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thoughts on long term care policy
Old 04-25-2013, 06:56 AM   #1
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thoughts on long term care policy

who has them and who doesn't?


I called USAA. I have everything with them mostly.

I chatted about early retirement. OH YEA, they had tons of info for me and a financial planner will be calling me next week.
time to do this seriously.

but long term care came up and the rep. said to research it a bit.

hit the net. some in favor of those policies, others say high prems. and no way etc.


anyone have thoughts on this policy? I just don't know at this point.
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Old 04-25-2013, 07:38 AM   #2
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I am very interested in this topic as well. I have done some research and have heard everything from- You have to have it...to at some savings amount, it does not make sense....to it's a rip off, don't pay out, too many restrictions.......

Whole thing has me confused, but I just started this research.

Would be interested in others experiences or point to sites with good info. My BIL is with Farmers and he is trying to talk me into their policy. I have no where near enough info to make a call.............

BTW, I have some money cut out in the plan for it (Let Fidelity approximate it)
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Old 04-25-2013, 07:45 AM   #3
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I am very interested in this topic as well. I have done some research and have heard everything from- You have to have it...to it's a rip off, don't pay out, too many restrictions.......
I'm not sure that those two are necessarily mutually exclusive.
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Old 04-25-2013, 08:09 AM   #4
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We took our policy out about 15 years ago through DH's megacorp group plan through John Hancock. Premiums were unbelievably low. DH took early retirement about 6 years ago, and we were luckily offered the option to continue the plan. Premiums have doubled, but I'm guessing they're still way below what most non-group participants pay. Thank God we took it when we did - DH was diagnosed with cancer shortly after he retired, and we'd never have gotten a policy on him. He's older than me, and far more likely to use it.

All I can suggest is to stick with a big company - you want the policy to be there when you need it. Dave Ramsey says you shouldn't secure a plan until you're at least 60, but that's a little scary to me. My megacorp offered us a plan through Genworth, and the premiums were MUCH higher that those through DH's plan.

Good luck. It's no fun to think about needing it, but having watched my parents' life-savings almost depleted from my mother's nursing home stay, I just wouldn't be without it.
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Old 04-25-2013, 08:39 AM   #5
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The problem with getting the LTC ins is the gigantic rate hikes you will likely face. If you buy the insurance when you are in your 40's or 50's then after a few years the premium has double, what do you do? What if it doubles again? Did you just wasted tens of thousands for nothing or do you save that to self insure? This has to be one of the toughest decision, along with how to get affordable health insurance if you want to retire early.
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Old 04-25-2013, 08:52 AM   #6
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I'm self insuring and stockpiling meds.
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Old 04-25-2013, 09:11 AM   #7
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The problem with getting the LTC ins is the gigantic rate hikes you will likely face. If you buy the insurance when you are in your 40's or 50's then after a few years the premium has double, what do you do? What if it doubles again? Did you just wasted tens of thousands for nothing or do you save that to self insure? This has to be one of the toughest decision, along with how to get affordable health insurance if you want to retire early.
The product as currently offered effectively does not transfer the risk from the policyholder to the insurer because the insurer can (and in many cases repeatedly has) say "oops, we goofed on the pricing" and jam you with giant rate increases. I don't like the product and would not buy it as presently offered. Carrier risk is also a significant consideration, as LTCI si one of the longest duration products on the market (the most credit exposure to your insurer). Of the companies that meet my criteria for creditworthiness for this type of product, I can only think of one or two that offer the product and they are known to be very expensive.
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Old 04-25-2013, 10:37 AM   #8
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We wouldn't do it again, but being invested in LTC since 1993, our payments are still low enough to keep us in the plan. If we were purchasing the same benefit amount today, the cost would be 3 times as much.
BTW... our plan has gone through three different companies, and is currently managed by a "trust" in Pennsylvania.
We're ok with what we have, but wouldn't do it again.

At 75K to 125K per year for nursing homes, self insurance is pretty expensive. As with almost everything that involves $$$... it's a gamble.
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Old 04-25-2013, 10:55 AM   #9
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I think there are a lot of relevant factors, including your age, your risk of needing the policy, the size of your portfolio and whether you have a spouse.

If you don't have much, then you will run out of money anyway. If you have a lot, then you can self fund. The biggest question mark is the people in the middle.

I have always felt the greatest risk is impoverishing a spouse. The thing that worries me if what if DH (who is 6 years older than me) needed long-term care and we self-funded it, but his need for care was for more than 2 or 3 years. We could self-fund for 2 or 3 years. However, his mother (due to strokes not Alzheimers) was in a nursing home for something like 7 years before her death. To fund that kind of stay, it would impoverish me. Yes, I know I could stay in the house and under current law I could keep some money (I forget the exact amount but it is I think something just above $100k.) And that amount wouldn't be enough to allow me to afford staying in the house we have now.
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Old 04-25-2013, 11:18 AM   #10
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I have always felt the greatest risk is impoverishing a spouse.
Are there ways to use a trust to mitigate that risk?
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Old 04-25-2013, 12:01 PM   #11
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I have always felt the greatest risk is impoverishing a spouse. The thing that worries me if what if DH (who is 6 years older than me) needed long-term care and we self-funded it, but his need for care was for more than 2 or 3 years. We could self-fund for 2 or 3 years. However, his mother (due to strokes not Alzheimers) was in a nursing home for something like 7 years before her death. To fund that kind of stay, it would impoverish me. Yes, I know I could stay in the house and under current law I could keep some money (I forget the exact amount but it is I think something just above $100k.) And that amount wouldn't be enough to allow me to afford staying in the house we have now.
"I have always felt the greatest risk is impoverishing a spouse. "
Me too. I look at my house value as the hedge against that risk. If the surviving spouse stays in the house, that value is preserved, since medicaid (under present law) pays for the nursing home... subject the limits. This is discussed in the current "owning or renting" thread.
Is Home Ownership Essential to the American Dream?
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Old 04-25-2013, 01:10 PM   #12
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Lots of opinions all over the place on this, and understandably so.

In our case, we have a friend who has an early form of dementia. She is not yet 60 and now needs daily care, soon to go to 24/7 care. Very difficult for her family to deal with this.

This woke DW and up to this problem so we have a non-inflation adjusted LTC policy. The premiums are reasonable right now... although the company is discussing a raise with our state's insurance commission. We'll see after that.

In any case, we are insuring for early life catastrophes, such as a disabling stroke, to help the other spouse through that time. In later life, I expect to be self insured and eventually drop this policy -- or keep it, but the value will be a minor supplement at that time due to inflation.
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Old 04-25-2013, 01:12 PM   #13
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"I have always felt the greatest risk is impoverishing a spouse. "
Me too. I look at my house value as the hedge against that risk. If the surviving spouse stays in the house, that value is preserved, since medicaid (under present law) pays for the nursing home... subject the limits. This is discussed in the current "owning or renting" thread.
Is Home Ownership Essential to the American Dream?
You say....if the surviving spouse stays in the house. Let's say my DH went to a nursing home under Medicaid and I stayed in the house and then he died and I had only $115,920 cash left (the maximum that a healthy spouse can keep - some states allow much less to be kept), plus my SS benefits and the house. With only $115,920 and SS left I don't want to be living in my current house. It is too large and expensive to maintain for the modest assets I would have left. Staying the house would slowly bankrupt me. If DH was dead, could I then safely sell the house and keep the proceeds? Or would Medicaid be able to take the proceeds to satisfy Medicaid's lien?

And, of course, one of the problems in future planning is that the law can change. Right now, there is at least some protection for the healthy spouse. But, that may not be true 10 years from now or 20 years from now.
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Old 04-25-2013, 03:00 PM   #14
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You say....if the surviving spouse stays in the house. Let's say my DH went to a nursing home under Medicaid and I stayed in the house and then he died and I had only $115,920 cash left (the maximum that a healthy spouse can keep - some states allow much less to be kept), plus my SS benefits and the house. With only $115,920 and SS left I don't want to be living in my current house. It is too large and expensive to maintain for the modest assets I would have left. Staying the house would slowly bankrupt me. If DH was dead, could I then safely sell the house and keep the proceeds? Or would Medicaid be able to take the proceeds to satisfy Medicaid's lien?

And, of course, one of the problems in future planning is that the law can change. Right now, there is at least some protection for the healthy spouse. But, that may not be true 10 years from now or 20 years from now.
About changes in the law... who can say? I'm not a lawyer of course, but the case I cited... ($850,000 home) happened in 1995. .. The house was sold for that, after the second spouse passed away three years later. Step relatives received that amount . The interim nursing home costs (estimate) 5 years @ 40K/yr. $200,000 paid by the government.
The other case (Bob) ended in Florida 9 years ago. The $280K from home in Maine went to pay his wife's nursing home. When Bob passed away, he was living on Social Security. Had he kept the house as primary residence, he could have left an estate for his kids.

I'll put in a disclaimer here... I don't see anyone here on ER who uses this as part of their retirement plan. That surprises me. Except for the fact that I have seen this happen a number of times, I'd guess that I missed something along the way. At the present time, just in our own Illinois retirement complex I know of four cases where the spouse is in the attached nursing home, which cost is being paid by the government... and the other spouse continues to live in one of our villas. (regular home)

BTW our time frame... life expectancy, is getting very short... With a longer term outlook, we probably wouldn't have retired as early or been quite so frugal. As it is, the house IS part of our plan.
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Old 04-25-2013, 04:22 PM   #15
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I guess the real question I am asking is:

Say husband goes into nursing home and wife stays in paid for house. Husband's SS goes to nursing home and rest is paid for out of their portfolio until it gets done to the max wife can keep under Medicaid (say $115k). Husband goes on Medicaid for the remainder of his wife. Wife continues to live in house. In due course, husband dies. Wife then sells the house to move somewhere smaller. Does wife get to keep all the house proceeds or does Medicaid get to take the proceeds?
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Old 04-25-2013, 04:32 PM   #16
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wow this is amazing about long term care.

I am not sure at this point about it at all and have tons of research.

I am 'leaning' toward NOT getting it.

great info on the thread
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Old 04-25-2013, 04:36 PM   #17
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"Does wife get to keep all the house proceeds?"

Sorry to be so obscure.

The answer is yes, as far as I can see. If it turns out to be different, am hoping someone will let us know 'cuz we're planning on it.

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Old 04-25-2013, 04:44 PM   #18
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We are 52 and 50. RE in about 2 years. We are going to buy LTC thru MegaCorp this year at about $50 per month for each of us (total of $100). If the market does well over the next 10-15 years and the rates go up, we will probably drop it in favor of self insurance. Right now the low cost makes sense for where we are at.
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Old 04-25-2013, 06:04 PM   #19
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We applied because I saw what Alzheimer's did to my parents finances. It drained hundreds of thousands and left my dad with little for his own care. They accepted my husband, but wouldn't take me due to medical. At least that will help if something happens.
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Old 04-25-2013, 06:38 PM   #20
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Are there ways to use a trust to mitigate that risk?
I don't think so but am willing to listen. If it did it would relate to the 5 yr back look thing.

BIL sells Farmers and we are going to sit down with him next month to discuss. Like him but don't trust anyone who gains from the sale....semi mega corp offers one and I will investigate......

We are currently leaning against and hoping we can self insure. That is always at risk though. Maybe an off-shore account? (kidding)
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