LTC Redux

[msefren]

DW and I are scrutinizing LTCI plans. So far we have found 4 primary plans to consider:

* Self insuring utilizing the medical expense deduction and your IRA's

* Traditional LTCI plans with a scheduled premium to pay. The use it or
loose it plan. Rising premiums a risk

* Hybrid plans that provide a life insurance feature upon death

* An annuity plan with a LTCI rider. Invest a lump sum, the funds are
locked for 9 years with a free surrender amount available that reduces
your LTCI benefits if invoked. If accepted you may qualify for 2x or 3x
your initial investment in LTCI coverage. Return of premium guarantee
with 3% interest

Recent articles:

"Nonetheless, there are some people -- for example, those who have assets worth $300,000 to $500,000 above and beyond the value of their homes -- for whom LTC insurance may be a sound idea. This is particularly true if LTC insurance is viewed as a safety net rather than as a financial investment -- and if your policy includes coverage for assisted living facilities."

and articles such as this:

Two-thirds of all men, and one-third of all women, age 65 and older will never spend a day in a nursing facility.

Most nursing facility stays are brief -- only about 10% of men and 25% of women age 65 and older spend more than a year in a nursing facility.

Only 10% of all nursing facility residents will stay longer than three years.
More than half of all nursing facility stays last six months or less. The average stay of those who enter a custodial care facility is about 18 to 20 months.

My DW's mother is 94 and is currently in her 3rd year at a faciility expending her LTC funds and now using the proceeds from the sale of her home.

Comments, thoughts or experiences would be appreciated! TIA

 

[reneeh63]

Easy to understand why so few men go to nursing homes since they married their nurse! ....and that's not even funny.

But nursing home care is the most extreme form of care. Doesn't LTCi also cover many types of in-home and assisted living care that you might very well benefit from even if you never progress to needing a nursing home? To me, that's what would be valuable to get - so be sure to see if that type of care is also covered.

 

[Chuckanut]

I would love to find a LTC plan with a very large waiting period - at least 12 months, and, as a result, a much lower premium.

 

[Koolau]

LTC is one of those potential "black swans" facing all of us. Other than LTC, we are golden. If both of us end up in LTC for several years, we're bankrupt.

I had to laugh (in a good way) about msefren's 4 options. Why laugh? Because I'm using 3 of them and am STILL concerned.

I have a policy that can be used for death or for LTC. It's only $50K total. I got it back when I was young and stupid (about age 45, heh, heh.)

Next, we did both obtain (and maintain) LTC insurance. IIRC it covers up to 3 years with high enough coverage, it will probably work (for 3 years.)

We are also willing to self insure (when the other two run out.) STILL, two old people in a "home" at $20K total/month (or more) would quickly go through our (significant but not endless) stash.

YMMV

 

[bmcgonig]

Easy to say but tougher to do: nursing home care can be over 100% more expensive in coastal areas over other states. So if you're willing to move to a cheaper state you can save a lot. You might even get an opportunity to move once you feel you need care if you have someone to look out for you?

And no, I haven't thought this through.

 

[marko]

My view is that should LTC be needed, for most people the cost is not 100% additive to your current living expenses as the healthy spouse's life also changes dramatically. No more expensive trips, dining out, two cars, boats, second home etc. and spending most of their time at the sick spouse's bedside. Seen it firsthand.

So if one's healthy COL is, say, $100K, the healthy spouse's COL could drop to $30K. This changes the equation a bit of what one's actual out of pocket would be.

In our case, LTC is less than what our healthy COL is. So, assuming the above, I'd see our LTC additive to be about $50K instead of LTC's total $120K added to what we spend now.

Of course, this doesn't work if you're squeaking by on $30K as a healthy COL.

 

[matzdr2019]

I think there is another option you could explore if you have some assets to set aside. It is similar to your annuity idea, but is actually a life insurance policy that is designed to give you a 2 to 3 x multiple if you need LTC coverage. I know New York Life has one, and MassMutual has one called Care Choice One. The idea is you put in a one-time lump sum premium of $25K or more. You have a small life insurance benefit that grows, and after 4-5 years you will be able to get your full premium back if you decide you don't think you are going to need it. If you go into LTC you will have a pool of $$$ that will be 2-3 times your premium, depending on your age when you get the policy. I'm happy to provide more details if anyone has futher questions.

 

[matzdr2019]

Now that a re-read your post, maybe that is what you mean by the hybrid life insurance plan? Just wasn't clear to me.

 

[Koolau]

Easy to say but tougher to do: nursing home care can be over 100% more expensive in coastal areas over other states. So if you're willing to move to a cheaper state you can save a lot. You might even get an opportunity to move once you feel you need care if you have someone to look out for you?

And no, I haven't thought this through.

Actually, we have thought it through and checked to some extent. You are correct that some areas are less costly than others for LTC. We haven't found "100%" differences, but it IS very significant. Locally (Oahu) is quite expensive, so we've looked in the central US and found it worth moving under the right set of circumstances. We figure that if you are stuck in a "home", it doesn't much matter where - except for the cost.

Of course, depending on circumstances, it would be easy to get "stuck" in your area as one (or even both or both of you) suddenly needs LTC and isn't able to hop on a plane (or even hop into a car.) Of course, YMMV.

 

[timo2]

in a nursing home versus in-home care is a big deal for my policy. For instance I have a five year policy, but that is five years at the max rate. In-home care could cost less per day and cause the insurance money to last for a longer period than the five years. The eventual nursing home care would then be either akin to hospice care or as the result of a severe accident or car crash.

From what I've been reading, as the boomer population ages, there might be less nursing home facilities than are needed, and/or there might be a shortage of workers (in the nursing homes I've been in many workers were immigrants/refugees). Thus home care becomes more of the norm and would allow the elder care workforce to be spread more effectively. IIRC my LTC policy can pay family members for providing care.

 

[bmcgonig]

Actually, we have thought it through and checked to some extent. You are correct that some areas are less costly than others for LTC. We haven't found "100%" differences, but it IS very significant. Locally (Oahu) is quite expensive, so we've looked in the central US and found it worth moving under the right set of circumstances. We figure that if you are stuck in a "home", it doesn't much matter where - except for the cost.

Of course, depending on circumstances, it would be easy to get "stuck" in your area as one (or even both or both of you) suddenly needs LTC and isn't able to hop on a plane (or even hop into a car.) Of course, YMMV.

When I looked at the numbers I saw that the average price for Louisiana and Alabama was under 60k. The prices in the Bay Area were over 120k. For the NY area it went up to 140k.

Probably a good business model for someone...supply coastal residents with cheaper nursing homes, including travel etc!

 

[Koolau]

When I looked at the numbers I saw that the average price for Louisiana and Alabama was under 60k. The prices in the Bay Area were over 120k. For the NY area it went up to 140k.

Probably a good business model for someone...supply coastal residents with cheaper nursing homes, including travel etc!

I guess I made the classic "mistake" and assumed that Hawaii would have the highest prices. I forgot the Bay Area! Yep, they're the most expensive with just about everything - even gasoline is more expensive there.

The "base" I was using was $120K/year, based on Hawaii. So far we haven't looked as far south as Alabama and Louisiana. So far, Missouri looks about the best, but I realize we have more homework to do. Honestly, we do this in fits and starts. We convince ourselves that "we won't need it" and then we realize "well, yes, we might need it." YMMV

 

[zippy2020]

A couple of things to consider:

* over the last 6 yrs it is home healthcare services that have risen the fastest in cost, per a federal study published annually.

* LCOL states very often have poor quality of care and the weakest consumer protections. I was recently participating in a forum discussing Skilled Care facilities and while debating a certain aspect, I mentioned I lived in CA. The other forum member immediately responded, "Oh, no wonder! I used to live there before I moved to xxxx. You have legal protections we don't have in our state."

 

[easysurfer]

Got a letter a few weeks ago from my current traditional LTC policy saying to either choose to pay more for same coverage or pay same for less coverage. Second time for such a letter in about 10 years.

Think I'm going to choose, not pay and let default and look for a hybrid LTC policy in a few years.

 

[Scuba]

I think LTC delivery will change a lot in the next 10-20 years. Standalone skilled nursing facilities are consolidating and/or closing. With the ACA, reimbursement has dropped but regulations requiring minimum staffing levels and other cost drivers haven’t changed. It’s near impossible to operate a stand-alone SNF at a profit, driving many to close.

 

[zippy2020]

Everyone, and I suggest EVERYONE, needs to read this article. Relatively short, it is comprised of responses from family caregivers to a survey by the NY Times.

Don't see yourself as the caregiver. See yourself as one of those elderly people, because this is who we all become, at some point.

‘I Put My Own Life on Hold’: The Pain and Joy of Caring for Parents
NY Times 05Sept2019 (this article does not count against the 'five free/month' limit)

https://www.nytimes.com/2019/09/05/reader-center/taking-care-of-elderly-relatives.html?action=click&module=Well&pgtype=Homepage&section=Reader%20Center

 

[mickeyd]

LTCi premium payments are a waste of good retirement funds. Invest your hard earned funds into a good index fund with a long-term outlook. Too many hands in the pie for this old Texan.

 

[meierlde]

recall there are two steps between living at home and a nursing home, independent and assisted living,(includes memory care) costs about 40% of what a nursing home costs. you can get from studios up to 2 bedroom units. the price includes meals where you order off a menu not the low choice option of at least some nursing homes, assisted living provides assistance with medication bathing etc, but not as intensive as a skilled nursing facility. however it and independent living provide maid service.

 

[harley]

DW and I discussed LTC, but we're still hoping to die quietly at home. If that doesn't work, we decided we'd just be each other smother buddies and avoid the whole situation.