How many of you have or are planning to have long term care insurance?

[REWahoo]

I plan to purchase my LTC insurance from Smith & Wesson.

This type of coverage is rarely used. When it comes time to collect benefits the insured has often lost access to the policy - or can't recall how to file.

 

[donheff]

I plan to purchase my LTC insurance from Smith & Wesson.

I'm in that group too but you have to see the problem coming to take advantage of that insurance. For many, if not most, that isn't the reality. And you sure can't rely on others to act as your proxy.

 

[Hamlet]

I was mostly kidding about that being the plan.

My problem with LTC insurance is that I don't trust the policies to really deal with the problem.

They don't seem to offload enough risk for the money.

I'm in that group too but you have to see the problem coming to take advantage of that insurance. For many, if not most, that isn't the reality. And you sure can't rely on others to act as your proxy.

 

[rescueme]

I'm in that group too but you have to see the problem coming to take advantage of that insurance. For many, if not most, that isn't the reality. And you sure can't rely on others to act as your proxy.

Sorry to be morbid (and I understand if the admin's pull this post), but I'm well aware of a situation, close to me, of re-occurance of a medical "challange" that was resolved in this manner.

It happens...

 

[East Texas]

Good post. Even the best laid plans can go awry....and in case anyone is wondering, 40% of all people that need LTC are between the ages of 18 and 64, so it's not just the old and frail.

A relative was in a nursing home with early-onset dementia for about 10 years until he passed away. His wife lost everything except their one acre homestead on the ranch they used to own. Their savings were wiped out. She was not old enough to collect survivorship on his social security. She eventually had to sell the homestead and move in with relatives.

I'm sure dgoldenz has a thousand stories similar to this one.

 

[Moemg]

I know most insurance companies state that the average length of stay in a nursing home is 2 1/2 years but except for Alzheimer's ,Dementia or Neurological trauma that seems a little high . Here is a more recent article that's a little morbid but more realistic IMO

Social Support is Key to Nursing Home Length of Stay Before Death | www.ucsf.edu

 

[youbet]

A quick scan of the thread seems to show that most folks that are commenting on LTCi positively have either had it for a number of years, get it through an employer (private or gov't) or both. Anyone out there that purchased LTCi recently, say within the last couple of years, and outside of any employer or group involvement, that's happy with it?

As several others have commented, I'd consider LTCi if I could be convinced there was no risk of the company folding or of being priced out later due to premium increases. Also, I'd like a 2 year waiting period followed by unlimited coverage. I don't need LTCi to step up and pay for a few months of care due to an accident, etc. I need coverage in case one or both of us winds up needing care for many years.

 

[Bestwifeever]

I know most insurance companies state that the average length of stay in a nursing home is 2 1/2 years but except for Alzheimer's ,Dementia or Neurological trauma that seems a little high . Here is a more recent article that's a little morbid but more realistic IMO

Social Support is Key to Nursing Home Length of Stay Before Death | www.ucsf.edu

That article is very interesting. After reading it we're feeling even better about deciding to self-insure.

Insurance companies should be lining up to sell policies that have a two-year waiting period--most of them would never be used.

 

[youbet]

Insurance companies should be lining up to sell policies that have a two-year waiting period--most of them would never be used.

I agree. Perhaps the lack of policies is due to complications that long waiting periods would bring to NH's collecting payments? Possibly collect from the person/family for a while, possibly followed by a period of Medicaid and finally, after two years, insurance. Dunno......

I do know I'd like to find a policy with a 2 yr waiting period that is cheap because so few would collect. We can afford to self-insure for 2 - 3 years with no threat of impoverishment of the healthy spouse. But I wouldn't mind some protection if one of us winds up the rare case of being in a NH for 5 - 10 or more years. $300/day, compound inflation adjusted, 2 yr waiting period, 10 years (or more) of coverage. Cheap. That would do it.

For us, 3 yrs of coverage with a short waiting period doesn't really remove the risk adequately. We could cover 3 yrs but fear an unlikely but possible extended period that could impoverish us. And policies with both a short waiting period and lengthly (10 yrs or more) coverage seem expensive.

 

[Independent]

There's another angle on LTC that folks should watch. The recently passed health care law included a voluntary federal LTCi provision (the CLASS program). It is going to be a big government giveaway to those enrolled in the program unless it is reformed (that's not a political statement or bashing of the law--the present HHS secretary has admitted that the CLASS act is "totally unsustainable" in its present form, which is plainly true). The law will likely be reformed or changed in some way eventually, but sometimes there are considerable benefits to getting a foot in the door of such a broken program. Our legislators and their staffs have proven to be sloppy in their work, and sometimes loopholes turn up.

There are a lot of unknowns about how the CLASS program might work, but the daily benefit is supposed to be a minimum of $50 per day (to be adjusted for inflation), but other sources indicate it might be higher depending on degree of impairment. Premiums haven't been published, but the CRS estimated the average premiums would be about $123 per month. You have to pay premiums for 36 months out of the first 60 months you are enrolled in the program before you qualify for benefits.

What I need to find out--once you qualify for CLASS benefits (paid premiums for 36 months), if you are retired (no longer earning income subject to SS), are you still required to pay CLASS premiums? The legislation is set up to collect premiums via payroll deduction--hmm.

Observations:
-- $50 per day aint a lot, but it's something. It is enough to pay for about 25% of nursing home costs in most parts of the country, and could pay for home visits, etc. It will be indexed for inflation. There are signs that the government will offer higher amounts to those with more impairment. The legislation specifically states that the benefits won't count against the recipient when figuring Medicaid eligibility or other benefits, so Medicaid + CLASS might result in better accommodations. Also, unlike most commercial LTCI, the duration of the benefit is unlimited.
-- Government benefits tend to go up, not down.
-- If the premiums for this program are linked to employment or to income, ERed folks or the "flying under the radar" low income types might get make out.

So, keep your eyes open. Final rules should be set and published in the next year or two. Maybe this program will be worthless, but maybe not. An ER person might do alright, and it will almost certainly be a good deal for folks with risk factors that make it likely they'll need LTC (and therefor can't buy coverage commercially. This adverse selection is the main reason the federal program will probably lose tons of money, whatever the law says about it being self-supporting). With all the goodies being thrown around in DC, it's prudent to grab a net and scoop some up.

Good post. I agree that it looks like this is set up to fail, but when it does, Congress will have the taxpayers foot at least some of the bill of "grandfathering" those who bought early.

It's already a political issue and may be killed before it ever gets off the ground. If it does get started, I will definitely look at it, since I'm likely to be one of the taxpayers bailing it out.

 

[donheff]

A quick scan of the thread seems to show that most folks that are commenting on LTCi positively have either had it for a number of years, get it through an employer (private or gov't) or both. Anyone out there that purchased LTCi recently, say within the last couple of years, and outside of any employer or group involvement, that's happy with it?.

I picked it up when the Federal Government (OPM) contracted for it. Before that it wasn't even on my horizon. Like lots of other Feds, I studied the concept in earnest prior to the open season and concluded that I wanted the insurance. The cost is entirely born by the employee so there isn't anything substantially different about the Fed program or an individual contract. Interestingly, a good number of Feds elected to get LTC -- but to get it outside of the OPM contract. Salespeople descended en mass with tales of better deals which many employees agreed with. I went with the OPM contract because I hoped that OPM would do its due diligence in selecting a carrier and would stay on the carrier's case to make sure benefits were paid as agreed, etc. There was no guarantee that rates would not rise and, in fact, there was a small upward adjustment after a couple of years as data came in.

While it is impossible to state with certainty what I would have done had there not been an OPM program, I believe that as soon as I understood the concept I would have chosen to get an LTC policy on my own. Once I realized I could insure against a potential loss of estate I wanted to insure against it. It's interesting, I am not highly risk adverse about market changes and have a high portion of my holdings in equities. But I am very risk averse about common catastrophes that can destroy the best laid financial plans thus I had large term life policies until our portfolios were sufficient, disability insurance during work years, and LTC since I learned about it. Additionally, I make sure my kids have health insurance to the degree that I paid for my son's until he came under an employer plan and still pay for my 24 year old daughter's today. This aversion to perverse fortune financially wiping me and my loved ones out is probably a substantial part of why I am a proponent of universal health care.

 

[Independent]

I plan to purchase my LTC insurance from Smith & Wesson.

That reminds me of a story from a LTCi salesperson. In her story, it's a tough little Italian man who says "If things ever get really bad, just shoot me."

Then he needs surgery and does get some paid help at home for a while. But he points out that's not "really bad". If things do get really bad, just shoot me.

Of course the story continues with additional events and increasing needs for care. At each point he says "I can live with this, but if things get really bad ...".
Many of us have an amazing ability to adjust our definition of "really bad".

 

[Mulligan]

The subject interested me to find these statistics from the government I assume to be correct. 65 and overs have a 40% risk of entering a nursing home. 45% of that 40% group have a stay of 3months or less. 20% of that group will be there for over 5 years. Women are 50% more likely to enter a home than a man, citing mostly the factor they outlive us. If you live to be 85 the chances of making it to the nursing home are pretty good!

 

[donheff]

The subject interested me to find these statistics from the government I assume to be correct. 65 and overs have a 40% risk of entering a nursing home. 45% of that 40% group have a stay of 3months or less. 20% of that group will be there for over 5 years. Women are 50% more likely to enter a home than a man, citing mostly the factor they outlive us. If you live to be 85 the chances of making it to the nursing home are pretty good!

So about 10% end up in a home for 5+ years. For two oldsters that adds up to a 10% chance of 10+ years of nursing home expenses. That could be a big hit on a portfolio, although not highly likely.

So, here is a fun mental exercise. If I was to tell my kids the total size of our portfolio and our withdrawal plan and gave them the option of us sending them our LTC premiums each year instead of purchasing LTC would they see that as a good bet or would they prefer that we buy the LTC to avoid maybe a 10% chance that of a drastic reduction in their inheritance? I'm not going to tell you the size of the portfolio but if I were one of them I would not take the premiums. Obviously, the more $ at stake (e.g funds that could get frittered away before reaching Medicaid eligibility - up to the limit of the LTC payout) the greater the potential impact and thus potential payback from LTC.

 

[East Texas]

The most valuable aspect of LTC for us is the ability to stay in our home as long as possible. Our LTC will provide us with caretakers, physical modifications to the house, durable medical equipment (e.g.hospital style beds, wheelchairs, walkers), emergency medical response system (communication system, not an alarm system), and respite care.

 

[samclem]

But I wouldn't mind some protection if one of us winds up the rare case of being in a NH for 5 - 10 or more years. $300/day, compound inflation adjusted, 2 yr waiting period, 10 years (or more) of coverage. Cheap. That would do it.

Yep, that's what I want, too. Coverage for a true unusual calamity. The only difference is I'd probably go for $200/day coverage and I'd like a "shared benefit" of about 3-5 years each person (or up to 6-10 years for one person).

With a long waiting period and the stats the way they are, such coverage should be inexpensive.

 

[Mulligan]

So about 10% end up in a home for 5+ years. For two oldsters that adds up to a 10% chance of 10+ years of nursing home expenses. That could be a big hit on a portfolio, although not highly likely.

So, here is a fun mental exercise. If I was to tell my kids the total size of our portfolio and our withdrawal plan and gave them the option of us sending them our LTC premiums each year instead of purchasing LTC would they see that as a good bet or would they prefer that we buy the LTC to avoid maybe a 10% chance that of a drastic reduction in their inheritance? I'm not going to tell you the size of the portfolio but if I were one of them I would not take the premiums. Obviously, the more $ at stake (e.g funds that could get frittered away before reaching Medicaid eligibility - up to the limit of the LTC payout) the greater the potential impact and thus potential payback from LTC.

If I was your child, I would play insurance man and say "Dad instead of you paying the premiums for both of you, pay what would be the total premium to me each month. I Would invest that money and bet that you arent one of the 20% that stays longer than 3 months and hope to still come away with the inheritance down the road, too!"

 

[freebird5825]

LTC not only provides for old age but when young too. I knew a woman that rode on my commuter van to work. Several years later after I left the van I heard that she was in a very serious car accident (could have been a stroke, a fall, anything really), she was in her later 40's I'd guess. She ended up in a long term rehab facility learning how to walk, talk, hold a fork, you get the picture! Devastating expenses, so you don't have to be 75 to need LTC.


...so LTC makes sense even though I do not have kids and am divorced. If not for that I may have passed on it but again a car accident can change your plans in a heartbeat.

You make two most excellent points here. Most people think LTC = nursing home at advanced age and a lot of people have a bulletproof mentality, i.e. "it can't happen to me".

Life happens. Nobody is exempt from life's curses.

The main reason I bought into the federal LTC program was there is a chance I will develop BC (Mom was a victim) and I have no children or family nearby to help out.
If I was in a serious accident or had to have major surgery, home rehab care is covered under the FLTCIP. There are no minimum age requirements for the coverage. I read every single page of the benefit booklet before I signed up.