Genworth LTC price increase

[Ready]

MIL has been paying for a Genworth LTC policy for many years. She currently has paid in about $41K. Her annual premium was $3500 but next year the rate is going up 72% to $6,100.

She has the option of reducing the benefit from lifetime (first 100 days excluded) to a cap of six years. Either way the maximum benefit is $150/day. She is 85 years old, in reasonably good health. I’m new to reviewing LTC policies so I’m not sure if I’m fully knowledgeable on how they work.

My initial thought is that six years seems like a lot of coverage for someone who is already 85 years old. She has enough money to self insure anyway, so if she really needed more than six years of care she would be fine.

Does it make sense to reduce the premium and go with a six year cap. The rate would be $3,800/yr, so a little higher but not too bad of an increase.

Is there anything else I should be aware of before we recommend something to her?

 

[joeea]

She has the option of reducing the benefit from lifetime (first 100 days excluded) to a cap of six years. Either way the maximum benefit is $150/day. She is 85 years old, in reasonably good health.

Six years is a long time for an 85 year old.
But $150/day is not much, depending on what part of the country she live in.

She has enough money to self insure anyway, so if she really needed more than six years of care she would be fine.

So why does she have a policy at all?

 

[zippy2020]

A couple of things to check:
1) Is this a partnership LTC policy? If it is, the benefits received are tax-free. That can be no small advantage, depending on the tax bracket.

2) So total is $54,750/yr after first 100 days. Assume there is NO home healthcare rider? If there is, what percentage of daily benefit does it pay? Some pay 50%, some pay 100%. Note home healthcare must be provided by a licensed bonded agency, not grey labor.

3) At her age a 6-yr cap is probably fine. $3800/yr for a $54K tax-free benefit for the next six yrs still puts her ahead of the game should anything happen, and at her age you NEVER know what's going to happen.

4) Her life expectancy may be longer than you think. My MIL was 84 when she moved to a full-care senior facility for Asst Lvg. You can believe she was extremely shocked to find that her three assigned dining companions were ALL older than she was. One was 99 yrs old and had been in the facility for 40 yrs, moving in with her husband who had been older and who eventually passed away! It was noticeable, btw, that at a 135-unit facility, women outnumbered men by approximately 9 to 1 ratio.

The fastest growing age group globally is ages 80-100+.

 

[timo2]

I think it is important if the policy allows for home health care.


It it were me, with what you told us, I'd switch to the 6 year. because $150 does not cover the total amount of the daily nursing costs, so she will be self-insuring for a good part of the cost anyway.


from the link:
Below are some national average costs for long-term care in the United States (in 2016). Average costs for specific states are also available.

• $225 a day or $6,844 per month for a semi-private room in a nursing home
• $253 a day or $7,698 per month for a private room in a nursing home
• $119 a day or $3,628 per month for care in an assisted living facility (for a one-bedroom unit)
• $20.50 an hour for a health aide
• $20 an hour for homemaker services
• $68 per day for services in an adult day health care center

https://longtermcare.acl.gov/costs-how-to-pay/costs-of-care.html

 

[HI Bill]

MIL has paid in about $41K. Her annual premium was $3500 but next year the rate is going up 72% to $6,100.

What if it goes up another 72% next year, and the LTC provider lowers the coverage at the same time?

The cost of LTC keeps going up, as do life expectancies, and therefore, the premiums. If she's really not in need of the policy, consider the $41K sunk costs, and ditch the policy.

 

[Ready]

What if it goes up another 72% next year, and the LTC provider lowers the coverage at the same time?

The cost of LTC keeps going up, as do life expectancies, and therefore, the premiums. If she's really not in need of the policy, consider the $41K sunk costs, and ditch the policy.

That has been my concern with LTC policies all along. Each year you really only know what your cost will be for the year. You have no control over future price increases from year to year, but you feel like you need to keep feeding the kitty so you don’t lose your investment to date. I don’t like entering into an agreement where I have so little control over future prices. But it’s tough to cancel the policy altogether at this point just to save $4K, and then have her need care right after we cancel.