New LTC Study

[audreyh1]

Yeah, it seemed to have zoomed right over the head of everyone so I just let it slide.

Maybe we just let it slide.

 

[Amethyst]

Appalling. This is the thing that ends up kicking people in the butt when they are 93 and alone. "You can still go the bathroom by yourself...no payments for you!"

Might better learn to lie and act helpless. But wait a minute...we'll be demented, right? Acting ability is a mental skill.

Amethyst

I think the worst part was when the insurance company acknowledged that he couldn't live safely on his own, but since he could still handle the six activities of daily living then he wasn't eligible for long-term care.

 

[big-papa]

Always good to see the statistics across the entire population - but you also can't ignore family history. My wife's mom, my wife's twin sister, my wife's uncle and a great-aunt have all suffered from alzheimers. Specifically my wife's mom was in the alzheimers unit of a nursing home for about 6 years and her sister for 5. Net result - we purchased a policy for my wife to cover approximately that length of time. If sometime between now and our older years a test comes along to prove my wife won't be susceptible or if a cure if found, we'll reconsider the amount of coverage at that time.

 

[jim584672]

Life Estate Deeds protect real estate from recovery. It is a deed that allows the owner the right to occupy the house until death, then the named "remainder man" gets the Title upon death. Since the deed is not in the name of the occupant that can't come after it, it also avoids Probate court.

 

[Bestwifeever]

Maybe we just let it slide.

+1

We just didn't want to show you.

 

[MRG]

Appalling. This is the thing that ends up kicking people in the butt when they are 93 and alone. "You can still go the bathroom by yourself...no payments for you!"

Might better learn to lie and act helpless. But wait a minute...we'll be demented, right? Acting ability is a mental skill.

Amethyst

It is appalling. Sad thing is many of executives and managment in the insurance industry tend to follow each other around from company to company. So the disgusting pratices(money saving for the insurance companies) follow them around too.

As far as acting goes my DF successfully hid his dementia for at least 4-5 years, probably more. DM had it too but there was no amount of acting she could have done. But she was sweet, loving and kind, much like she was in her healthy years. I think DF started the acting as he didn't want anyone deciding their affairs.

Looking back now we feel we should have seen his earlier. I guess de-nile is a really big place to hang out with lots of company.

Based on family history we choose to self insure.

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[REWahoo]

Maybe we just let it slide.

+1

It was a lame joke and this forum rarely acknowledges that sort of humor. Don't ask me how I know...

 

[Taxman59]

My parents purchased LTC coverage about 25 years ago. I thought it was a waste of $, but was a gift to my sister (her husband was the agent). After paying premiums for 10 years, we had my father tested, and he qualified for payment, as a mater of fact, they gave retroactive benefits for about 6 months! He collected for about 5 years before he passed, and that allowed him to stay at home until the very end. The benefits covered all of the costs of his care. This made a huge difference in the funds available for my Mother. I realize that the policies available today have relatively low lifetime limits, but LTC policies are a valuable tool used in the right situation. I have a ten pay (all ten paid!) unlimited benefit policy, no longer available, and since I have paid all the premiums, an increase in the rates doesn't affect me (a 25% increase on a $0 premium is still $0). I hope to never collect, but if I need it, it will protect my assets for my DW, and her assets for me in the reverse.

The media is quick to laud a product as the panacea for everyone, then target it as only for the gullible when it is out of favor. We need to realize that everyone's situation is different, and will require a different set of tools. Just my 2 cents.


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[Mulligan]

+1

It was a lame joke and this forum rarely acknowledges that sort of humor. Don't ask me how I know...

Hang in there RE and don't change a bit. I'm always waiting for a quip from you on a post. The more it is unrelated to the actual thread, usually the better the post it is!


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[MooreBonds]

The worst part of the process has been the tracking burden. I had to wrestle monthly invoices out of the care facility, get them to John Hancock, wait a month for the paper check (which could get lost in the mail), and make sure it got deposited (again by mail). When I eventually got an iPad to read eBooks, I kicked myself for not starting mobile deposit earlier. Hancock finally shifted to electronic deposits but the paper invoices continued.

And then I discovered that nobody had even been tracking the total payments at Hancock. When Dad bought the policy in late 1992, it included 20 years of 5% inflation adjustments with a cap on the total payout. By conventional math (the kind I like to use) the 20th adjustment would have been in late 2012. Yet in late 2013 Hancock actually applied a 21st inflation adjustment to the payments. (In retrospect, they did not raise the cap by 5%.) The net effect was to make the policy reach its cap a little faster, but it proved to me that nobody at Hancock was watching the books. At one point my spouse and I had a discussion about whether Hancock would just keep paying right through the cap, and how much further would we let them go? We decided that we'd only return the money once they woke up and asked for it. Of course that was before they tried to stiff us for the last $6175 out of a $318K payout. They had no documentation to back up their numbers, and it looked as if they were just makin' stuff up.

It's hard to tell whether Hancock is truly that incompetent, or simply breathtakingly negligent, or merely evil.

Wow - thanks for sharing your experiences! I've been more on the side of "self-insuring" regarding LTC before, but some of your very valid points and experience is really pushing the needle to the "self-insure" end of the spectrum.

Along with youbet's comment:

I estimate that having an LTC policy would benefit our net worth about $200K if one of us is in LTC for a substantial amount of time. I calculated that by estimating we would have purchased a policy with a $300k payout max and we would have paid $100k (actual payments + forgone investment gains on the payment dollars we would have otherwise invested) for the policy. $300k max policy value - $100k policy cost = $200k higher net worth if LTC lasts at least to the max of the policy payout.


As things have worked out for us, would $200k likely mean the difference between the remaining spouse being impoverished or not? Almost certainly not.

Yes there are chances one or both spouses could linger in LTC for many years, but the odds are slim. And presently, the cost of insuring for that unlikely event of "many years of LTC" are not cheap, and with no assurance that it won't get even more pricey. As youbet points out, the cost of LTC care for most likely stays is maybe $200k-$300k, which should not impoverish a surviving spouse for most of the forum's posters (who have a NW of several hundred thousand dollars+). Obviously it won't hold for a majority of Americans who don't have large financial assets to pay for it, and who will need to rely on Medicaid or pay through the nose for some LTC insurance.

But given Nords' points of battling with insurance companies, and the hassle and possibly spending unreimbursed money just to get their approval that LTC is required, along with the claim filing each month with various tracking, etc., when it's all said and done it's not just appearing to be worth the hassle and risk, given the few financial resources I've been blessed with.

As with all companies, I'm sure there are plenty of people who sail through the claims process lickety split without any problems...but due to the dollars involved, I'm sure it usually isn't easy. Imagine a medical procedure that costs $5,000, and all of the paperwork and bills and headaches that could accompany that with health insurance companies. Then imagine that experience a few times a year with the LTC insurance company dance, if various items are required or impact your LTC payouts, with an occasional hospital stay, healthcare provider visit, etc. All handled by you or your spouse or your child.

 

[rodi]

Interesting - I'm seeing LTC ads on this page now. googleads is so smart.

 

[FUEGO]

Interesting - I'm seeing LTC ads on this page now. googleads is so smart.

Maybe they know something about your future health outcomes that you don't even know yet! Scary...

 

[youbet]

Yes there are chances one or both spouses could linger in LTC for many years, but the odds are slim. And presently, the cost of insuring for that unlikely event of "many years of LTC" are not cheap, and with no assurance that it won't get even more pricey. As youbet points out, the cost of LTC care for most likely stays is maybe $200k-$300k, which should not impoverish a surviving spouse for most of the forum's posters (who have a NW of several hundred thousand dollars+). Obviously it won't hold for a majority of Americans who don't have large financial assets to pay for it, and who will need to rely on Medicaid or pay through the nose for some LTC insurance.

You might be missing my point a bit.......

Today's LTC policies don't generally carry long periods of coverage or high payout limits. $300k is typical. And that policy probably costs you $100k by the time you use it. So the "help" amounts to $200k, no matter how long one spouse is in LTC.

With today's polices and the typical max payout limits, you're not buying catastrophic protection.

For us, it's not likely that a $200k insurance benefit is going to make a lot of difference in terms of the surviving spouse being impoverished or not. Everyone's situation is their own.

 

[samclem]

Maybe they know something about your future health outcomes that you don't even know yet! Scary...

If the LTCI companies have such info and they are still trying to sell me insurance, I'd put that in the "good news" column.

I'm still seeing ads for Viagra and "if you can draw this picture of Cutie the Elephant, you may have enough talent to enroll in our Career in Cartooning correspondence course." What does that mean?

 

[RE2Boys]

I don't see any ads, so my ADblock software must be working well!

 

[daylatedollarshort]

I'm getting ads for "If you died today, would your spouse have enough for..." which is actually somewhat the opposite of the problem we're discussing. If I died today, DH would have lower expenses but all of the assets and most of the retirement income (minus my SS).

 

[Katsmeow]

You might be missing my point a bit.......

Today's LTC policies don't generally carry long periods of coverage or high payout limits. $300k is typical. And that policy probably costs you $100k by the time you use it. So the "help" amounts to $200k, no matter how long one spouse is in LTC.

With today's polices and the typical max payout limits, you're not buying catastrophic protection.

For us, it's not likely that a $200k insurance benefit is going to make a lot of difference in terms of the surviving spouse being impoverished or not. Everyone's situation is their own.

Yes, I think this is an excellent point. Basically, to look at buying LTC insurance in terms of the dollars that it buys you. If you look at it that way, then really it is pointless to worry about the situation where someone is in LTC for years (DH's mother was in it for 8 years) since the policies being sold nowadays are very unlikely to cover more than a few years of that.

Like many I suspect, I would love to buy a policy with a 2 year exclusion period and then much longer coverage. That would be true insurance to me and might be worth considering. But, the high cost of premiums coupled with the limited coverage doesn't make it appealing to me even though we fall within the class of people that usually would be likely to consider LTC. That is, we have enough money that Medicaid isn't inevitable even for a shortish stay and we don't have enough money to be able to afford many years of stay. So I would ideally like to protect against the situation like DH's mother (8 years) but would be fine with having to pay for 2 or 3 years on our own nickel (well, not fine exactly but doable).

 

[samclem]

Like many I suspect, I would love to buy a policy with a 2 year exclusion period and then much longer coverage. That would be true insurance to me and might be worth considering.

I'd even be okay with a two-year exclusion period and just 3 years of coverage. That would provide enough time for a couple to move assets and achieve Medicaid eligibility for the person needing care. In this case, the LTCI is like "Medigap" coverage with Medicaid becoming the "last resort" insurance that pays for a truly unusual event (a situation requiring more than 5 years of full-time NH care).
Another feature that should be more widely available: Shared benefits. My spouse and I don't really need independent coverage, we need coverage for the first of us that requires care. After that spouse passes away, the assets are enough to take care of the last of us. Shared benefits make the product more like true insurance (covering the risk we can't afford to take on our own, and spreading the coverage over a "pool" of two rather than one).
And another thing (as a complement to the shared benefits): Once one of us dies (whatever the age), the other one no longer needs LTCI (SS, investments, sale of the house, and the lack of any expenses for a community spouse = there's enough coming in to pay for care). So, I'd like to buy a policy priced for that: Coverage on both of us ends when one dies. That right there should result in much lower premiums. I've talked to a lot of salesmen, never saw anything like that.

One thing that sometimes doesn't get mentioned: In most cases, there's no real time limit on how long the LTCI company will pay benefits. Most policies are a max $$ per day/week/month, but they go on paying until the purchased benefit amount is used up (e.g. a "2 year" policy that pays up to $400/day will last for 4 years if you only need $200/day in benefits.)

 

[athena53]

I was at a Toastmasters meeting today where one of the prepared speeches was a guy who works for a retirement planning firm. He gave a presentation on LTC with a real example (name blacked out, of course) of an insurance company quote.


56-year old female, coverage of $3,900/month, max 3 years of payments or $140K. 60-day waiting period, 3% annual COL increase. $2,600/year premium.


I asked him after the meeting what I was missing: let's assume she has 20 years before she enters LTC and thus has paid over $500K in premiums, ignoring compound interest. At most she collects $140K? He pointed out the 3% COL adjustment. Big whoop. (Not sure if it starts right now or when she enters LTC, but that's more than offset by my neglecting to count lost investment income on the premiums.) She could, of course, die without ever needing it.


All I can figure is that the price reflects adverse selection (the fancy insurance term meaning that you buy this only if your parents got Alzheimer's at age 60, so only those who are pretty sure they'll collect on it will buy it).


I did ask him about 2-year elimination periods and he didn't know of any, but said some had 1-year waiting periods.

 

[REWahoo]

... $2,600/year premium.

I asked him after the meeting what I was missing: let's assume she has 20 years before she enters LTC and thus has paid over $500K in premiums...

Typo? $2,600/year x 20 years = $52,000.

 

[athena53]

Typo? $2,600/year x 20 years = $52,000.

Da*n. I should not try and do Math in my head. But, to be fair, he didn't catch it, either.

 

[Katsmeow]

Da*n. I should not try and do Math in my head. But, to be fair, he didn't catch it, either.

And, even so, $52k to get $140k in coverage (not considering what that $52k would have earned and the fact that is paid over a period of years, but not considered inflation either) seems underwhelming to me). So the benefit is what $88k in extra benefit over just putting the $2600 a year in a CD each year. I'm not thinking that for most getting that $88k in benefits will really make or break anyone with any assets.

It just seems like too much cost for not enough benefit....

SamClem - I like your ideas for your ideal policy and I would love to have that kind of thing available as well.

 

[REWahoo]

And, even so, $52k to get $140k in coverage (not considering what that $52k would have earned and the fact that is paid over a period of years, but not considered inflation either) seems underwhelming to me). So the benefit is what $88k in extra benefit over just putting the $2600 a year in a CD each year. I'm not thinking that for most getting that $88k in benefits will really make or break anyone with any assets.

It just seems like too much cost for not enough benefit....

+1

We certainly wouldn't have purchased our two LTCI policies back in 2001 if the numbers looked anything like those quoted in this example. Each of our policy limits, after factoring in the 5% compounded annual benefit increase, are now up to $6,000/mo for 3 years, a total benefit of $216,000. For this we have each paid $9,050 in premiums over the past 14 years.

Even with a 50% increase in annual premiums last year (from $584 to $875) I'm still comfortable with keeping the policies - and hoping every penny we pay in premiums is a complete waste...

 

[samclem]

He gave a presentation on LTC with a real example (name blacked out, of course) of an insurance company quote.


56-year old female, coverage of $3,900/month, max 3 years of payments or $140K. 60-day waiting period, 3% annual COL increase. $2,600/year premium.

The LTCI program offered to federal employees and federal retirees has rates fairly close to those of commercial providers (it gets no subsidy from the government, and when I compared their prices to quotes I got from Genworth, they were about the same).
For a better policy than the one described in the OP (56 YO, slightly more coverage ($150/day instead of $130/day), slightly longer elimination period (90 days instead of 60--the fed program doesn't offer a 60 day elim period), 4% inflation increase instead of 3%, the annual premium came out to less than $1500 (over 40% less than the premium in the OP). So, I don't think the illustrated policy was an especially good deal, and might not be representative of what is available (or maybe the insured person had some medical issues, etc).

The Federal LTCI calculator is a good place to find ballpark figures for LTCI and see how changing various factors changes the cost. These policies are subject to medical underwriting, but I think their standards might be a bit less stringent than some others so it's possible someone in great health could get a slightly better rate from an insurer. All policies are for individuals (no couples), and men pay the same as women. Link