New LTC Study

[MichaelB]

The surviving spouse probably cares a great deal.

I don't recall any discussion of preserving assets for heirs when we purchased. We bought our LTC policies to protect the assets of the surviving spouse.

This is how I see it. An extended stay in a nursing home can be financially devasting to a healthier, surviving spouse.

 

[Fermion]

This is how I see it. An extended stay in a nursing home can be financially devasting to a healthier, surviving spouse.

Devastating in the fact that they won't be able to leave money to their heirs?

The surviving spouse will have a paid for house, a nice SS check from delaying SS to age 70, and extra income from a small annuity they both purchased with a portion of their 401K money.

 

[audreyh1]

This is how I see it. An extended stay in a nursing home can be financially devasting to a healthier, surviving spouse.

That's how I see it too. The main concern should be the surviving spouse, not the heirs. And the point of deciding whether one can afford to self-insure is what is left for the spouse.

But a lot of people talked about protecting their estate for their heirs.

 

[REWahoo]

That's how I see it too. The main concern should be the surviving spouse, not the heirs. And the point of deciding whether one can afford to self-insure is what is left for the spouse.

But a lot of people talked about protecting their estate for their heirs.

Leaving our kids/grandkids a big chunk of money isn't very high on our priority list and certainly wasn't part of our thinking when we purchased LTC policies.

As I mentioned in an earlier post, we've seen all four of our parents spend from 7 months to 3 years in a nursing home. None of them had any LTC coverage, so the financial burden to pay for care fell on the surviving spouse and whatever savings they had until the spend down to Medicaid. It was a painful process.

The emotional and financial toll on the healthy spouse was a heavy one. It is easy to discuss spending down assets from an academic point of view but it is entirely different when an individual sees their life savings evaporating over a period of a few months. Knowing "they can't take my house" and "I'll still have SS" really doesn't offer much consolation.

We're hoping to avoid some of that pain with our LTC coverage.

 

[harley]

Devastating in the fact that they won't be able to leave money to their heirs?

The surviving spouse will have a paid for house, a nice SS check from delaying SS to age 70, and extra income from a small annuity they both purchased with a portion of their 401K money.

Sounds like quite a few very judgemental assumptions here. First, not everyone enters LTC in their 70s or later. Not everyone has a paid for house. Not everyone can afford to wait until 70 for their SS. There are often complications well before and even during LTC that would eat up the 401(k), and if they had purchased an annuity with it there wouldn't be money for the care. They'd probably have to take out a loan to cover it because their money would be locked up in the annuity. There goes your assumed comfy cushion. Back to dog food. Of course, I guess you could divorce the sick spouse so you'd have your money.

I might agree that some/most people on this site might be able to manage based on your assumptions, but very few other people would.

 

[Fermion]

Sounds like quite a few very judgemental assumptions here. First, not everyone enters LTC in their 70s or later. Not everyone has a paid for house. Not everyone can afford to wait until 70 for their SS. There are often complications well before and even during LTC that would eat up the 401(k), and if they had purchased an annuity with it there wouldn't be money for the care. They'd probably have to take out a loan to cover it because their money would be locked up in the annuity. There goes your assumed comfy cushion. Back to dog food. Of course, I guess you could divorce the sick spouse so you'd have your money.

I might agree that some/most people on this site might be able to manage based on your assumptions, but very few other people would.

So you are saying people who can't afford to pay off their home or delay SS to age 70 CAN afford the high premiums of LTC insurance?

Or are you just pointing out that there are people who can't afford either one?

 

[MichaelB]

I saw a situation little discussed but very worrisome with my aunt. She moved from independent living to assisted living, close to where my mother lived so DM could help care for her. Two years later she fell and badly broke her arm. It did not heal well, and over the next 6 months she went back and forth between the hospital and a skilled nursing facility. She reached the 100 day max that Medicare pays for hospital / nursing homes but required much more care, at that point she had to pay the continuing cost out of her pocket. At the same time she had to continue paying for her home in the assisted living facility or they would move her out and rent to room to someone else. The monthly cost for those two things was around $16K. The risk of her drawing down all of her asset went from very low to very high in just a couple of months.

The risk of consuming all the assets in just a couple of years is higher than most people think.

 

[Fermion]

$16K a month and she still needed extra care provided by DM?

One would think for $200,000 a year that these private facilities would do everything for you.

Do the LTC policies pay out whatever absurd rate the facility of your choice charges?

 

[athena53]

If LTC were so profitable, more companies would write it so I don't think it's a big gravy train for insurers. I once worked for an insurance sub of a large non-insurance conglomerate and when they sold their insurance operations off, the one entity the acquiring company (a very large insurer) didn't want was the LTC provider.


I haven't bought LTC and don't intend to. The stories that scare the crap outta me are the ones that start with a spouse developing Alzheimer's in their 60s. No matter what the healthy spouse is "allowed" to keep, it won't be enough. I think there was a story here where the wife was permitted to keep $100K plus $2K/month in income. They were living in a retirement community (apparently not one with Alzheimer's care) and the fixed expenses were about $2K/month.


DH is 76 and has some health issues so a nursing home stay that goes on for years is extremely unlikely. We can fund that. What's left should be fine to provide for me, and DS (bless him) says he doesn't want any of my money. If I lose DH I'm not marrying again- too many financial entanglements imposed by the state.

 

[harley]

So you are saying people who can't afford to pay off their home or delay SS to age 70 CAN afford the high premiums of LTC insurance?

Or are you just pointing out that there are people who can't afford either one?

No, I'm just saying that life seldom works out according to your plans, and that until you've seen the way things can pile up it can seem very simple and clean cut as to how you'd deal with them. I've had recent experiences with LTC, Medicaid, extraneous expenses and such. If you get real lucky it would work out like you've described. I'm not that lucky. If I was I'd solve my problems with a Powerball ticket.

We don't have LTC insurance ourselves. We're going with the Smother Buddy plan for debilitating long term illness/injury. Limits costs, decreases personal misery, leaves assets intact for spouse and heirs. Only downside is if I start snoring too loud it might kick in early.

 

[Fermion]

No, I'm just saying that life seldom works out according to your plans, and that until you've seen the way things can pile up it can seem very simple and clean cut as to how you'd deal with them. I've had recent experiences with LTC, Medicaid, extraneous expenses and such. If you get real lucky it would work out like you've described. I'm not that lucky. If I was I'd solve my problems with a Powerball ticket.

We don't have LTC insurance ourselves. We're going with the Smother Buddy plan for debilitating long term illness/injury. Limits costs, decreases personal misery, leaves assets intact for spouse and heirs. Only downside is if I start snoring too loud it might kick in early.

Yes, I realize life can kick you when you are down, then kick you some more. It sounds like LTC insurance could end up being nothing more than a bandaid on a severed artery.

I don't know if you are really series about the smother buddy plan, but DW and I have seriously talked about how we don't want to stay alive as a vegetable like a previous poster in this thread claimed a mother was keeping their child. The kicker would be if one of us had a sound mind but were permanently disabled to the point they could not feed or care for themselves. I think we each likely push the spouse to take us to a country with legal assisted suicide in that case.

 

[jim584672]

According to NYS the average nursing home in Long Island (where I live) is $398 a day, or $145,344 a year.

I don't know how anyone can afford this without Medicaid.

 

[JoeWras]

Like others have said here... We have LTCI for now, when young, rather than when old. Don't care about assets surviving past death. Care more now for accident or early age disease that can affect spouse. We've seen it happen to a few young people right now, and it is scary. ("young" being less than 80). We'll eventually let it lapse assuming all goes well in life.

That said, I have the same brand insurance as Nords dad and it is making me nervous.

 

[audreyh1]

Leaving our kids/grandkids a big chunk of money isn't very high on our priority list and certainly wasn't part of our thinking when we purchased LTC policies.

That's why I was surprised that "preserving the estate" was such a major goal of LTC holders over on M*. Folk here are much less concerned with maximizing what they pass on.

 

[audreyh1]

$16K a month and she still needed extra care provided by DM?

One would think for $200,000 a year that these private facilities would do everything for you.

Do the LTC policies pay out whatever absurd rate the facility of your choice charges?

No they don't. They pay out a fixed rate per day, with a maximum total payout. People can buy insurance riders so the amounts increase over time until needed, but there is still a limit. There is no "extreme case" coverage. What is covered is a fixed amount, so deciding whether to purchase LTC is partly a matter of deciding whether you already have that amount in excess of your remaining spouse's spending needs.

 

[wrl11]

So what happens to someone when they cannot pay to stay in the LT care facility and there is no family (or no family money) to pay or take them in and benefits under Medicare/Medicaid is used up? Can they dump someone at their house (if they have one) that cannot take care of themselves?

 

[jim584672]

Once they spend down all their assets Medicaid will pay for the nursing home.

 

[daylatedollarshort]

These super, crazy high costs for LTC seem to be only in the U.S. I have read in the UK average nursing home costs are ~$60K USD a year. That is still not cheap, but we could deal with that for a long term basis without impoverishing the surviving spouse.

As has been discussed in previous articles here, America is a place where luxuries are cheap and essentials are expensive. Retiring outside the U.S. is something we are considering. Are there other countries where people who are millionaires or multimillionaires with SS and maybe pensions like many of the retirees on this board have legitimate worries about running out of money?

 

[REWahoo]

LTC costs vary considerably by state. Here's a website where you can view the average annual cost of various levels of care on a state-by-state basis:

https://www.genworth.com/corporate/about-genworth/industry-expertise/cost-of-care.html

 

[daylatedollarshort]

LTC costs vary considerably by state. Here's a website where you can view the average annual cost of various levels of care on a state-by-state basis:

https://www.genworth.com/corporate/about-genworth/industry-expertise/cost-of-care.html

Okay, so it is the EU or Louisiana then for lower nursing home care costs.

 

[RE2Boys]

LTC costs vary considerably by state. Here's a website where you can view the average annual cost of various levels of care on a state-by-state basis:

https://www.genworth.com/corporate/about-genworth/industry-expertise/cost-of-care.html

Thanks for the link. For the reasonable costs in my area (NW PA) the right decision for me is to self-insure.

The product I need is a LTCI with an exclusion period of a couple of years to cover the catastrophic events, not cover from day 91.

 

[donheff]

Yes, almost always true (the Federal program used to offer an "unlimited term" plan, maybe others did, too).

I have the unlimted care option under the Federal program. I don't look at this in terms of an investment but more along the lines of life insurance when we were younger. The likelihood of getting a payback from life insurance was tiny but the impact of death without it was extreme. LTC is more complicated. DW and I could absorb the impact of a long term illness but, in worst case scenarios, it could eat up the bulk of our planned estate. We made the decision to insure the estate on our own but I bet if we put the question to our kids they would vote for the LTC. The question would be along these line: We have the choice of spending a few thousand a year for the rest of our lives to cover LTC that likely will never materialize. Alternatively, we could save that money earmarked for LTC and it would likely suffice and probably even leave you with a somewhat larger inheritance. But, if the LTC costs came in on the far right tail of the curve most or all of the estate could evaporate. It matters more to you than us, what should we do?

 

[REWahoo]

The product I need is a LTCI with an exclusion period of a couple of years to cover the catastrophic events, not cover from day 91.

+1

I'm not sure that type of catastrophic coverage policy is available, but it has been a very long time since I looked. The longest exclusion period available when we bought was six months, and that's what we went with.

 

[growing_older]

The product I need is a LTCI with an exclusion period of a couple of years to cover the catastrophic events, not cover from day 91.

That product doesn't seem to exist. All the LTCI policies people have been trying to sell me have duration limits that mean they have coverage only for stays in assisted living or nursing home care for a few years, after which I pay for everything. The "risk" I'm trying to insure against is the possibility of a very long stay. The policies all seem to be offering arbitrage between a moderate stay and the premiums (uncapped and rising all the time) charged for the policy. I'm not interested in that bet.

 

[BBQ-Nut]

Thanks for the link. For the reasonable costs in my area (NW PA) the right decision for me is to self-insure.

The product I need is a LTCI with an exclusion period of a couple of years to cover the catastrophic events, not cover from day 91.

Couldn't you do a self-executed 'exclusion' period of not filing for LTC benefits for however long you want up front?