mom and she doesn't recall receiving another letter spelling out the options.

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Old 09-07-2011, 05:35 PM   #5
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In round numbers, it looks like she has income and assets to pay for 10 years of nursing home care. (50,000 income + 36,000 from assets). Inflation will eat into this, but that's still enough to fund several years of care.

If the $6k LTC premium is uncomfortable now it will only get worse as time goes by. I'd give serious thought to begin reducing the coverage to hold down costs. She's already at the point she can self-insure for longer than the average nursing home stay.
You're thinking what I'm thinking. Just reluctant to advise her to reduce the coverage level knowing it can't be restored. If this was your mom, would you recommend reducing coverage levels now or wait for it to become more uncomfortable later? No hurry on this since mom can afford the premium. I'm thinking let it ride about a year then reconsider. We can always reduce coverage levels later.
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Old 09-07-2011, 05:40 PM   #6
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I think I would lower the coverage .Your Mom is 81 and her Mom lived to be 96 so she has great genes . Since she is in good health she may only need assisted living for a few years.
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Old 09-07-2011, 05:41 PM   #7
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Would you think about reducing now or waiting for it to become more uncomfortable later? No hurry on this since mom can afford the premium. I'm thinking let it ride about a year then reconsider. We can always reduce coverage levels later.
I think from a numbers standpoint it might make sense to reduce coverage now. But if she can afford it for another year...
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Old 09-07-2011, 05:46 PM   #8
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Thanks guys. This is the kind of input I'm looking for to prepare me for the conversation with the MetLife agent. I tend to be uber conservative about these matters plus have an emotional component since it's my mother. She's a good one too. More input, advice and suggestions very welcome.
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Old 09-07-2011, 05:57 PM   #9
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Home Care $24,700
It's difficult. I think if I were her, I'd drop the insurance and self-insure, aiming for the home care option. Of course, I don't know how she feels about the 3 options, but most probably would like to stay at home, rather than go to a nursing home or assisted living facility. And after all, if you can get a single skilled provider for $24.7K, you ought to be able to get a team of 3, if needed, and still stay roughly within her budget. When I was scouting out this alternative for my mother, I found that the main problem was locating someone with nursing skills who was willing to travel to her out-of-the-way location. If I had it to do over again, I think perhaps it might have helped to start early, by finding someone to come regularly to help out with house cleaning and grocery shopping, even before my mother actually needed this, with the idea of trying to network with people who do this sort of work (mainly, I think, women who need more money to live during their own retirements).
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Old 09-07-2011, 06:14 PM   #10
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I had it to do over again, I think perhaps it might have helped to start early, by finding someone to come regularly to help out with house cleaning and grocery shopping, even before my mother actually needed this, with the idea of trying to network with people who do this sort of work (mainly, I think, women who need more money to live during their own retirements).
I have to agree . My Mom is 95 and we have gone through several layers of care . She lived in an apartment by herself with relatives nearby and a cleaning lady until 89 . At 89 I added a Home Health aide to drive her to appointments , the beauty parlor and to food shop and do laundry . She lived with my sister from 92 to 95 . Not a good situation and now at 95 she is entering a independent living facility with the option of assisted living if she needs it . My Mom is like yours in that she has great genes . My advice is keep your Mom living independently as long as possible and just add help . You usually do not need a RN just a home health aide ,a cleaning lady and some meals .
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Old 09-07-2011, 06:36 PM   #11
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It's difficult. I think if I were her, I'd drop the insurance and self-insure, aiming for the home care option. Of course, I don't know how she feels about the 3 options, but most probably would like to stay at home, rather than go to a nursing home or assisted living facility. And after all, if you can get a single skilled provider for $24.7K, you ought to be able to get a team of 3, if needed, and still stay roughly within her budget. When I was scouting out this alternative for my mother, I found that the main problem was locating someone with nursing skills who was willing to travel to her out-of-the-way location. If I had it to do over again, I think perhaps it might have helped to start early, by finding someone to come regularly to help out with house cleaning and grocery shopping, even before my mother actually needed this, with the idea of trying to network with people who do this sort of work (mainly, I think, women who need more money to live during their own retirements).
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I have to agree . My Mom is 95 and we have gone through several layers of care . She lived in an apartment by herself with relatives nearby and a cleaning lady until 89 . At 89 I added a Home Health aide to drive her to appointments , the beauty parlor and to food shop and do laundry . She lived with my sister from 92 to 95 . Not a good situation and now at 95 she is entering a independent living facility with the option of assisted living if she needs it . My Mom is like yours in that she has great genes . My advice is keep your Mom living independently as long as possible and just add help . You usually do not need a RN just a home health aide ,a cleaning lady and some meals .
This some good stuff GregLee and Moe. My mother would like to stay at home above all other options. Mom lives in Northern Virginia, so getting skilled workers is not the problem - they just cost more here. It's a great idea to start scouting for in home care now instead of waiting. She's pretty self sufficient right now but could use help with some things even though she's not ready to admit it. She's a proud and strong woman.
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Old 09-07-2011, 07:16 PM   #12
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I forgot to mention the alert button . They are a necessity . My Mom's is life link and she has used it several times .
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Old 09-07-2011, 07:45 PM   #13
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I forgot to mention the alert button . They are a necessity . My Mom's is life link and she has used it several times .
What's the "alert button"?
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Old 09-07-2011, 08:11 PM   #14
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What's the "alert button"?
Life Alarm System for Seniors In Emergencies | Medical Guardian
There are lots of different brands . We got my Mom one in her eighties after she fell.
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Old 09-07-2011, 08:23 PM   #15
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The premium increase seen here is a big reason why I am strongly leaning toward skipping LTCI and trying to accumulate more now to "self-insure" for it.
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Old 09-07-2011, 09:08 PM   #16
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I would keep it as she can afford the premium. She is entering the fragile years where a fall or illness might make an ALF a necessity.

I would look into the options of different levels of coverage as she does have assets.
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Old 09-07-2011, 09:43 PM   #17
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I would also consider how much you or other family members are willing to help if she gets Alzheimers or something. If someone is willing to help financially or take her in for a period of time to delay costs, then she could reduce the insurance.
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Old 09-08-2011, 05:28 AM   #18
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Not entirely sure. I plan to call the MetLife rep to get some details. The last notice from MetLife contained this statement:

"Another letter will be provided to you prior to your billing anniversary date, when the premium increases will be implemented on your policy. That letter will specify the changes to your premium and explain several options available. For example, you can accept the new premium and keep your benefits at their current level, or you may be able to keep your premium at about its current level by electing to change your benefit options. Look for more details in that letter."

I asked mom and she doesn't recall receiving another letter spelling out the options.
Your mother can request a copy of the policy documents if she cannot locate them.

That letter will be helpful.

One thing to consider is her income... and how that money might be used in different LTC type scenarios (e.g., NH vs Home Health).

I would include in those projections using different longevity and health need scenarios. That will not help you make the decision, but it will help you to understand it a little better. Don't forget about inflation.

One other thing to consider is what she is trying to accomplish. It is easy to overlook but her situation may be a little different now than it was when she was 65 (and purchased the policy). People usually buy LTCi for access to LTC choices/care, an Asset Protection. Since your father is dead... asset protection may not be her primary motive. This can be an important in certain scenarios and may help her in making the decision.


I would recommend not jumping to any conclusions. Think about it and do your analysis.

If the premium payment is due now and you are unsure about the course of action.... you might be able to pay the premium this year and make changes next year when you have had time to analyze it further. But make sure the policy will allow you to make changes later... do not assume anything!
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Old 09-08-2011, 01:19 PM   #19
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I don't see your Mom's net worth as adequate to pay for long term long term care. You can't count on her condo selling expeditiously, for one. That means that you will be paying the ongoing costs of the condo until that time. The other issue that we had is that initially the aging parent expects to recover and return home. They don't agree to sell until they have lost all hope of return.

Were I you I would put that condo in a living trust where either she, or contingent trustees acting together, can sell the unit. By the time all hope is lost she may not be competent to sign a contract and you really don't want to go through the court system (like Nord).
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Old 09-10-2011, 01:36 PM   #20
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$1,810. ...will be $6,112.
I don't have much to add to the conversation except~ Wow! A 330% increase in fifteen years. What will it be 15 years from now?
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