Is it enough? Is it ever enough?

[ncbill]

I am planning to buy LTCi because I got to see my mom in LTC care situations for ~15 years and would rather be dead tomorrow than have to be a resident in any non-CCRC, standalone skilled nursing facility given my experience with several of those during the course of her illness.

So the LTCi is to enable me remain at home or in assisted living in a private room as long as possibly versus having to live in a semi-private room in a standalone SNF.

 

[Lsbcal]

I am planning to buy LTCi because I got to see my mom in LTC care situations for ~15 years and would rather be dead tomorrow than have to be a resident in any non-CCRC, standalone skilled nursing facility given my experience with several of those during the course of her illness.

So the LTCi is to enable me remain at home or in assisted living in a private room as long as possibly versus having to live in a semi-private room in a standalone SNF.

How much might it cost to self insure?

 

[COcheesehead]

I am planning to buy LTCi because I got to see my mom in LTC care situations for ~15 years and would rather be dead tomorrow than have to be a resident in any non-CCRC, standalone skilled nursing facility given my experience with several of those during the course of her illness.

So the LTCi is to enable me remain at home or in assisted living in a private room as long as possibly versus having to live in a semi-private room in a standalone SNF.

I priced it and the costs vs what you get are pretty ridiculous.

 

[Koolau]

How much might it cost to self insure?

A tough question because of inflation and different medical requirements once admitted. But as a starting point, I've heard of monthly payments from $8K to 12K. (In Hawaii, we're in the upper range of that.) We've often thought we might as well return to the midwest if we must be confined to a nursing home as it would save us a lot of money.

I must say, at THESE costs, our LTC insurance still won't cover us completely IIRC. AND the policy lasts for 3 or 4 years (I forget.)

I just hope God takes me in my sleep! Perfect (and a lot cheeper )

 

[Sunset]

I am planning to buy LTCi because I got to see my mom in LTC care situations for ~15 years and would rather be dead tomorrow than have to be a resident in any non-CCRC, standalone skilled nursing facility given my experience with several of those during the course of her illness.

So the LTCi is to enable me remain at home or in assisted living in a private room as long as possibly versus having to live in a semi-private room in a standalone SNF.

Only if they pay... which is the difficult slog in some cases, who is going to push for it months on end ?

That turns me off LTCi.

 

[harllee]

I have started another thread about what a hard time I am having in making a claim for my 90 year old mother's LTC Insurance. Many of these companies make it impossible to get a claim paid.

 

[Bryan Barnfellow]

This is a timely and interesting thread, given that we are now in the midst of planning for old age/end of life scenarios. As usual, Switzerland is different than the US w/ respect to health care and I have not found any specific LTC insurance offers here.

We pay our current bills with a combination of US and Swiss social security, a small Swiss pension, a substantial 2-life annuity, and dividend income from a focused equities portfolio. We also each have a Roth plus I have a TIRA, all invested in Vanguard mutual funds, and have so far just let these grow without taking any distributions.

Our (I'm 68 soon, my wife is 71) "plan" (for want of a better term) is to save the Roths/TIRA for use for LTC costs. In Switzerland everyone pays individually for comprehensive health care insurance for their entire lives, starting at age 21. If you run of money at any time the local (Canton) government can step in to help make up any shortfalls in your insurance premiums. The health insurance companies here are all non-profits and regulated fairly heavily by both Federal and local government, which can limit premium increases and which specifies a countrywide uniform menu of medical services and medicines.

Long term care here is very different from in the US. Most senior people prefer "at home" care (generally below the level of highly skilled nursing or serious memory care) by specialized nonprofits, who visit you to perform services, and are paid for by your health insurance.

After that there are skilled nursing and LTC facilities also, but your living costs (room/board and extra services) at these are not covered. These are on a par, but a bit more expensive, than similar US facilities.

So, we expect to have about 1.2M CHF-Swiss Francs (=$1.34M) in that bucket by our mid-80s; this includes re-investing RMDs. The Canton can ultimately step in and pay for everything but, like with US Medicaid, you need to turn over your remaining assets. That said, nobody is ever left without needed LTC.

The LTC portfolio currently stands at about 500K CHF ($550K), so we are projecting about 8%/year average annual cumulative growth. Our actual experience over the life of the portfolio is about 10-12%. So, we hope we are being conservative.

-BB

 

[Midpack]

I think there is probably always a concern of "is there enough". The best you can do is know your expenses well, utilize as many calculators (Firecalc is a good one) as you can, and do diligent research on what your income streams are/will be, as accurately as you can.

It is the unknown that often causes the most worry. Plan as best you can, set a budget that allows for some fun, and be willing to adjust as necessary throughout the years.

+1. That’s the best answer. There will always be quite a few unknowns - so there is no calculator or methodology that guarantees future success. Calculators like FIRECALC can show you historical options, from there you have to choose all your future assumptions and what level of risk you can live with. And reevaluate and adjust if necessary every five years or less. The “answers” can vary substantially depending on your assumptions, hence the worry.

 

[Time2]

Putting this LTC idea into perspective, we on this group have concerns about something most Americans will never have the assets to even think about. I.e LTC.


"a new study from GOBankingRates shows just how far behind the oldest Americans have fallen. Roughly 72% of the study's respondents ages 65 and up have $200,000 or less to work with — much less, in most cases."
https://finance.yahoo.com/news/retire-200k-less-110046677.html



Another quote from Survey of Consumer Finances (SCF).


"In 2019, about 50% of households reported any savings in retirement accounts. Twenty-one percent had saved more than $100,000, and 7% had more than $500,000."
https://usafacts.org/data-projects/retirement-savings

 

[gauss]

+1 Agreed plenty of folks get by without using LTC.

-gauss

 

[harllee]

Most people in the US who have to go into a nursing home qualify for Medicaid and have to find a place that accepts Medicaid. I am glad my mother has funds to pay her own way (even though her LTC insurance is giving me the run around). As for myself, I do not ever want to be in a Medicaid facility so I am going in a CCRC.

 

[athena53]

Most people in the US who have to go into a nursing home qualify for Medicaid and have to find a place that accepts Medicaid. I am glad my mother has funds to pay her own way (even though her LTC insurance is giving me the run around). As for myself, I do not ever want to be in a Medicaid facility so I am going in a CCRC.

Most LTC facilities (other than CCRCs) accept a % of Medicaid residents because it's required if they want the more lucrative MediCARE rehab business, which pays them pretty well. (Example: If, heaven forbid, I were to need knee replacements Medicare would pay for post-surgery rehab because I live alone and would need that support.) I think the problems occur when a big % of residents are Medicaid- I remember headlines in Boston a few years ago when places were closing down because they couldn't stay afloat on what Medicaid paid. That also meant, of course, that a lot of old, sick people had to be moved elsewhere.

I'm not ready to gamble on a CCRC coming through, either (see other threads on this topic). If the time comes that I need LTC, I want to be able to choose when and where based on conditions at the time. The funds will be there and I know I'll have the logistical support of DS and DDIL.

 

[NoiseBoy]

Most LTC facilities (other than CCRCs) accept a % of Medicaid residents because it's required if they want the more lucrative MediCARE rehab business, which pays them pretty well.

This is true only if you define LTC as "skilled nursing care." But this is not true if you define LTC as assisted living and/or memory care. Only the "nursing homes" in my area accept Medicaid patients. All of the CCRC and Assisted Living + Memory Care facilities are private pay only. Note that the trend is towards the later design. I'm not aware of any new, private CCRC facilities that include skilled nursing care opening in my area. The waiting lists are long, and the fees are expensive for the two that we do have.

 

[Koolau]

+1 Agreed plenty of folks get by without using LTC.

-gauss

I think that's true. It probably w*rks fairly well for those with lower assets and those with a lot of assets. The "middle" (whatever that is) are the ones that probably could use LTCi.

 

[athena53]

This is true only if you define LTC as "skilled nursing care." But this is not true if you define LTC as assisted living and/or memory care. Only the "nursing homes" in my area accept Medicaid patients. All of the CCRC and Assisted Living + Memory Care facilities are private pay only.

I agree- I was using the more restrictive definition. It's sad to see posts on FB touting new Assisted Living and CCRC facilities in my area getting responses asking if they take Medicaid. No, and that's why they have better chance of remaining solvent.

 

[Lsbcal]

I think that's true. It probably w*rks fairly well for those with lower assets and those with a lot of assets. The "middle" (whatever that is) are the ones that probably could use LTCi.

So how much qualifies as a lot of assets?

 

[NoiseBoy]

It's sad to see posts on FB touting new Assisted Living and CCRC facilities in my area getting responses asking if they take Medicaid. No, and that's why they have a better chance of remaining solvent.

Agreed. The private pay places are not necessarily very forthcoming on what will happen to dear old mom or dad if they run out money either. I learned that it's best to assume that you will be asked to leave if you can't pay your bill. There were a few conversations around the Sunday brunch table, when I ate with Dad, about that kind of situation.

 

[gauss]

It's been my personal experience that most people who end up in LTC have "an incident" such as a fall or something where they visit the hospital and get admitted. As part of the discharge planning process often the children are summoned and told that Mom/Dad shouldn't/can't live alone anywhere and they will help find a place.

That being said I am not even 60 y.o. yet. None of our many aunts/uncles in their 80s live in LTC. They are either childless and live alone or they they are married and live with their spouse.

So from my pov, as I mentioned before, not everyone ends up in LTC.

-gauss

 

[harllee]

Agreed. The private pay places are not necessarily very forthcoming on what will happen to dear old mom or dad if they run out money either. I learned that it's best to assume that you will be asked to leave if you can't pay your bill. There were a few conversations around the Sunday brunch table, when I ate with Dad, about that kind of situation.

The CCRC I am moving into (it is a non profit) has a trust fund set up to pay the costs of any resident who runs out of money. The fund has millions, many people leave bequests to it. I was told there were currently 2 ladies over 100 for which the trust fund is paying their fees.

 

[harllee]

It's been my personal experience that most people who end up in LTC have "an incident" such as a fall or something where they visit the hospital and get admitted. As part of the discharge planning process often the children are summoned and told that Mom/Dad shouldn't/can't live alone anywhere and they will help find a place.

That being said I am not even 60 y.o. yet. None of our many aunts/uncles in their 80s live in LTC. They are either childless and live alone or they they are married and live with their spouse.

So from my pov, as I mentioned before, not everyone ends up in LTC.

-gauss

I am so grateful that my 90 year old mom lives in a nice CCRC. She was living in an independent living apartment until recently, then she fell, went to hospital and was discharged directly to an assisted living apt in her CCRC. Now it looks like she will have to move into skilled nursing at her CCRC and I am battling with her LTC insurance company, I have a separate thread on that disaster.

 

[Koolau]

So how much qualifies as a lot of assets?

I wish I knew. Knowing that would help decide if one should self insure or pay the LTCi companies.

 

[New Thinking]

Here is one way to hedge

This is an important topic as OP and others are hesitant to spend due to the risk of late-in-life healthcare expenses Here's how I wrote about this topic recently.

The 2021 Genworth survey indicates median cost of $94,900 for semi-private room in a skilled nursing facility. Having five years of payments should cover most of the risk.

Delaying Social Security is a great hedge to start. A high earner just retiring might get, say $42,000 at age 70 in today's dollars. So, the gap is $52,900 ($94,900-$42,000). Over five years, the additional funds needed are thus $264,500 ($52,900 x 5) in today's dollars. Many wealthier retirees have these funds in home equity that can be tapped by selling house or using a reverse mortgage or HELOC.

But another way to earmark funds to mitigate the risk is by using mental accounting, an IRA, and an equity index fund. Late-in-life healthcare costs are just that: late in life and thus typically 20 or 30 years down the road. Use this to our advantage. If we apply a 4% inflation rate to the $264,500 additional funds needed, the approximate shortfall after SS is $705,000 in 25 years. Over 25 years with buy and hold of a Total Market Index Fund, it's relatively prudent to assume an average return of 7%. As such, we can discount the $705,000 liability back to today at a 7% rate. This leaves us with a liability gap of just $130,000 in today's dollars.

Transfer the $130,000 to a separate IRA and earmark it for late-in-life healthcare costs and consider investing it a Total Market Index Fund. Under current tax law, the future withdrawals will be taxed at ordinary income rates but much of the healthcare costs will be deductible as well to offset any taxes due. If you need it, it's there. If not (which will happen 80% of the time for those with at least "some college"), the IRA goes to the children or charity.

 

[Lsbcal]

All the worry about LTC costs points to a need to take some moderate risks with the overall portfolio in retirement. For us that is a 60/40 portfolio with the bond part heavily weighted to inflation indexed products with good real returns. Trying to get by with too heavy a fixed income portfolio could be a problem.

 

[SecondCor521]

If not (which will happen 80% of the time for those with at least "some college"), the IRA goes to the children or charity.

The rest of what you wrote seems reasonable. However, you may have the odds backwards here. Or perhaps I misunderstand.

People with "some college" or more are more likely to have the resources (intellectual, social, and financial) to avoid early catastrophic death and end up in their 80s or 90s with a host of accumulated issues that eventually require long term care. An example is my father who is 87, has a doctoral degree, and now lives in AL with dementia.

People without those resources are more likely to die earlier due to wearing their bodies out or not having the resources to fix issues that crop up in one's 50s and 60s. An example is one of my high school friends who was a college dropout, worked in concrete and fencing for his career, probably drank too much alcohol, and died suddenly in his early 50s after a liver transplant.

Obviously those are just two anecdotes, but from my experience the broader pattern holds. If you have a cite or argument for the 80% I'd be interested in it. It's not a big deal though, because the larger idea that $130K in an account somewhere is enough to deal with most cases of LTC seems reasonable and also achievable for many (at least among this board demographic).

 

[Koolau]

The rest of what you wrote seems reasonable. However, you may have the odds backwards here. Or perhaps I misunderstand.

People with "some college" or more are more likely to have the resources (intellectual, social, and financial) to avoid early catastrophic death and end up in their 80s or 90s with a host of accumulated issues that eventually require long term care. An example is my father who is 87, has a doctoral degree, and now lives in AL with dementia.

People without those resources are more likely to die earlier due to wearing their bodies out or not having the resources to fix issues that crop up in one's 50s and 60s. An example is one of my high school friends who was a college dropout, worked in concrete and fencing for his career, probably drank too much alcohol, and died suddenly in his early 50s after a liver transplant.

Obviously those are just two anecdotes, but from my experience the broader pattern holds. If you have a cite or argument for the 80% I'd be interested in it. It's not a big deal though, because the larger idea that $130K in an account somewhere is enough to deal with most cases of LTC seems reasonable and also achievable for many (at least among this board demographic).

I assumed that my Condo would be enough to take care of DW and me. A back of the envelope was something like $600K condo/$12K per month per person = 50 months for 2 people = 25 months in skilled care for both DW and me. That's probably enough "on average" but my dad spent about 5 months and my mom spent almost 3 years in a nursing home. So, the condo is the first line of defense, but I do need something else (which I handled with LTCi years before I ever acquired the condo.) Hope I never need a day in skilled care. I love to waste insurance!