consider the example previously given "a $425k house" vs "a potential $425k LTC liability" and "exactly the same premium per year". the HO is insuring against a potential loss during a given year, vs the LTC liability which is a lifetime maximum. they are clearly not directly comparable. (over a period of years, the potential HO liability is a multiple of the $425k.) i've no doubt that MetLife and John Hancock "will be around for a while", but there is considerable uncertainty of what the LTC coverage (adequacy) and premiums (and hence their affordability) might be in the future.
Long Term Care Options
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When crunching the numbers on LTC, you may want to see if the premiums are deductible for state tax purposes. They are in Ohio (subject to some limits).
Another thing--many states are participating in a relatively new program that allows those who have LTC policies to protect more of their savings. Example: If you buy a $250K LTC policy and wind up needing LTC, then when your personal assets are spent down to $250K you'll qualify for care under Medicaid. If you hadn't bought insurance, you'd have to spend your assets down to a very low level (a few thousand dollars, IIRC) before qualifying for Medicaid.
Another thing--many states are participating in a relatively new program that allows those who have LTC policies to protect more of their savings. Example: If you buy a $250K LTC policy and wind up needing LTC, then when your personal assets are spent down to $250K you'll qualify for care under Medicaid. If you hadn't bought insurance, you'd have to spend your assets down to a very low level (a few thousand dollars, IIRC) before qualifying for Medicaid.
Goonie
Thinks s/he gets paid by the post
I just purchased a LTC policy the other evening. I had been pondering, studying, and doing some research on LTC policies since last year, and finally made the decision to bite the bullet and get covered. It covers Home Health, Assisted Living, and Nursing Home. The HH does not necessarily have to be given by a nurse or other med professional, it can be given by a friend or relative, or anyone else that I choose.
There's a list of six or eight (I don't recall off hand and am too lazy to go look right now) normal daily tasks that one is supposed to be able to perform on their own. If there are at least 2, that I can't perform or perform properly, I qualify for assistance...whether HH, AL, or NH. My family physician is the one that makes the determination.
I got the 90 day lifetime elimination period, $150 a day, unlimited inflation adjustment with NO max, I was going to get the 5 year plan...but for the few dollars more I opted for the 10 year plan (even though the agent tried to talk me out of it....I wanted the added peace of mind). Also, if I collect on it at any time, whether for a few days or weeks, or even months or years, and then I get to be well enough to care for myself again, and I don't use it again for at least 180 days, the lifetime payout amount goes back up to the original amount.
I just recently turned 50, and my premium is $183 per month ($2196 per year). That may (or may not) seem like a lot to some folks, but it gives me peace of mind. And IMHO, that's what counts! Besides, as I posted somewhere else around here today, the money to pay for the premiums is covered by the money that I used to spend on eating lunch out everyday at w*rk, and money that was formerly used to purchase safety gear, and w*rk clothes...especially extreme weather clothing, and other equipment and materials that were needed for my former j*b, that the employer didn't provide.
I have a friend, and former co-w*rker, that is a couple years younger than I am, who had a motorcycle accident. He ended up in ICU for some time, then in a normal hospital room for a few weeks, then into a nursing home for a few months. He is now at home, and has home health care coming in, as well as some there for 24 hour assistance (fortunately that person is a relative and NOT charging a fee!). The good news is that he has very good medical insurance, so while the hospital and doctor bills are huge, insurance covers a big chunk of it. The bad news is he didn't have LTC, so all of the nursing home, assisted living, and home health bills are HIS!!!
I don't want to be in a situation where I'd have to liquidate my assets, and/or spend all of my retirement savings/investments to pay for costs of LTC, when I can have the LTC coverage for a relatively reasonable cost.
I'd rather have it and not need it, than need it and not have it!
There's a list of six or eight (I don't recall off hand and am too lazy to go look right now) normal daily tasks that one is supposed to be able to perform on their own. If there are at least 2, that I can't perform or perform properly, I qualify for assistance...whether HH, AL, or NH. My family physician is the one that makes the determination.
I got the 90 day lifetime elimination period, $150 a day, unlimited inflation adjustment with NO max, I was going to get the 5 year plan...but for the few dollars more I opted for the 10 year plan (even though the agent tried to talk me out of it....I wanted the added peace of mind). Also, if I collect on it at any time, whether for a few days or weeks, or even months or years, and then I get to be well enough to care for myself again, and I don't use it again for at least 180 days, the lifetime payout amount goes back up to the original amount.
I just recently turned 50, and my premium is $183 per month ($2196 per year). That may (or may not) seem like a lot to some folks, but it gives me peace of mind. And IMHO, that's what counts! Besides, as I posted somewhere else around here today, the money to pay for the premiums is covered by the money that I used to spend on eating lunch out everyday at w*rk, and money that was formerly used to purchase safety gear, and w*rk clothes...especially extreme weather clothing, and other equipment and materials that were needed for my former j*b, that the employer didn't provide.
I have a friend, and former co-w*rker, that is a couple years younger than I am, who had a motorcycle accident. He ended up in ICU for some time, then in a normal hospital room for a few weeks, then into a nursing home for a few months. He is now at home, and has home health care coming in, as well as some there for 24 hour assistance (fortunately that person is a relative and NOT charging a fee!). The good news is that he has very good medical insurance, so while the hospital and doctor bills are huge, insurance covers a big chunk of it. The bad news is he didn't have LTC, so all of the nursing home, assisted living, and home health bills are HIS!!!
I don't want to be in a situation where I'd have to liquidate my assets, and/or spend all of my retirement savings/investments to pay for costs of LTC, when I can have the LTC coverage for a relatively reasonable cost.
I'd rather have it and not need it, than need it and not have it!
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Goonie said:
So...... if I understand correctly, your premium for the first ten years will be $2196/yr and after that some unknown higher amount?
Did they give you some indication of what goes into figuring the higher amount ten years from now? Could it be a large increase?
mathjak107
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we looked at many policies and we are still deciding . it looks like the best values seem to be in the policies that pay the actual bills and you have to use proffessional care givers rather than friends or relatives. theres a big premium worked in to the policies that just give you a certain amount a day regardless of your bills.
chinaco said:Can you point to a source of information that outlines the rules for each state
The states that already offer protection of assets are: California, Connecticut, Indiana, Iowa, and
New York.
The 2005 Deficit Reduction Act re-opened the program to allow more states in. Here's a paper outlining this portion of the Act
http://www.cms.hhs.gov/DeficitReductionAct/Downloads/BackgrounderPartnership.pdf
There are limits to the amount of assets you can protect ths way, and te policy has the qualified by the state. It would probably be best to talk to a company representative of the policy you are considering to find out if your state has joined the program and if a particular policy qualifies. The Feds are doing this to encourage people to buy LTC policies, thereby reducing the strain on Medicaid. BTW, the "lookback" timeframe for Medicare eligibility was also increased (to 5 years, I think). When they need LTC, people sometimes transfer their assets to someone else (or a trust) in order to qualify for Medicaid. Now, such transfers need to occur more than 5 years in the past. That is, you give your money to your kids and the clock starts--in five years Medicaid will cover your LTC costs. That's a long time to wait for a bedpan. And, the coverage provided by Medicaid is nothing to crow about. "Welcome to the warehouse."
Rich_in_Tampa said:
Well, I'm not sure I made the right decision to purchase this LTC policy. We are revisiting this decision annually, and if we get to the point where we can self-insure, we might just abandon the policy. We pay around $2160 in coverage, annually, for two of us, ages 53, 56; my premiums have never gone up since I purchased 3 years ago, we have a daily benefit allowance of $150 per day with an automatic inflation adjustment, which has already kicked in, covers 5 years of LTC, and it's "sponsored" by the Federal government, my employer.
If my hard earned premiums are not used for the coverage, I'm happy for that, much the same way I'm happy if I never have to use my HO premiums -- for me, this brings me contentment and peace of mind in knowing that I've covered a risk where the gravity of the harm is very substantial. We're all creatures of our history and the historical experiences we have encountered, particularly as we deal with aging parents, has strongly dictated our policy coverage. I'm keeping an open mind too, and might get rid of this policy if events change dramatically.
Gearhead Jim
Full time employment: Posting here.
If the plan is like ours, the ten years refers to the amount of time they will pay benefits. In our case, we chose the 5 year plan. But it's actually 5 yrs x $235 per day, total $428,000. If we need it, we have the option to take a lesser amount for a longer period, the total amount available stays at $428k.youbet said:
Rich_by_the_Bay
Moderator Emeritus
The psychology of risk management is interesting. In our society, you can rarely go wrong by recommending insurance coverage for an accepted risk. And for those with sufficient funds and low tolerance for the risk in question, it may be the right decision.
But everyone has a threshhold for every risk -- even health, homeowners, life, disability. It emerges as either the price above which you are no longer willing to pay for protection or the rarity of the risk. For me, I have a lower threshhold for risks which might impact not only me but my loved ones.
Add to that the opportunity cost of the premiums, the real if low possibility that the insurer may not meet their obligations when the benefits come due, and inevitably changing lifestyles, needs, and government environment in which all this takes place.
No wonder we are all confused about LTC. It's one of those topics that just paralyzes me into indecision. I am not willing to rely on the insurance carriers to tell me what is best, but when I turn to expert recommendations I get more confused than ever. So, for now I'm just saving best I can.
But everyone has a threshhold for every risk -- even health, homeowners, life, disability. It emerges as either the price above which you are no longer willing to pay for protection or the rarity of the risk. For me, I have a lower threshhold for risks which might impact not only me but my loved ones.
Add to that the opportunity cost of the premiums, the real if low possibility that the insurer may not meet their obligations when the benefits come due, and inevitably changing lifestyles, needs, and government environment in which all this takes place.
No wonder we are all confused about LTC. It's one of those topics that just paralyzes me into indecision. I am not willing to rely on the insurance carriers to tell me what is best, but when I turn to expert recommendations I get more confused than ever. So, for now I'm just saving best I can.
Gearhead Jim
Full time employment: Posting here.
Very true.
For those who are still trying to decide, remember that there usually comes a point in your life when the insurance companies will no longer write you a policy because of health issues. Or the premiums will become too high to afford. We can't postpone the decision forever.
Something like that happened to my mother. We kids urged her to get LTC insurance for many years but she could never decide. Finally her health deteriorated to the point that she needed care but couldn't get insurance. So she just paid out of her own pocket, getting a lesser level of care than she wanted and always worrying about running out of money. When she died, she had enough money left for about 6 more months of her assisted living. That worked out ok for her, but her life would have been a living hell if she had lasted another two years.
If you have the resources to self-insure, that's fine; and a reasonable choice. But if you don't have the resources, then you're doing something similar to assuming a SWR of 6% will work out fine. It may in fact be fine, but the consquences of guessing wrong are pretty awful. None of us want to go back to work at Walmart when we're 80, we should be equally careful to avoid needing LTC that we can't afford.
For those who are still trying to decide, remember that there usually comes a point in your life when the insurance companies will no longer write you a policy because of health issues. Or the premiums will become too high to afford. We can't postpone the decision forever.
Something like that happened to my mother. We kids urged her to get LTC insurance for many years but she could never decide. Finally her health deteriorated to the point that she needed care but couldn't get insurance. So she just paid out of her own pocket, getting a lesser level of care than she wanted and always worrying about running out of money. When she died, she had enough money left for about 6 more months of her assisted living. That worked out ok for her, but her life would have been a living hell if she had lasted another two years.
If you have the resources to self-insure, that's fine; and a reasonable choice. But if you don't have the resources, then you're doing something similar to assuming a SWR of 6% will work out fine. It may in fact be fine, but the consquences of guessing wrong are pretty awful. None of us want to go back to work at Walmart when we're 80, we should be equally careful to avoid needing LTC that we can't afford.
mathjak107
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for life in new york we would need 400 a day at a cost of over 5,000 a year for the 2 of us. its alot of money
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Hopefully she would have picked a plan that covered assisted living, not just NH care. One of my school chums thought his MIL, who was slipping mentally, could move into a nice assisted living apartment where staff would remind her to take her meds and feed her supper every night and have her ltc pay for it. Nope! She couldn't get documentation that she was unable to perform some number of qualifying events. I think you have to be careful that your expectations and the policy details are in synch.Gearhead Jim said:
By this I assume it would have been a living hell due to being on medicaid. I agree. I cringe at the thought of DW being in a NH on medicaid and therefore my financial plans take that into account.
To me, joining a risk pool, via ltc insurance, to avoid medicaid or spousal impoverishment makes sense. I just wish the ltc industry would get cleaned up, simplified, regulated, etc., so purchasing a policy would be straight forward and easily understandable.
Most people who buy ltc insurance will pay in much more than they take out. That's how insurance works and I have no problem with that! For those that sadly need to collect, it could be a huge life benefit........if it works the way you expect, if it's actually there for you, if you weren't ripped off by a bag dragging salesperson, if the devil wasn't in the details, if the rules don't change and on and on. If buying ltc insurance was no more complicated than buying my home owner's policy, and if I could cover DW and myself for $200 a day inflation adjusted for ten years for an annual, can't be increased ever premium of $5K or $6K, I'd do it.
Perhaps the plan offered to federal employees needs to be offered to all citizens for the same price and under the same oversight and regulations?
Goonie
Thinks s/he gets paid by the post
youbet said:
No, the premium will remain at $183/month ($2196/year), unless they raise the premiums of all of their LTC policy holders in this state (IL). Thus far they have not had any rate increases for their LTC policies.
The 10 years that I referred to is the duration of actual coverage, not premium level for 10 years.
youbet said:
The plan offered to federal employees, retirees and their spouses is not the cheapest plan around. Many of my co-workers have opted out of the plan in favor of cheaper plans offering the same benefits. (Term life insurance for federal employees is generally not cheaper than term life insurance offerred in the private sector.) I've heard that the subscription rate has been a dissappointment to the U.S. Office of Personnel Management, which "regulates" the plan offerred by Metlife/John Hancock to federal employees.
My father was eligible for this insurance when it was first announced, so we went over all the literature.ChrisC said:
His John Hancock policy cost less for more benefits than the federal LTC program. So one of those programs is a bit more optimistic than the other and one of them is mispriced, but he decided not to switch.
Nords said:
I think the medical underwriting for the federal program is less stringent, which means that if you are in good health that you could get a better rate by not going through the federal program. Also, with the federal program men and women pay the same rate, which means women are getting a relatively better deal in the federal program, men get a worse deal.
In case some are wondering--the LTC insurance offered to Govt employees is entirely funded by premiums, no government money gets kicked in.
It seems, in fairness, that smokers should get a discount on LTC policies--I'd bet their claims history for these policies are lower than nonsmokers.
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
chinaco said:
Assisted living includes your living quarters and, frequently, some meals. That would be substantially different than paying for someone to come into your home and help you with daily living.
chinaco
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I ws visiting NH researching where to place my mother. Right now she is in an Adult day care (has bee for several years). I have noticed more than a few younger people getting care.
My advice, do not wait until you are older if you have networth to protect. Go ahead and get LTC insurance. If you were to have an accident or some debilitating illness strike you down... you could be ruined.
The solutions is not as simple as just getting LTC insurance. If you need this type of care for a long time... most policies have a cap. But it can buy time for someone (spouse) to plan and get past the lookback period in medicaid and not be ruined financially.
Admittedly, problems of this sort while younger are a small risk, but it does happen. And that is what insurance is about... mitigating the risk of financial loss.
My advice, do not wait until you are older if you have networth to protect. Go ahead and get LTC insurance. If you were to have an accident or some debilitating illness strike you down... you could be ruined.
The solutions is not as simple as just getting LTC insurance. If you need this type of care for a long time... most policies have a cap. But it can buy time for someone (spouse) to plan and get past the lookback period in medicaid and not be ruined financially.
Admittedly, problems of this sort while younger are a small risk, but it does happen. And that is what insurance is about... mitigating the risk of financial loss.
Can someone please explain self insurance?
My estate attorney said we should look into LTC. I am only 37 and wife is 42.
It seems the daily coverage, typically $150, is not close to what the daily cost would be, if an accident happened. I'm having a hard time convincing myself I need this.
My estate attorney said we should look into LTC. I am only 37 and wife is 42.
It seems the daily coverage, typically $150, is not close to what the daily cost would be, if an accident happened. I'm having a hard time convincing myself I need this.
Maybe you don't need LTC insurance--most people wait until they are older before buying it. It is very unlikeky that someone your age will find themselves being unable to do several of the "activities of daily living" that would put you into a nursing home or require care in your home.
By waiting you'll save a lot of money. You'll also be taking some risk--you COULD have a stroke/car accident next week that would put you into this situation (very unlikely), or (more likely) you could develp a health condition that would make buying a policy later more expensive.
$150 dollars a day won't entirely cover the cost of a nursing home in the average US city, but it will come close. If you live in the NE it will be more expensive, more affordabe in the south. Also, if you've got other money coming in (from investments, a pension, etc) that could cover some of the costs. Remember that if you are in this situation, you won't be needing money for travel, etc.
Self-insurance: Hmm. It's very expensive to pay for this type of care. If you are single, it is probably not unreasonable to put away enough to cover an extended stay in a nursing home. I think it is harder to make this work for a couple, since you'd need to have enough squirreled away to cover the worst of either of two situations:
1) two extended nursing home stays
2) One extended nursing home stay and one long, full retirement (with the normal expenses)
I'm still procrastinating on buying LTC insurance. When my state finishes building/nominating/gettting approval for various plans that will qualify under the new rules, I'll probably look at those and buy in. It's not an easy decision--this coverage is expensive, and the typical ER would need to give up some real money every month to pay for something that we'd rather not use.
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Brat
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
If you choose this type of policy I would take a long hard look at the insurer, they need to be the best in the business.
It is inexpensive if you buy it when your are young. Make sure you have a compounded increase in benefits.
When I pushed the numbers the sweet spot was a 90 day waiting period and lifetime benifits.
I have had a difficult time convincing my kids to buy this insurance, they think it can't happen to them. Their father and I know better. Today's medicine can make for a long goodby.
It is inexpensive if you buy it when your are young. Make sure you have a compounded increase in benefits.
When I pushed the numbers the sweet spot was a 90 day waiting period and lifetime benifits.
I have had a difficult time convincing my kids to buy this insurance, they think it can't happen to them. Their father and I know better. Today's medicine can make for a long goodby.
jayanu
Recycles dryer sheets
5 years of a semi-private room in a nursing home in NJ will cost $125K/year so about $625K w/o any increase. So you will still have to take something out of your pocket.
If you need beyond 5 years or if both need to be in the NH simultaneously then all bets are off.
