How much LTC insurance is enough?

[Alex in Virginia]

Hey, folks...

John Hancock just dropped the other shoe on me. They got their long-awaited rate increase for long term care policies issued in Maryland.

They told me I'll be getting my "options package" in June ahead of my August renewal, but they also told me that lifetime policies such as I have will have up to a 90% rate increase.

I'm trying to get ahead of the ball here. I'm sure one of my options will be to reduce the length of my coverage from "lifetime" to something else. And so my question really is: how long would be long enough, based on the odds? How many years of coverage would keep me reasonably safe from ending up paying gigantic long term care bills some time in the future?

Any experiences or ideas? Any studies or references I can check up?

Thanks loads!

Alex in Virginia

 

[REWahoo]

Alex, I've posted this information a number of times.

• the median length of stay in a nursing home before death was 5 months
• the average length of stay was longer at 14 months due to a small number of study participants who had very long lengths of stay
• 65% died within 1 year of nursing home admission
• 53% died within 6 months of nursing home admission

The authors also found that length of stay varied based on a number of demographic, social, and clinical factors. For instance:

• men died sooner after admission than women (men had a median length of stay of around 3 months versus 8 for women)
• married nursing home residents died sooner after admission than unmarried participants (an average of 4 months sooner)
• nursing home residents in the highest quartile of net worth died six months sooner than those in the lowest quartile.

We went with three years coverage on our policies.

Length of Stay in Nursing Homes at the End of Life | GeriPal - Geriatrics and Palliative Care Blog

 

[gerrym51]

Hey, folks...

John Hancock just dropped the other shoe on me. They got their long-awaited rate increase for long term care policies issued in Maryland.

They told me I'll be getting my "options package" in June ahead of my August renewal, but they also told me that lifetime policies such as I have will have up to a 90% rate increase.

I'm trying to get ahead of the ball here. I'm sure one of my options will be to reduce the length of my coverage from "lifetime" to something else. And so my question really is: how long would be long enough, based on the odds? How many years of coverage would keep me reasonably safe from ending up paying gigantic long term care bills some time in the future?

Any experiences or ideas? Any studies or references I can check up?

Thanks loads!

Alex in Virginia

when i was first shopping for this 10 years ago i decided to go 4 year policies

 

[brewer12345]

lifetime policies such as I have will have up to a 90% rate increase.

They are certainly inducting a lot of new members into the Ankle Grabbers' Club.

 

[Stanley]

They are certainly inducting a lot of new members into the Ankle Grabbers' Club.

Better yet, why not have a good local craft brew and tell the insurance companies to go to the devil.

 

[imoldernu]

The link posted by REWahoo gives odds, and by itself would be a good guide. Like all insurance, "You pays your money and you takes your chance".

For us, it was a matter of merging the odds, and the realities... mitigated by seeing a friend go into nursing home care (Alzheimer's) for 5 years, at $65,000 a year at the time. With today's rates of $70K to over $100K, even the 14 month average stay adds up... especially when it comes all of a sudden.

Family history, genes, general health, where ya live, doctors and lifestyle, and personal health history all play a part. A second part, that we often avoid talking about, is the vulnerability of the "partner". Given the absence of the other half, what is the cost of survivability. Can he/she handle the cost and responsibility of living alone. Most of our discussions here on ER have had to do with both partners buying insurance. In retrospect, if I had it to do over again, I probably would have only bought insurance on myself, in an attempt to cover some assets for DW to use going forward. If it were her to be going into nursing care, I believe i would have an easiier time surviving with less money.

In the case of choosing not to purchase LTC, It would be well to understand the law with respect to medicaid, and in particular those laws that protect the house, the car, and a limited amount of cash assets, in the event of a long term stay that could deplete savings.

 

[jclarksnakes]

People with enough income or assets should consider self insuring rather than buying LTC insurance.

 

[akck]

The link posted by REWahoo gives odds, and by itself would be a good guide. Like all insurance, "You pays your money and you takes your chance".

For us, it was a matter of merging the odds, and the realities... mitigated by seeing a friend go into nursing home care (Alzheimer's) for 5 years, at $65,000 a year at the time. With today's rates of $70K to over $100K, even the 14 month average stay adds up... especially when it comes all of a sudden.

Family history, genes, general health, where ya live, doctors and lifestyle, and personal health history all play a part. A second part, that we often avoid talking about, is the vulnerability of the "partner". Given the absence of the other half, what is the cost of survivability. Can he/she handle the cost and responsibility of living alone. Most of our discussions here on ER have had to do with both partners buying insurance. In retrospect, if I had it to do over again, I probably would have only bought insurance on myself, in an attempt to cover some assets for DW to use going forward. If it were her to be going into nursing care, I believe i would have an easiier time surviving with less money.

In the case of choosing not to purchase LTC, It would be well to understand the law with respect to medicaid, and in particular those laws that protect the house, the car, and a limited amount of cash assets, in the event of a long term stay that could deplete savings.

My parents did this, but got it for my mom. She figured she would be able to take care of my dad if he needed care. What happened is my mom and sisters couldn't lift him up anymore when he fell. He went into a facility and my mom didn't. They were going through their assets at a good pace, but fortunately, dad was under the average.

We'll likely carry it on both of us. If my wife goes in, I'll think about canceling the policy on myself.

 

[obgyn65]

there have been many posts on this topic. After much consideration, I decided to buy LTCI last year, although I have enough income to self insure. I am concerned about the risk of a long term condition (e.g Alzheimer's) and I have no family in the US to take care of me or look after my interests.

People with enough income or assets should consider self insuring rather than buying LTC insurance.

 

[REWahoo]

People with enough income or assets should consider self insuring rather than buying LTC insurance.

Another option is to do some of both.

We bought three year policies. If one or both of us end up in that very small percentage who require LTC and subsequently in the far smaller percentage who survive there longer than 39 months (our policies have a 90 day waiting period), then we will self-insure for the long term.

 

[mickeyd]

I have will have up to a 90% rate increase.

Is it time to cut the JH cord 100% and begin a self insure program? Remember, you control your own plan.

 

[gerrym51]

Is it time to cut the JH cord 100% and begin a self insure program? Remember, you control your own plan.

need an awful lot of money-or very little-to self insure.

medicaid for poor money for rich-if your nestegg is 500,000 to a million need LTC insurance

 

[Dawg52]

I would drop back to a 3 year plan. As already shown, odds are you won't use it over 3 years anyway.

 

[jclarksnakes]

need an awful lot of money-or very little-to self insure.

medicaid for poor money for rich-if your nestegg is 500,000 to a million need LTC insurance

Would you think that whether you have SS and/or a pension might enter into a decision on this subject? Some people have pensions and SS that could easily cover LTC expenses and so the size of their nestegg makes no difference in the decision of whether to purchase LTC insurance or not.

 

[Katsmeow]

People with enough income or assets should consider self insuring rather than buying LTC insurance.

The thing is...what is enough. I can read all I want about average stays and if all you consider is average stays then DH and I wouldn't buy long term care insurance.

However, DH's mother had numerous strokes and was in a nursing home for 7 or 8 years. So that type of thing does happen.

And DH and I are not so much worried about the last one of us. If there was just one I think we would each take our chances that our assets would be enough to coverage sufficient care.

The real issue for a married couple is the possibility of the non-ill spouse being impoverished through either paying for care for the ill spouse or due to having to spend down to reach Medicaid limits. Yes, I know that the non-ill spouse can now keep some money but it is a fraction of what most of us here would have.

This is the main reason that DH and I have thought about long term care policies. I think the policies are badly designed and badly priced. But, that's whats available. But basically the primary reason to get the policy is to try to protect the assets of the spouse who isn't ill.

 

[gerrym51]

Would you think that whether you have SS and/or a pension might enter into a decision on this subject? Some people have pensions and SS that could easily cover LTC expenses and so the size of their nestegg makes no difference in the decision of whether to purchase LTC insurance or not.

have you actually checked the price of a nursing home?

 

[jclarksnakes]

The thing is...what is enough. I can read all I want about average stays and if all you consider is average stays then DH and I wouldn't buy long term care insurance.

However, DH's mother had numerous strokes and was in a nursing home for 7 or 8 years. So that type of thing does happen.

And DH and I are not so much worried about the last one of us. If there was just one I think we would each take our chances that our assets would be enough to coverage sufficient care.

The real issue for a married couple is the possibility of the non-ill spouse being impoverished through either paying for care for the ill spouse or due to having to spend down to reach Medicaid limits. Yes, I know that the non-ill spouse can now keep some money but it is a fraction of what most of us here would have.

This is the main reason that DH and I have thought about long term care policies. I think the policies are badly designed and badly priced. But, that's whats available. But basically the primary reason to get the policy is to try to protect the assets of the spouse who isn't ill.

Just some quick thoughts on the question of how much is enough. If both husband and wife had made an upper middle class income for 35 or more years they could each expect to collect around 30K SS if they waited until age 70 to start drawing it. That would cover around a third of nursing home costs. If they each also had a midsize COLA'd pension that would cover a big part of the rest of the bill. If they were both to go into a nursing home and stay there 5 years they might need 200K at most to cover the rest of the bill. If one of them did not have a pension they would perhaps need to burn through 300K of savings on top of their SS staying in a nursing home for those five years.

As a seperate discussion. Who can be sure that we will even have nursing homes 30 years from now? As I have posted before my parents have/had LTC insurance. My dad could have gone into a nursing home but he would not have liked it so my mother kept him at home with some help from Hospice. He died at home in 2009. She recently spent over a year in an assisted living home after a fall and is now living with my brother and his DW. The way my family is mom will probably never go to a nursing home and the seemingly very good LTC policy she and my dad purchased 30 years ago will never pay a dime.

 

[jclarksnakes]

have you actually checked the price of a nursing home?

Yes.

 

[daylatedollarshort]

My LTC plan - I told our kids to put me in a nursing home in Belize.

The look back period for Medicaid is 5 years. If you can self insure for 6 - 7 years, in the unlikely event you are in a home longer than that, you have some time the first year or two to arrange your financial affairs for your spouse and kids as needed. Or there is always the Belize option.

Also, our baseline spending in retirement should be less than our total SS income. If one of us were in a home I think we could cover one low cost residence and one nursing home bill with SS, pensions and investment income.

 

[jclarksnakes]

My LTC plan - I told our kids to put me in a nursing home in Belize.

The look back period for Medicaid is 5 years. If you can self insure for 6 - 7 years, in the unlikely event you are in a home longer than that, you have some time the first year or two to arrange your financial affairs for your spouse and kids as needed. Or there is the Belize option.

Are the nursing homes in Belize good? What I have seen around here is that the weak nurses who could not keep up with the work pace or were not able to problem solve in the hospital eventually end up working in nursing homes.

 

[Corporateburnout]

In January we applied for a 3 years 200/day 3% inflation policies for both of us for $2800 annual premium. DW was declined coverage due to health reasons but we were given until end of April to appeal the decision. Unfortunately since she was declined we lost the couples discount and the premium for my policy is now $2000. The odds are in our favor as she does not have longevity on her side of the family with both parents died at 70 and a brother at 61 while my father spent 3 months in a nursing facility before dying at 80 and my mother is 91 and currently in a nursing facility since last June.

If we decide to appeal and win a reversal the discount will be reinstated.

 

[daylatedollarshort]

Are the nursing homes in Belize good? What I have seen around here is that the weak nurses who could not keep up with the work pace or were not able to problem solve in the hospital eventually end up working in nursing homes.

I have no idea. I have never even been there. I was half joking. I sent our kids this link -

The New Retirement Resorts - WSJ.com

I guess it was Costa Rica in the article. I suspect we will be traveling around to places like that for part of the year in retirement anyway.

 

[jclarksnakes]

I have no idea. I have never even been there. I was half joking. I sent our kids this link -

The New Retirement Resorts - WSJ.com

I guess it was Costa Rica in the article. I suspect we will be traveling around to places like that for part of the year in retirement anyway.

Your sense of humor is odd.....like mine. Have a beer on me. Maybe we should start asking the Expats on the forum about nursing homes around the world.

 

[Sarah in SC]

Your sense of humor is odd.....like mine. Have a beer on me. Maybe we should start asking the Expats on the forum about nursing homes around the world.

I have a friend who retired to Belize. He likes it, but Belizeans consider Guatemala to be the height of medical expertise down there. Not quite what I would think.

 

[GLM]

We did a lot of debating over the years on weather to get a policy. We recently decided to get a policy. Admittedly in part because DH just started his own LLC and we can write the cost of insurance off "above the line "

We are in the process of being approved for a partnership shared policy that covers $150 /day or a 40% cash benefit for 3 years for each of us . It is a shared policy so the first to get ill can share (use ) the other's coverage.

This gives us 6 years of supplementation ($150/day) to keep the healthy spouse liquid and allow for moving asserts if need be.

Because it is a partnership policy it also raises the medicaid spend down needed for medicaid coverage. That is we can keep $324000 ( $150x360X6 ) more in assets for the well spouse should a long term illness ever arise.

It also has a 3% inflation rider and the cash benefit means we can, in place of using a nursing home, get $1800 a month cash for any other type of care or home modifications . I too wonder just what long term care will look like in 30 years. (when I will be in my 80's)


It is my hope that the portfolio does so well over the next decade that can then just self insure!