Defer LTCi Claim ?

[cathy63]

This is what's on my other sister's mind. We hear stories of Alzheimer's patients living 20 years in NH because their hearts keep beating even if their awareness is low.

I'm with the "file now" crowd, but I also wanted to urge you to help her get an actual diagnosis. Don't just assume that dementia=Alzheimer's disease. The prognosis and treatment for different types of dementia varies, and you and your sisters will be able to make better decisions if you have more information.

 

[Spock]

While true, how is that relevant here? ...

??
the post directly before mine stated:
" Six years is a very long benefit. The average length of time in a nursing home is 2.5 years. "
And the last sentence of the OP:
"The policy benefit period is 6 years. (My other sister thinks that's awfully short. I thought that was pretty long, given the LTCi market.)"

 

[joeea]

I don't think purchasing power matters here. The issue is the differential between what assets earn (after tax) and the 5% growth in the LTCi benefit.

The issue is how much the care will cost in the future.

 

[joeea]

Dunno if you read the thread, but the post directly before mine stated:
" Six years is a very long benefit. The average length of time in a nursing home is 2.5 years. "
And the last sentence of the OP:
"The policy benefit period is 6 years. (My other sister thinks that's awfully short. I thought that was pretty long, given the LTCi market.)"

I was asking what you would suggest.

 

[Golden sunsets]

I don't think this has been mentioned: Assuming that she will not need skilled sursing care once she recovers from the neck injury, she may be better placed in an ALF or a Memory Care Unit. I would advise that 1) if she goes to an ALF, select one that also has a Memory Care wing, so that if she ultimately ends up in Memory Care, the transition is easier, and 2) make sure that the facility you choose, accepts Medicaid when and if she runs out of money.

 

[Independent]

I don't think this has been mentioned: Assuming that she will not need skilled sursing care once she recovers from the neck injury, she may be better placed in an ALF or a Memory Care Unit. I would advise that 1) if she goes to an ALF, select one that also has a Memory Care wing, so that if she ultimately ends up in Memory Care, the transition is easier, and 2) make sure that the facility you choose, accepts Medicaid when and if she runs out of money.

That's worth thinking about. The NH she's in has a memory care unit, but not an ALF. The retirement community that her apartment is in has an ALF, but not skilled nursing or memory.

We'll certainly check on Medicaid.

 

[Independent]

The issue is how much the care will cost in the future.

I'm having trouble seeing the relevance. Maybe you missed this from post #10

Odd twist is that her LTCi is an "indemnity" policy which pays a flat dollar amount if she is in a facility, regardless of the amount she is spending out of pocket.

Suppose her policy would pay $7,000 per month today. She can either use the insurance to pay (most) of this month's care, or she can take the money out of savings. Suppose her savings will grow at 2% per year, the LTCi benefit grows at 5%.

If she starts insurance benefits today, she'll keep $7,000 in savings. Six years from now when her LTCi benefits run out, that $7,000 will have grown to $7,883.

If she defers filing for insurance for at least a month, she will pay for the NH with $7,000 from savings. She won't have that $7,883 six years from now. But, her policy benefit will still be payable, and will have grown to $9,381.

In that case, she is $1,498 better off by not using her LTCi for this month.

(That is my other sister's reasoning. Since the LTCi benefit grows faster than here conservatively invested assets, she's ahead by spending down assets now and letting the LTCi benefits grow.)

Notice that the cost of care doesn't matter. It could be $6,500 or $7,500 today, it could be $7,000 or $8,500 or $10,000 six years from now. I don't need to know which is right to see that she'll be $1,498 better off if she lives long enough to exhaust her LTCi benefit.

 

[Lewis Clark]

I would file for long-term care insurance benefits as soon as possible. The policy will only pay a fixed amount, so you may as well start getting the benefits sooner rather than later. The sooner you start claiming benefits, the more likely it is that you will get the full benefit from policy.

 

[joeea]

(That is my other sister's reasoning. Since the LTCi benefit grows faster than here conservatively invested assets, she's ahead by spending down assets now and letting the LTCi benefits grow.)

Check her policy.

You'll almost certainly find that every month you not are using the benefits, you are paying the premiums.

But once benefits start, most policies don't require that the premiums be paid.

 

[Independent]

I would file for long-term care insurance benefits as soon as possible. The policy will only pay a fixed amount, so you may as well start getting the benefits sooner rather than later. The sooner you start claiming benefits, the more likely it is that you will get the full benefit from policy.

Because of the 5% increase rider, the policy pays an increasing amount, depending on when we start.

 

[Independent]

Check her policy.

You'll almost certainly find that every month you not are using the benefits, you are paying the premiums.

But once benefits start, most policies don't require that the premiums be paid.

That's true, but the monthly premium is something like $60 (this is an old policy). The interest differential overwhelms that.