Long Term Care Insurance 60% premium hike--yikes!

[akck]

If Sturm, Ruger & Co. can't be called upon, my old buddy Evan Williams will round up the Percocet boys and get the task done in a jiffy.

I think that's the plan for many, but in reality, it likely won't work out that way. My FIL had the first of several strokes the day after his wife died after a stroke. He made one daughter promise not to put him in a care facility should the same happen to him. The stroke caused him to lose speech, but he was working on it and was slowly improving. Two months later, he had his second stroke and could no longer walk unassisted. During this two months, both daughters were assisting him with doctor appointments, both having to travel over 5 hours to get where he lived. He refused rehab and as promised, was brought home. We then spent a week doing 24 hour care while trying to arrange competent in-home care. The daughter who made the promise freaked by the third day and put him in a care facility. The day he was to be transported, he had another stroke that fully took away his ability to walk. He's now in a care facility and we're taking turns have a family member with him at all times while he slowly deteriorates.

His original plan was a S&W to the head. Barring that, since he lives in an assisted suicide state, he would have gone that route. But losing the ability to communicate took that option out. And don't think a friend or family member can do anything. While it's easy to say it's your option out now, think about what you're putting them through and that they'll be the ones doing the deed since you may not be in a condition to do it yourself (i.e., you can't feed yourself).

In any case, the ongoing experience has pushed us to investigate the CCRC option, even though it's hopefully decades away for us. We don't want to put our kids through this

 

[athena53]

The excuse I get for the lack of such a policy [with a 3-year waiting period] is that being that the average nursing home stay is less than three years then heirs could sue the insurance company for taking advantage of the buyer and selling an unsuitable product. The response sounds fishy to me but that's what I usually get.

I agree it's fishy. If enough people keep demanding it maybe they'll offer it. Heck, I might even go for it. If there were concern that people were being sold an "unsuitable product" they'd never allow deferred annuities. In their simplest form, you pay the premium now, they start in X years, and if you die before X years you don't collect.

Years ago (1980s) an actuary I know started his own consulting practice and had to go looking for private health insurance for himself and his family. He specifically wanted a high deductible, around $10,000. There was no such product then.

Now most of us are stuck with high deductibles (not that bad, of course), whether we want them or not. The standard seems to be about $6K. I'd go for that anyway because I'm blessed with good health and that much out of pocket wouldn't break me, but that's not true for everyone.

 

[brewer12345]

I think that's the plan for many, but in reality, it likely won't work out that way. My FIL had the first of several strokes the day after his wife died after a stroke. He made one daughter promise not to put him in a care facility should the same happen to him. The stroke caused him to lose speech, but he was working on it and was slowly improving. Two months later, he had his second stroke and could no longer walk unassisted. During this two months, both daughters were assisting him with doctor appointments, both having to travel over 5 hours to get where he lived. He refused rehab and as promised, was brought home. We then spent a week doing 24 hour care while trying to arrange competent in-home care. The daughter who made the promise freaked by the third day and put him in a care facility. The day he was to be transported, he had another stroke that fully took away his ability to walk. He's now in a care facility and we're taking turns have a family member with him at all times while he slowly deteriorates.

His original plan was a S&W to the head. Barring that, since he lives in an assisted suicide state, he would have gone that route. But losing the ability to communicate took that option out. And don't think a friend or family member can do anything. While it's easy to say it's your option out now, think about what you're putting them through and that they'll be the ones doing the deed since you may not be in a condition to do it yourself (i.e., you can't feed yourself).

In any case, the ongoing experience has pushed us to investigate the CCRC option, even though it's hopefully decades away for us. We don't want to put our kids through this

Yeah, yeah, I know all that. Really, I figure by the time I am likely to get there all the Boomers will have blown up or rationalized the system and it will look nothing like what it does today.

 

[SJ1_]

Yes, at least here in Oregon. I've checked with multiple insurance companies and agents, looking for a LTC policy with a three year waiting period and 100% coverage afterwards and none are to be found.

The excuse I get for the lack of such a policy is that being that the average nursing home stay is less than three years then heirs could sue the insurance company for taking advantage of the buyer and selling an unsuitable product. The response sounds fishy to me but that's what I usually get.

I just started looking for the same thing here in GA . So far it looks like there
is no such product anywhere in the US...

 

[mathjak107]

i think it will be a tough find.

the purpose that most have for the insurance who do not have partnership plans is to clear the 5 year look back period using insurance and shift assets .

that 5 year period could be changed at any time and lengthened . it used to be 3 years prior to 2006 .

this is the main reason trying to self insure for enough time to clear the look back can back fire on you .

all we need is 3 years coverage here in ny in the partnership plan and there is no look back no matter how they stretch it out

 

[Tadpole]

My husband and I have "self insured" and have plenty of income/savings for the job. But, since you have to lay bare all your finances to a facility, I have wondered if they might charge us more than normal in order to deplete as much as possible before that 3 year statistic comes home one way or the other. Then, bad luck becomes living too long because what was more than enough money might not be enough if nursing inflation on an individual's savings got too big. I may have mentioned this before some time ago but I still wonder why you have to show your finances when you are not applying for Medicaid or some other financial aid. It's kind of like my thinking about umbrella insurance and why wouldn't lawyers use a net worth + insurance add on a law suit amount.

 

[audreyh1]

we realized that if we tried to self insure in reality a large chunk of money had to be kept safe ,liquid and secure and not at risk since an extended downturn could wipe out a major portion of that money.

just losing the ability to invest that chunk would negate the fact we could have invested it ,paid a premium and had more left over .

I don't get this. Unless someone is 80% stocks, they should have enough in bonds and cash to cover this just with a "normal" retiree AA.

 

[BarbWire]

<snip> But, since you have to lay bare all your finances to a facility <snip>

Can you please elaborate? My mother has been in two Alzheimer's residential care facilities, and in neither case did we have to "lay bare" all of her finances. We just signed a contract agreeing to pay her monthly fee.

What am I missing here?

 

[mathjak107]

I don't get this. Unless someone is 80% stocks, they should have enough in bonds and cash to cover this just with a "normal" retiree AA.

at 120k a year in our area i don't know many that can cover much with cash and bonds while the stay at home spouse has to continue on . get caught in a nasty dip that takes a couple years to recover and that can put the stay at home spouse right in the retirement graveyard .

how much outside of what it takes the stay at home spouse to live would you have to keep liquid to have enough to fund both for a few years ? even using more cash and bonds it would be a rediculous amount if you truely were setting money a side to self insure here .

they already pushed the look back from 3 to 5 years . what if you were trying to self insure and they pushed it to 7 or more .

my co-worker who fell off the ladder painting at 55 years old and had a stroke during hip surgery has now been in a home 1-1/2 years with costs approaching 200k . a lot of things like hair cuts and personal things are not included in the home price .

 

[audreyh1]

at 120k a year in our area i don't know many that can cover much with cash and bonds while the stay at home spouse has to continue on . get caught in a nasty dip that takes a couple years to recover and that can put the stay at home spouse right in the retirement graveyard .

I suppose it depends on how well the early retiree is financed, and their other sources of annual income. If you can cut, say, $360K out of the FI portion of your portfolio today and live on the remaining portfolio OK, then you can self insure. 3 years is what most LTC policies cover. If not, then you have better have a hard look at your alternatives.

Someone retiring on $1M might be in hazardous waters, as with a 50/50 portfolio there isn't much left in bonds and cash to weather a downturn. Someone with $2.5M would not be in as nearly a precarious situation, and it would behove them to do a little rebalancing as the near time expense of a nursing home became clear.

 

[Tadpole]

Can you please elaborate? My mother has been in two Alzheimer's residential care facilities, and in neither case did we have to "lay bare" all of her finances. We just signed a contract agreeing to pay her monthly fee.

What am I missing here?

Thanks, that is good to hear. I ran into this several times when I was examining LTC. Here is a well know site. Look at #7. It justifies by reference to financial aid but it looks like they may want the information to assure private payment ability too.

Nursing Home Checklist

 

[mathjak107]

I suppose it depends on how well the early retiree is financed, and their other sources of annual income. If you can cut, say, $360K out of the FI portion of your portfolio today and live on the remaining portfolio OK, then you can self insure. 3 years is what most LTC policies cover. If not, then you have better have a hard look at your alternatives.

Someone retiring on $1M might be in hazardous waters, as with a 50/50 portfolio there isn't much left in bonds and cash to weather a downturn. Someone with $2.5M would not be in as nearly a precarious situation, and it would behove them to do a little rebalancing as the near time expense of a nursing home became clear.

we have more than the 2.5 million and because the cost of living here is high we would be in a financial bind if we had to support more than a year or 2.

if they raise us to high eventually we may have no choice but to take our chances.

but for now i can keep that money fully invested and just a piece of the average gains will pay the premiums .

 

[BarbWire]

"The nursing home has an obligation to determine if incoming residents meet the criteria for any state or federal funding. This process is similar in nature to a person divulging financial information to get a mortgage; the nursing home is, in effect, the patient's new home."

Uh, no. The nursing home is NOT the patient's new home any more than a hospital becomes a patient's home if they in hospital for more than a week.

Let's be clear: there is skilled nursing and there is assisted living/memory care.

In some cases Medicare will pay for skilled nursing (eg, after a qualifying hospital stay, they will pay in full for 20 days, and then in part for several more days). And after that, you and your supplemental insurance and/or long term care insurance will have to pay for skilled nursing care.

A contract is signed for admission to a SN or AL facility, and you agree to be the responsible party. They may want your insurance information, but most will not directly bill the insurance -- you pay and then submit for reimbursement. And there are the usual clauses in the contract that payment is due at the beginning of the month (pay in advance, not arears) and if the bill isn't paid by date x, the patient must leave.

So the only time I can see them demanding your full financial picture "as if you were applying for a mortgage" is if you are asking for Medicaid and they have to determine if you qualify.

 

[Ready]

I'm not sure why nursing care would be $10,000 per month, but even if it was, I would imagine there would be some limits on the per day amount the policies would be willing to reimburse. So I doubt you would be shielded from the entire $10K expense if you had a policy.

Assisted living facilities are typical $3K - $7K per month, depending on how nice they are and where they are located. Again, most policies only cover the basics, not the five star resorts.

Nursing care is known for being higher than assisted living due to the higher level of attention needed. However, it is very rare for someone to be in a nursing facility for three years. Usually by the time you need that level of care, you're just about ready to go, or at least within six months.

 

[mathjak107]

we took 350 per day with a 5% increase per year .

the place is up to us .

my dad was in for 5 years.

statistically it doesn't matter what the odds are of being in a home more than 3 years are . we only have two choices. either we are in more than three years or we are not . which one will you be ?

 

[BarbWire]

Here's an example of what we're dealing with in Central Texas:

Good quality memory care/assisted living runs about $200/day. ($6k/month)
Good quality skilled nursing runs about $300-$350/day. ($9k/month)

We're not talking luxury here -- just places that we are confident she will be well looked after and kindly looked after (those aren't the same thing!). The LTC insurance company doesn't care where she is or how much it costs over their daily reimbursement -- that's our problem.

My mother's LTC policy had COLA frozen about 8 years ago. Thus it pays $140/day -- either for skilled nursing or assisted living --and she "self-insured" for the difference of $60/day. The policy will eventually pay out $154K for her over the course of about 3.5 years. After that, we pay the whole thing out of pocket.

That's how my parents decided to split the pros/cons between insured and not insured for LTC. Cost-sharing.

It is likely she will spend more than 5 years in Alzheimer's assisted living; her body isn't wearing out.

When I faced a big jump in LTC rates last year after the Texas insurance board increase, I decided to bring my daily coverage down to the current cost of memory care, and "self insure" the difference if I end up in skilled nursing. I will continue to accept the COLA adjustments every three years unless they become prohibitive.

Why? My bigger concern is not being in skilled nursing for <3 years, but rather being in memory care/assisted living for > 5 years. That's the scenario I'm trying to cover with LTC.

BTW, if I didn't have a policy with unlimited lifetime cap, my thoughts might be different. But now for $1000 per year premium, I am content.

 

[Ready]

It would be helpful if we had stats on average length of stay in assisted living or nursing care, as well as the percentage of the total population that is predicted to require such a stay. Without those details it's difficult to assess whether the insurance is worthwhile.

There will always be a few outliers who stay well beyond the average, but those are few and far between.

 

[mathjak107]

why would that matter since as humans and not insurers we only have two possible outcomes ? things work out or they don't.

unlike insurers without knowing which side we are on being a little bit pregnant does not work for us . don't we all have fire insurance on our homes even if paid off with less than a 1% chance of a fire ? odds of needing long term care at some point are 77% .

but as far as statistically how long , unless you know which side you are on the info does you little good .

 

[Nunthewiser]

So here's one data point for you.

My Mom passed away yesterday, age 95. She was really fairly independent until about 6 months ago (lived at home) until her COPD finally caught up with her and she needed assistance and eventually skilled nursing.

She had taken out a policy with Genworth around 1995. Paid approx $80k in premiums over the years (last payments were about $6K/yr). She had a $314K benefit max , daily max for skilled nursing was $178. The nursing home she was in charged $255/day. After the dust settles, I am sure Genworth got better by $70-$75K on that deal. YMMV.

I think the nursing home experience hastened her demise by a few weeks or months, but hey, she was 95...

She probably would have been best off in assisted living for a few years, but Genworth would not have paid for it because she was so healthy and didn't fit the criteria. Self insurance , in this case, would have been the best option.

 

[MichaelB]

Nunthewiser, condolences on the passing of your mother.

 

[mathjak107]

on the other hand , as i said above my co-worker is coming up on 200k in expenses only 1-1/2 years in since his stroke .

all which would have been covered under our policy..

one of the reasons many policy's got a big jump is just because they were paying out more than they were taking in .

todays policy's are very different . they are clearly worded and have none of the double talk older policy's did.

the steps to collect are very defined now .

 

[Nunthewiser]

the steps to collect are very defined now .

oh yeah...insurance companies are such pushovers

 

[bingybear]

It would be helpful if we had stats on average length of stay in assisted living or nursing care, as well as the percentage of the total population that is predicted to require such a stay. Without those details it's difficult to assess whether the insurance is worthwhile.

There will always be a few outliers who stay well beyond the average, but those are few and far between.

Search online and on Morningstar. Morningstar had some short snippets of the stats. Within the last year I found a newer study that reworked the expected LTC stay for both those who return to the community and those who don't. I don't remember who did the study.

why would that matter since as humans and not insurers we only have two possible outcomes ? things work out or they don't.

unlike insurers without knowing which side we are on being a little bit pregnant does not work for us . don't we all have fire insurance on our homes even if paid off with less than a 1% chance of a fire ? odds of needing long term care at some point are 77% .

but as far as statistically how long , unless you know which side you are on the info does you little good .

One is paying the insurance company to take on some of the risk. To evaluate the cost/benefit, one must understand or at least consider what the benefit is likely to be. While plans use to have unlimited coverage in cases, many if not all that are written now have time and dollar limits. The ones I looked at were this way. Even if you buy LTCI, it is quite possible you will outlive the policy if you go into LTC for Alzheimer's... In the end we are individual cases as you note. For the policies I looked at, if I needed in care in my early '80s, I could likely do was well to just invest the premiums and if I didn't need the insurance, I keep the $.

Buying LTCI does not mean your covered for all LTC needs. Buying fire insurance for the proper value of a property should cover the replacement. So, if you don't purchase LTCI, what do you do to prepare for LTC cost? For me, I'm funding an HSA to the max and investing the $ for a start. I will also earmark other moneys for that purpose. The real risk is if I need LTC early. A quick estimate indicates that later in life I would have investments to cover what the LTCI would cover.

That said, there were other types of policies brought up in this thread (I think... may have been another one) that may be more useful by protecting assets for the surviving spouse.

 

[mathjak107]

oh yeah...insurance companies are such pushovers

well they are not push overs but many state insurance boards got in to the act of cleaning up these policy's making it harder not to pay .

i know our nys policy is very cleanly defined as to what they will pay and by whom's judgement .

believe me i am no lover of insurance company's either but the partnership plans are the best house in the worst neighborhood ..

there are other choices but they fall flat most of the time , like the linked benefit / life insurance plans .

 

[REWahoo]

It would be helpful if we had stats on average length of stay in assisted living or nursing care, as well as the percentage of the total population that is predicted to require such a stay.

....