LTC policy for retirees??

[bmcgonig]

Who wants to move to a cheap state just to live in a CCRC or live in a studio even if you are single?

Well one can change what one complains about or...keep complaining..

Lots of people here talk about moving out of state to downsize after retirement. No difference.

 

[youbet]

This!! Spending down to a ridiculously low amount and impoverishing the other spouse BEFORE Medicaid will even trigger covering the nursing home bill does not sound like a fun way to spend my midlife year and my husband's elder years.

Yep. Having a plan for LTC expenses is pretty important. We've had self-insuring LTC as an important part of our FIRE plan for a couple of decades.

 

[Jotterb]

Both my wife and I carry LTC and have for some time now. Probably bought it too early but do have policies that would be hard to get today. Yes premiums have gone up relentlessly. But we have a lot of family experiences where large amounts of hard earned wealth have been destroyed by paying for nursing care. Assets we would rather leave to our heirs. In my case family history of debilitating strokes at early ages are a far bigger influence than end of life nursing care. Mathematically it would be easier to self insure my home than to take on the potential unknown risk of 5 to 15 years of nursing care.

 

[audreyh1]

Both my wife and I carry LTC and have for some time now. Probably bought it too early but do have policies that would be hard to get today. Yes premiums have gone up relentlessly. But we have a lot of family experiences where large amounts of hard earned wealth have been destroyed by paying for nursing care. Assets we would rather leave to our heirs. In my case family history of debilitating strokes at early ages are a far bigger influence than end of life nursing care. Mathematically it would be easier to self insure my home than to take on the potential unknown risk of 5 to 15 years of nursing care.

And the LTC policy you purchased will cover past 5 years to 15 years?

 

[mickeyd]

Visiting many CCRCs as possible and chatting with as many of the current residents as possible is the key to making the BIG decision to CCRC or not to CCRC.


Many have a free 2-day stay so you can see what it really like to live there. Free lunches are standard. Hey, it's part of their marketing department expenses! If you do not mind free stuff, this is for you. All you have to do is ask.

 

[ChrisC]

Medicaid doesn’t cover the risk of impoverishing your spouse.

No insurance, net worth, or safety net program will cover the entire risk of another spouse dragging the other into poverty, for whatever reason, including LTC. But dual LTCi and high net worth can help mitigate that risk, and ring fencing assets for the protection of a spouse, along with Medicaid, can provide some comfort for both a Medicaid consigned person and spouse.

I don't recommend reliance on Medicaid, but it is a possible and viable backstop for many. It is for me if all my belts and suspenders have been removed; my suggestion to many of my friends is to provide for the best care you can afford if faced with daunting health care issues, ring fence your assets around each other so that one does not impoverish the other, let the chips fall where they may fall and use the safety net programs as a last resort.

 

[REWahoo]

Speaking of Rich_by_the_Bay has anyone heard from him lately?

No. And, I was wondering the same thing. When I quoted his post, I looked @ his profile & his last post was July 2016. Hope he’s doing well. I always enjoyed his posts.

Sadly, I learned that Rich_in_Tampa/Rich_by_the_Bay passed away in January of this year. He was 69.

 

[capjak]

From Clark Howard: #7 is interesting....

Here are some guidelines to follow if you are thinking of buying LTC insurance

1) You only want to consider companies that have been rated ‘A++’ (by A.M. Best), which means they are of the highest financial strength. It also means that they won’t jack up the rates after a few years and they will cover you for either in-home care, nursing home care, or assisted living.

2) The prime age to buy is late 50s to early 60s. So if you have aging parents, talk to them about it.

3) You should not buy LTC insurance if you are very wealthy or very poor. ‘Very wealthy’ would be having investable assets of $3 million to $4 million. And ‘very poor’ would mean qualifying for Medicaid.

4) Make sure the benefit adjusts over time based on inflation. Medical inflation is higher than the normal inflation rate. You should look for an inflation level somewhere as much as 5% a year — because what seems like a good benefit today will look puny in 15 or 20 years.



5) Shopping for LTC insurance may be simplified by contacting an independent agent who can shop quotes from a variety of companies for you. Companies like AALTCI.org, LTCTree.com, and PrepSmart.com are all good starting points.

6) I used to say look for at LTC policy with a lifetime benefit. But that’s become cost prohibitive. Now I say look for a 5-year benefit with a 6-month waiting period upfront.

7) Adult kids of aging parents may want to consider paying the premiums on their parents’ policy themselves for 2 reasons: To protect their financial interest in any possible inheritance and to protect their parents against medical expenses they may face some day.

8) Wealthier families who don’t to see the legacy they wish to leave heirs get eaten up by medical bills may want to consider a hybrid policy, which combines traditional LTC coverage with potential life insurance benefits. You can read more about hybrid policies here.

Below is a list of companies that have been rated either A++ or A+ by A.M. Best. Special thanks also to Jim Hunt of EvaluateLifeInsurance.org for his feedback:

Honor Roll

Northwestern Mutual Life – A++
New York Life – A++
Mass Mutual – A++
Honorable Mention

Mutual of Omaha Insurance – A+
Source: A.M. Best

https://clark.com/insurance/long-term-care-insurance-honor-roll/

 

[Jotterb]

And the LTC policy you purchased will cover past 5 years to 15 years?

Yes, the policy we purchased has an unlimited benefit period. This was purchased in 2003. I am not sure unlimited benefit periods are still offered by companies today. Each year the company offers us a significant premium reduction if we would change to a defined benefit period of 5 years. Like any insurance it is best if we never have to use it, so hopefully all this premium we are paying is a poor investment. But I sleep better knowing that should one of us require some type of long term care the lifestyle of the other will be minimally impacted. What worries me is not end of life care, but stroke or dementia which we have seen too many times in our families ruin the financial well being of the spouse. I think it is a very personal decision, whatever allows you to enjoy life more today.

 

[capjak]

Yes, the policy we purchased has an unlimited benefit period. This was purchased in 2003. I am not sure unlimited benefit periods are still offered by companies today.

Based on my recent research and purchase there is 1 insurance company for Long Term Care traditional insurance (National Guardian Life) and 1 insurance company that sells a hybrid (One America Plan State Life insurance Company) that bot have unlimited benefit.

 

[audreyh1]

Sadly, I learned that Rich_in_Tampa/Rich_by_the_Bay passed away in January of this year. He was 69.

Oh no! That is very sad!

 

[MichaelB]

Sadly, I learned that Rich_in_Tampa/Rich_by_the_Bay passed away in January of this year. He was 69.

Sad news indeed. Thanks for letting us know.

 

[Pellice]

Does anyone else have the Transamerica step-rated policy, where both the premium and the benefits start low and increase every year? My annual premiums will cross above that which I would have paid with a fixed policy at age 73, and my total premiums paid will cross above those paid with a fixed policy at age 83. HOWEVER, I can freeze premiums and benefits for up to three years at any time (that is, I pay what I paid the previous year), and I can freeze the levels permanently at any point. So, whenever I am satisfied with the "pool of benefits" I can continue paying for that level. This definitely allowed me to take out a really good policy shortly before age 60. It's also very flexible as to how I can use the money (still have to satisfy that "2 out of 5" restriction).

As I have no children, I had no wish for one of those hybrid policies - although one person tried to push one on me. Actually, a question for you all - is there ever a reason to take out a hybrid policy if you do NOT have any heirs, spouses, etc. to whom you want to leave money? (My estate is mostly going to charity).

My policy definitely gives me peace of mind. I will likely need it at some point, and I am glad I can tell my nieces that I have made provision for my needing care, and that (I think!) taken together with my other resources, they can help me find a really nice facility.

 

[Huston55]

Capjak-thx for the link

#3 is interesting; puts numbers to the commonly heard advice & is likely the reason many here don’t buy LTCi. Although, the naked $# w/o corresponding expenses is marginally useful.

#7 is something I investigated doing for my (now deceased) DM but, she couldn’t pass underwriting & I just missed qualifying to buy her a group policy thru work. Still turned out OK financially.

I followed the links to read more about ‘hybrid ‘ policies but, there wasn’t much there.

 

[MrLoco]

Here's the thing about LTC insurance. It is a hedge. You may never need it, but if you do you will be glad you have it. Just like any insurance.
The thing I find interesting is this notion of "self insuring." Many have probably paid off their mortgage. Do you still carry homeowner's insurance? Why? (Putting aside for a moment the requirement that one combine auto and HO insurance to qualify for an umbrella policy or HO liability insurance).Just referencing the cost to rebuild, if you are worth $4M and it would cost $250,000 to rebuild your home if it burned to the ground....why not self-insure? You can afford it right? Lol ... maybe some do, but the HO insurance is a hedge if God forbid a fire does take your home. Same with LTC insurance.


LTC insurance is like most other insurance. If the premiums become too high; you can adjust the benefits or cancel the policy. And your premiums were not "wasted." You were covered for the time period you had the coverage. People in their 60's become disabled, have strokes, paralysis, etc.



My wife and I purchased a traditional LTC policy last year. The tipping point for us was the fact that our policy qualifies as a "partnership program."
The LTC Partnership Program is a Federally supported, state operated initiative that allows individuals who purchase a qualified LTC policy to protect a portion of their assets that they would typically need to spend down prior to qualifying for Medicaid coverage. So basically the state is saying "you were savvy enough to purchase a LTC policy so any amount the policy pays out you do not have to declare if and when applying for Medicaid at a future date." This would allow us to shield about $750,000 to go to our heirs. And the policy is portable within 48 states if we ever relocate. This was important to us if financial Armageddon strikes at a future date. If leaving a legacy to heirs is not an important consideration, then perhaps a LTC policy is not for you. Just spend down assets and apply for Medicaid.


Lastly, I think many would be surprised since 50% of applicants are denied coverage right off the bat. As someone else mentioned the sweet spot to apply is about 57-63. Beyond 63 the initial premiums are usually very high for decent coverage. Anyway my 2 cents.

 

[bmcgonig]

It's not quite the same as house insurance.

With house insurance I can insure a million for approx $1000/yr. About 0.1%. LTC would be about 100k for $1000/yr. Rough numbers but an order of magnitude difference in the price per $.

You're not sure if you're going to get paid or not with LTC. Probably will but with some of the stories here like Nords told it's less of a certainty than house insurance. Definitely more difficult than showing the agent a burnt down house.

You don't know how much your premium will increase. And it can go up considerably. House insurance will also but more in line with expectations.

Not to say it's not worth it. It's just a must different animal.

 

[bmcgonig]

Also some here say, somewhat jokingly perhaps, that they'll use the gun or the pills when the time comes. Trouble is if you have dementia you may not know you do. From what I've read 50% of dementia patients don't know. My mom has it. She has no clue. When they talked about it on TV she says thinks like "those poor people".

Also.. If you get a stroke you probably won't have access to a gun or whatever anymore. Maybe you will.. But maybe you won't. You certainly wont be able to park yourself on the beach with a bottle of Jack and wait for the tide to come in.

 

[Midpack]

You saw this related thread I assume?

http://www.early-retirement.org/forums/f38/poll-do-you-have-long-term-care-insurance-93406.html

 

[youbet]

Both my wife and I carry LTC and have for some time now. Probably bought it too early but do have policies that would be hard to get today. Yes premiums have gone up relentlessly. But we have a lot of family experiences where large amounts of hard earned wealth have been destroyed by paying for nursing care. Assets we would rather leave to our heirs. In my case family history of debilitating strokes at early ages are a far bigger influence than end of life nursing care. Mathematically it would be easier to self insure my home than to take on the potential unknown risk of 5 to 15 years of nursing care.

Wow, you did get a great policy since it would fully cover 15 years of nursing care! Would you mind sharing some details about it as far as how long ago you got it and the approx premiums? I'm pretty confident there is nothing like that available today.

Edit: just came across your answer to this in an earlier post, so..... never mind.

 

[youbet]

If leaving a legacy to heirs is not an important consideration, then perhaps a LTC policy is not for you. Just spend down assets and apply for Medicaid.

This would apply to the folks who are in that middle ground situation of having some resources to spend on LTC but not enough to self-insure. For folks who can self-insure or for folks who will quickly have their minimal assets depleted and be on Medicaid, it really doesn't apply. Of course, for the self-insuring folks, the inheritance would be smaller by (cost of LTC - premiums paid over the years and the earnings those premiums would have received).

Also, most of us don't have access to "partnership policies." They sound good, especially for middle ground people. But only a few states offer them.

 

[Gearhead Jim]

From Clark Howard: #7 is interesting....

Here are some guidelines to follow if you are thinking of buying LTC insurance

1) You only want to consider companies that have been rated ‘A++’ (by A.M. Best), which means they are of the highest financial strength. It also means that they won’t jack up the rates after a few years and they will cover you for either in-home care, nursing home care, or assisted living.

...

I don't see where the financial strength of the company guarantees against rate increases. Sure, a strong company can take some losses for a while, but if they are losing money and can raise the rates, they will.

The more significant factor is how accurately their actuaries have predicted the lapse and loss rates. You could even make an argument that the lower the rates at inception, the greater the chance of big increases later on. But I would not make that argument, because lots of other factors (like underwriting standards) can also influence the future rates.

A strong company can better afford to cover to cover "extra" things like in home care or assisted living, but the determining factor will be the contract.
If something is included in the contract, you can expect it to be covered. If not, insurance companies are not in the habit of giving away freebies.

 

[FIREHAPPY]

My wife and I are currently managing my in-laws care and financial needs. It's a full time job. Fortunately, the in-laws have a Long Term Care Policy that will reimburse a portion of the total cost of care. One parent is in memory care, the other parent is in assisted living. The policy reimbursement is capped and we should reach final policy payout in the next 18 months.

In case you haven't had a chance to check, assisted living and/or memory care is crazy expensive. We visited more than a dozen facilities in Atlanta with the cheapest at $8500 per month up to $15,000 per month for both parents. Keep in mind the fees these facilities charge do not include the cost of prescription medicine and/or many other costs of living. Also, as a fyi, we also utilized in-home care for about 3 years prior to moving into assisted living/memory care. 8 hours of care, 5 days a week runs about $36-40k per year.

The policy has been very helpful but i don't think I will purchase a policy for myself. If you are considering a long term care policy, you should read through the contract VERY carefully. You don't just call the insurance company and tell them you need assistance. You have to meet fairly strict requirements (ADLs) in order for the insurance firm to pay.

I plan to self-insure by keeping a hefty nest egg to fund these expenses.

 

[powerplay]

Sadly, I learned that Rich_in_Tampa/Rich_by_the_Bay passed away in January of this year. He was 69.

Sad news, I really enjoyed his posts. RIP

 

[REWahoo]

Oh no! That is very sad!

Sad news indeed. Thanks for letting us know.

I was really bummed out after learning Rich had died. He was one of the most knowledgeable, supportive, and helpful contributors on this forum for many years.

 

[capjak]

I don't see where the financial strength of the company guarantees against rate increases. Sure, a strong company can take some losses for a while, but if they are losing money and can raise the rates, they will.

The more significant factor is how accurately their actuaries have predicted the lapse and loss rates. You could even make an argument that the lower the rates at inception, the greater the chance of big increases later on. But I would not make that argument, because lots of other factors (like underwriting standards) can also influence the future rates.

A strong company can better afford to cover to cover "extra" things like in home care or assisted living, but the determining factor will be the contract.
If something is included in the contract, you can expect it to be covered. If not, insurance companies are not in the habit of giving away freebies.

Yes I do not know why Clark Howard stated this but it is correct that based on my research all of the major policies will provide benefits home care, assisted living facilities, adult day care centers, nursing facilities fairly standard. The major ones are A+ rated (Mass Mutual, Mutual of O,)have not requested rate increases from the respective state insurance regulatory boards for several years ( they have to get approval to increase rates and have to have a reason to get it granted from the states board, is my understanding which has significantly reduced constant increase for contract issued more recently) and the One America (AM Best A+) is single premium guaranteed to never increase.