Long Term Care Insurance

[Montecfo]

We do not have LTCI. With the pricing, unknown rate increases and unlikelihood both (or even either) will need, self insuring or using life insurance seem preferable at least to my eye.

 

[imoldernu]

Yesterday I received a letter from the company stating that I now had 3 choicesay the increased premium, or pay lesser premium amounts, with the understanding that smaller payments would mean fewer medical services.

I think the world has left me behind. Our LTC policy is based on a daily allowed amount. Are there policies that cover specific services?

Our policy, bought many, many year ago covers just $100/day. At the time, a reasonable amount, but even today, with the costs for nursing home or Alzheimer's care in our CCRC @ about $72K, still covers enough to take the sting off.

We did have a very small, less than 10% increase many years ago, but that was with a change that allowed for inhome care, and not necessarily institutional care.

 

[blueskyk]

Our policy has a list of things that are covered: Skilled Intermediate or Custodial Nursing Care Services, Home Health Care Services, Adult Day Care Services and Respite Care Services.

The limiting factor is the maximum daily amount, no matter what you spend it on. This thread prompted me to actually get out the policy and review it (instead of winging it). The inflation benefit is actually 5% per year for a period of 20 years. Since we have had the policy for 13 years, the max daily benefit is now $283 per person. So, the inflation benefit does not go on indefinitely (bummer). We still have a max lifetime benefit of $550K so I suppose at the higher rate of payout, you reach the max lifetime benefit more quickly.


All that being said, we are both only 64. This is a group policy we got from megacorp and then continued after I retired. So, I'm not really sure what future premium increases might look like. Or when they might show up. Whenever that happens, we'll reassess.

My fondness for the LTCI has little to do with the statistics of the likelihood of using it. Our life experiences are substantial factors in how we see risk. My DH1 was profoundly disabled at age 23 and required assisted living services for decades (after caring for him at home for nearly a decade). So, I lost any innocence that the bizarre (and expensive) can't happen. And I became very knowledgeable about how incredibly expensive it all is. Of course, we didn't have any LTCI at that age.


On the other hand, we don't carry any Umbrella insurance which many feel is important for protecting assets. Our total assets are just under $1M (house + retirement accounts) and my sister (who is an attorney) advised me it makes one a more attractive target for lawsuits.


If we could all predict the future, I suppose we would all know what types (and limits) of insurance would be the best investments. Instead, we make our best guess based on our life experience and the counsel of those we deem wise and choose as wisely as we can (and can afford).

 

[DeborahB]

I’m gambling and self-insuring. My father benefited from LTC insurance for a few months off and on, my mother never used it. I’d rather die than be in a LTC facility, mostly. I don’t believe in living if my quality of life is terrible. I’ve seen good and bad assisted living facilities... I plan to die at home. If I become seriously ill I will refuse treatment other than palliative care. Without going into all the pros and cons, if I reach the end of contentment with my life, I will make sure it ends.

 

[blueskyk]

If I become seriously ill I will refuse treatment other than palliative care.

I absolutely agree and this is my plan as well. I just finished reading BJ Miller's (palliative care physician) book, A Beginner's Guide to the End; Practical Advice for Living Life and Facing Death and thought it was excellent. Often we make choices that unwittingly prolong our death and the expense associated with it.

 

[Bongleur]

https://www.kitces.com/blog/how-to-handle-a-long-term-care-insurance-rate-increase

 

[Bongleur]

Who cares if there is a lawsuit if the insurance company is paying? 5% me pay, 10% they pay -- I'll take the 10% door, Monty. What I'd like to know is if your insurance amount is a required disclosure. Logically none of your assets should be disclosed, since that has nothing to do with a just settlement amount; it should not be allowed to affect what they ask for. Then the judge might reduce it based on assets.

 

[Rianne]

I don’t believe in living if my quality of life is terrible. I’ve seen good and bad assisted living facilities... I plan to die at home. If I become seriously ill I will refuse treatment other than palliative care. Without going into all the pros and cons, if I reach the end of contentment with my life, I will make sure it ends.

+1

 

[Z3Dreamer]

DW and I have had LTC insurance for at least 25 years (My quicken file only goes back to 1995). Back in 1995 we were paying about $250 total - about $125 each for, I believe, 5 years at the going rate. Each year, I get the option of paying the same amount or paying the rate for a 5% increase in daily rate. For example, the beginning rate may have been $100 a day for Skilled Nursing. Next year I could have paid the same premium or pay an increased premium for $105 a day. That increased premium is more than a 5% increase. Some years a 7% increase in premium for a 5% increase in coverage. If you don't pay for the 5% increase every other year, they lock your policy or call you names or something bad.

Recently, we had an increase without any increase in coverage. Due to all the reasons you guys listed.

Well the premiums for DW and I are now $2,200 a year, total. That is $1,100 each. Insurance was through Prudential who has passed it off to some wind-down specialist. The association that sponsors this has hundreds of thousands of members and assures us that our coverage is good.

Coverage is something like $285 a day for maybe 5 years or so. Looked at it pretty thoroughly last year. Don't feel like getting the policy out. I believe there is a 90 day waiting period. After that I have $500,000 of coverage. Plus home health care, etc.

Total paid in the last 25 years is probably in the $30,000 range. I think being in our early 60's with this kind of coverage is a good thing.

Oh, every few years I call the local Skilled Nursing Facility to make sure I have close to their daily rate in coverage. I do. Or maybe I have 90% coverage. Anyway, it was close enough.

 

[Teacher Terry]

Totally agree Deborah.

 

[RobbieB]

After trying (and failing) to deal with Pop's Genworth insurance I've decided that I would rather die out in the street and be eaten by rats.

Odds are you won't last 6 months in the nursing home anyway.

 

[joeea]

After trying (and failing) to deal with Pop's Genworth insurance I've decided that I would rather die out in the street and be eaten by rats.

Sounds like a plan.

 

[marko]

Odds are you won't last 6 months in the nursing home anyway.

+1 "Do you feel lucky, punk?"

There are the odds that you'll even need nursing home care and then there are the odds that you'll not be there long if you do. Remember that LTC pays for NH care, not assisted living.

You'll always hear the story about the lady who was in NH care for 14 years, but IIRC, the average NH stay is about 4 months or so before the reaper arrives. Four or six month is expensive but not something that would put most of us here in bankruptcy court. (Heck my portfolio has lost more than that amount in the past week)

It is a gamble? Sure, but so is getting out of bed each day. If folks here weren't among those playing odds, we'd all be 100% invested in passbook interest.

My other contention is that a $120K NH cost is seldom additive to your current expenses. The healthy spouse's life also changes dramatically along with the accompanying lifestyle expenses; no more expensive travel, eating out, two cars, etc. Instead the healthy spouse spends most of their time at the NH (I've seen this firsthand); one's additive cost could be more like $50K a year.

 

[joeea]

The average stay in a nursing home is 835 days, according to the National Care Planning Council.

 

[COcheesehead]

The average stay in a nursing home is 835 days, according to the National Care Planning Council.

My FIL is in the middle of year 3 at a facility. Sound body, not so sound mind. He could be there for years yet. The policy he has covers up to 5 years. The family is glad he has it, but there is also an eye to the future. His assets will then be called into play.

 

[cnocmmz]

Hi rtroxel
I am not a big fan of the LTC insurance; however, DW has one from her company and she is only paying $50.00 monthly for about 140.00 a day of service.
I on the other hand took out an annuity (I know most of you are not a fan) with a LTC rider which essentially a doubler for the 5 years you would use it. It would not be a whole lot of funds but it is still paying you your monthly ratio and it would double for the long term care. so, for instance if I pulled the trigger on my annuity payments at 70 yrs old my normal payout annually would be about 22K and then LTC would be 44K. Now, full disclosure I started this annuity 10 years ago. Just a thought?

 

[Dalmore]

I had similar issues with LTC premiums going up every year, when initially, they weren't supposed to change. I ended up cancelling it and decided to self-insure for DW and myself. My view is this: If I self insure, I can use the money for any event that I want to, and the money is readily available. Using LTC, you are subject to their review regarding what is covered and what the daily cap is. My MIL/FIL recently had to use theirs, and it only covered 60% of what they were spending (auditor didn't think they needed the full time care they were getting even though both had broken hips at the time). They also have a maximum benefit allowed.

I cancelled my LTC, and started putting that premium into a "savings" account to be used as needed, when the time comes. Since I don't count my home in my FIRE assets, and we will likely be near the end of our retirement, if we run out of funds due to LTC, we will leverage our house to fill the gap.

 

[Rianne]

Revocable or Irrevocable Trust

I borrowed this from another thread ^ and find it good advice regarding LTC for our situation. According to all the calculators for our situation, LTC should be well funded for our needs.



"We also met MIL's FA. He doesn't think that the irrevocable trust is a good idea. He claims that heirs to funds in the revocable trust have the benefit of a step-up basis and irrevocable trusts do not. MIL's basis is only about 40% of her portfolio value. He claims that there is no need to shield assets - that the investment portfolio and ss generates enough income to fund nursing home care without dipping into the principal."

 

[zippy2020]

....Using LTC, you are subject to their review regarding what is covered and what the daily cap is. My MIL/FIL recently had to use theirs, and it only covered 60% of what they were spending

Yes, but if someone handed you a billing for $100,000, and said "But your responsibility for paying is only $40K", you would probably think you've gotten off pretty easy.

Nobody offers to pay 60% of your mortgage. Or your car loan. (if they do, I want to meet them, ASAP!)

People seem to have forgotten the principle of risk applies equally to insurance as well as investing. Insurance is NOT to eliminate all your financial risk. It is to MITIGATE it.

That is the cost-versus-benefit ratio which every individual has to weigh for themselves on a periodic, ongoing basis. You might need more homeowner's insurance than you did 15 yrs ago. Or change jobs and have a higher disability insurance risk.

Every time you buy a car, the carrier reassesses your premium. They are estimating your new risk profile.

LTCi is simply another part of your risk profile. It has never been recommended for people with substantial liquid assets or high net worth (although I know several who have bought it anyway).

We bought it because if one of us needed Skilled Care for any substantial length of time - that high morbidity risk, remember? - it would substantially reduce the spouse's ability to live comfortably or eventually pay for her/his care as a second patient needing Skilled Care.

YMMV. These kinds of discussions need to show all sides, because many people like to ignore the fact their risk profile changes and usually increases, the older they get.

For some, their risk profile will decrease. (Lucky you!) Barring accidents or unexpected illnesses, they may indeed have enough financial assets to handle the cost of home healthcare (the fastest in cost increases over the last 5 yrs, according to Medicare) or Skilled Care Nursing, 10-20 years from now. If that's the case for some here, then more power to them.

 

[Dalmore]

Yes, but if someone handed you a billing for $100,000, and said "But your responsibility for paying is only $40K", you would probably think you've gotten off pretty easy.

I guess it kind of depends on how much you have paid them prior to only having to pay for the $40K. If your premiums added up to $80K over the years, and they are only paying $60K, you'd feel pretty screwed over.

I get the whole risk assessment/mitigation concept. But when you go into the contract being told the premiums will never go up, and then they do, that isn't a re-assessment of your risk. It is changing the rules to benefit the insurer.

The other point I was trying to make was that even though they cover "upto" $xxx a day, that doesn't mean they will pay that. They evaluate what they think you need and how much coverage you will actually get. It is a bit of an eye opener when you are covered for $200/day, spend $300/day for care, and they determine you are only eligible for reimbursement of $125/day.

 

[easysurfer]

Just got a "Heads I lose, Tails I lose" type letter from my LTC Insurer .

In other words, the options are I pay more in yearly premiums or pay same premium to get lower coverage. No wonder LTC coverage can rub folks the wrong way .

 

[pb4uski]

This is a big reason why I won't buy LTCI.

Just got a "Heads I lose, Tails I lose" type letter from my LTC Insurer .

In other words, the options are I pay more in yearly premiums or pay same premium to get lower coverage. No wonder LTC coverage can rub folks the wrong way .

 

[zippy2020]

I consider LTCi in the same vein as my other insurance: homeowners, earthquake, umbrella, auto. I may never need it - but the risk IMHO is worth mitigating.

I have average to above-average mortality risk but above-average morbidity risk. And I have a spouse to consider.

The oft-recommended "splitting of assets" would be insufficient where we live.

We have no trouble paying for our LTCi premiums; "forewarned is forearmed" in our case. As referenced in previous posts, we are conversant with our coverage guidelines and don't expect our policies to pay "everything".

If your risk tolerance is greater than ours, I think that's fine. Absolutely, more power to you.

Having LTCi is our choice, and we feel it is right for us.

One of the charities we contribute to is on behalf of seniors who have outlived their financial assets and are in SCN. It's an excellent cause....but we would rather not find ourselves joining them, at current market rates of $12,000/mo. with annual price increases of 2-4% compounded.

As mentioned in another forum's discussion, when my MIL moved to a full service seniorcare facility, she was assigned a dining table with three other residents. To say she was surprised to find that at 84 she was by far the youngest in the group, was putting it mildly! In fact, she was probably in the lower 50th percentile, LOL.

 

[timo2]

I just was reading an article about future LTC environment

"The big picture: Providing health care to aging Baby Boomers will strain Medicare’s finances, but the problem is even bigger than that.

Long-term care — the kind of services typically performed in a nursing home or by a home health aide — largely falls through the cracks of both public and private health insurance, saddling seniors and their families with financial and emotional burdens they often didn’t anticipate or plan for.

“It’s a problem nobody’s talking about,” said David Grabowski, a health policy professor at Harvard who studies long-term care. “Part of that’s just, these are hard issues to think about. Nobody wants to think about getting old and needing care. But part of it is that these are really hard problems.”

By the numbers: Estimates differ on the specifics, but they generally agree that somewhere between half and two-thirds of seniors will need at least some long-term care.

Today’s seniors will incur an average of $138,000 in long-term care bills, according to one federal study.
ven middle-class seniors are largely unable to cover those costs, according to a study published earlier this year, which Grabowski co-wrote.

https://www.axios.com/aging-baby-bo...9-d248-4d4b-815a-7d8d3c3cfab0.html?stream=top

 

[zippy2020]

Very true that seniors do not want to talk about it. I participate in another website that is mostly seniors and easily 85-90% of them are in the "I plan to die quickly in my own bed // cross my fingers I don't need any expensive care!" category.

Heck, my own family is like that. I've had better luck discussing my sister and BIL with their two grown kids, who are worried as heck about them because they have their own kids and retirement to fund as well.