How much LTC insurance is enough?

[yakers]

We have a 3 year policy. Mostly for estate planning, don't want to run down the portfolio if possible to pass on our Roth IRAs to our sons. Our major assets are our COLAd pensions but we have little in investments compared to those with large 401Ks/IRAs/real estate/personal business assets.

 

[imoldernu]

The real issue for a married couple is the possibility of the non-ill spouse being impoverished through either paying for care for the ill spouse or due to having to spend down to reach Medicaid limits. Yes, I know that the non-ill spouse can now keep some money but it is a fraction of what most of us here would have.

Not just the allowed money, but the house, as long as the non-nursing home spouse is still living there. In Illinois, for instance, medicaid would exempt up to $500,000 in house value. In essence that would become an asset for the surviving spouse.

Here's an example that I may have posted in another thread.

When my mother went into a nursing home, my stepfather (second marriage) being of old Yankee Stock, decided that he would not let my mom become a burden on the state, and decided to sell his home (Small cottage on the bay in Barrington RI, that he bought for $2000 in 1929.) Not being aware of prices, he planned on selling for $100,000 to help pay for mom's nursing home care.
One of his daughters, decided to go to an elderlaw lawyer, who suggested that he stay in the home (with help) and let the state pay for mom's care, according to the law.
After my mom passed away, he still owned the house. Two of his grown children had very little in resources due to illness, and were heirs to his estate. Three years later, he passed away. When they sold his house they received $815,000... (actually the value of the land, since the house was a simple cottage.)

Something to keep in mind, when thinking of downsizing... especially if downsizing in value, too.

Last point... The lookback period is now 5 years. That means, if spouse goes into the nursing home, buying a house has to have been 5 years prior to being admitted. Same for gifts or most other transactions designed to safeguard assets. Legal advice a MUST!

 

[JohnDoe]

We had a company come in and give a presentation at work on LTC a few days ago. After they were done a few us said they made a better case NOT get LTC.

The base plan they were giving examples on only cover 2 years and a max of 73k. What good would that do anybody? They also said things were priced so that when the price guarantee expired, the price wouldn't go up much. I had to laugh to myself after that comment.

After reading the OP's issue, I think I made the right choice.

Why do I need LTC?

 

[youbet]

The base plan they were giving examples on only cover 2 years and a max of 73k. What good would that do anybody?

While a case could be made that $73k X 2 could help, I tend to agree with you. I didn't get LTCi at a young age and now (65 yrs) it's out of reach expensive, if I'd even qualify. But, if I was going to have it, I'd want it to cover me for the real risk which would be a long stay.

We (and I suspect many on this board) can self-insure for $200k - $300k without leaving the survivor impoverished. It's the long and very expensive stay in a NH, say a decade, that would kill the chance of the surviving spouse for a decent standard of living afterwards.

 

[JohnDoe]

It's the long and very expensive stay in a NH, say a decade, that would kill the chance of the surviving spouse for a decent standard of living afterwards.

And in your 40's that would cost you a small fortune.

During the presentation they made it sound like your house would be exempt from medicare expenses, etc and also a portion of your tax deferred accounts. So the surviving spouse could be setup with a min 300-400k of assets they could keep in my case.

To be honest, I have not looked into any of that to see for myself if they were right.

 

[daylatedollarshort]

While a case could be made that $73k X 2 could help, I tend to agree with you. I didn't get LTCi at a young age and now (65 yrs) it's out of reach expensive, if I'd even qualify. But, if I was going to have it, I'd want it to cover me for the real risk which would be a long stay.

We (and I suspect many on this board) can self-insure for $200k - $300k without leaving the survivor impoverished. It's the long and very expensive stay in a NH, say a decade, that would kill the chance of the surviving spouse for a decent standard of living afterwards.

The look back period for Medicaid is 5 years. You have the years before that to consult an elder care attorney and gift money, buy a more expensive house, shift money to other exempt assets, whatever is legal to do at that time to shelter assets as best you can for the non nursing home spouse. The insurance companies are not going to tell you all ways you can exempt assets from Medicaid. They are going to try to scare you and conjure up images of your spouse homeless under a bridge when that isn't what is going to happen if you plan it right, like imoldenu's friend.

There's whole books you can buy and study and how to legally preserve the other spouse's lifestyle. Maybe I'm missing something, but I think if you can self insure for 6 - 7 years for one spouse in a nursing home that is good enough. If you both need to go in a nursing home, then you are both just in a nursing home on Medicaid when your assets run out and there is no one else to worry about, unless you need to leave a big inheritance for your kids for some reason and haven't started doing any gifts or trusts earlier in life.

And even with that, the odds of being in a nursing home longer than 6 - 7 years seem to be pretty low.

Added -

I don't mean to imply 6 to 7 years in a nursing home isn't a really huge cost and it is probably a wise decision to insure for some or all of those years. I just think 7 years is the max most married people would probably have to worry about for the non NH spouse. An even then I think personal retirement accounts and the residence are exempt assets in most cases, among other types of exemptions.

 

[gerrym51]

we got 4 year policies to help with medicaid if needed and to give the healthy one time to plan(breathing room)

 

[ERD50]

I think I asked in another thread, but I'll ask here:

How does ObamaCare affect the need for LTC? I would think we are all covered now (soon), no?

edit/add:

OK, I found an answer:

http://www.forbes.com/sites/aroy/20...are-entitlement-to-be-suspended-indefinitely/

You can read for more details, I won't comment here as it will be calling porky.

-ERD50

 

[MichaelB]

My LTC plan - I told our kids to put me in a nursing home in Belize.

I have a friend who retired to Belize. He likes it, but Belizeans consider Guatemala to be the height of medical expertise down there. Not quite what I would think.

Going to Venezuela was definitely our fall back plan if either of us needed LTC. That is, it was our plan until it wasn't. Amazing how quickly things can change.

Once in LTC I think what matter most is not leading edge medical care but just decent continuing care with more more individual attention.

 

[walkinwood]

I think this data complements ReWahoo's graph above.
The Online NewsHour: Basic Facts About Nursing Homes

F[FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-1]acts about Nursing Homes[/SIZE][/FONT]

• [FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-1]1.6 million people live in nursing homes.[/SIZE][/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-1]More than 90 percent of current residents are 65 years of age and over.Almost half are 85 years or over.[/SIZE][/FONT]
• T[FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-1]he average age upon admission to a nursing home is 79.[/SIZE][/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-1]Women are almost three times as likely to live in nursing homes than men.[/SIZE][/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-1]In 2000, 4.5 percent of Americans 65 years and older lived in nursing homes, a decline from 5.1 percent in 1990.[/SIZE][/FONT]

It seems like there is no way to estimate the rate of increase in premiums, so I'm going to wait till I'm older to consider LTC - maybe in my early 60s.

 

[Alex in Virginia]

Hey, folks...

John Hancock just dropped the other shoe on me. They got their long-awaited rate increase for long term care policies issued in Maryland.

They told me I'll be getting my "options package" in June ahead of my August renewal, but they also told me that lifetime benefit policies such as I have will have up to a 90% rate increase. ...

Alex in Virginia

I started this thread in early March based on a "yahoo" at John Hancock telling me that my premium could be going up 90%. Well... it's now June and the dreaded premium increase notice just arrived and it amounts to... a 15% increase.

What a relief! What a bunch of worrying for nothing! What a crock of you-know-what!

Alex in Virginia

 

[jclarksnakes]

Maybe they were hoping you would cancel it.

 

[JakeBrake]

I started this thread in early March based on a "yahoo" at John Hancock telling me that my premium could be going up 90%. Well... it's now June and the dreaded premium increase notice just arrived and it amounts to... a 15% increase.

What a relief! What a bunch of worrying for nothing! What a crock of you-know-what!

Alex in Virginia

DW and I received our notifications from John Hancock this week. They say our premiums will increase by 11.29%. Our policies are through my Megacorp. They tell me our policies are are no longer available to Megacorp employees or retirees. They also gave us the options to reduce our Daily Maximum Benefit (DMB) or our Lifetime Maximum Benefit (LMB) to reduce our premiums. We have to let them know by July 1, 2013 if we want to reduce our DMB or LMB.

 

[FinancialDave]

It is not necessarily just a matter of how long, but a combination of the elimination period, and the daily amount. Any one of these adjusted can adjust your rate. Personally, I went for a 3 year rate and a little lower daily premium. Because the risk of actually needing the insurance is usually only around 35% I didn't feel I really needed 100% coverage. Also my retirement nest egg could really handle the payments, so it's more of just a small buffer.

fd

 

[friar1610]

When I signed up for the Federal Gov't plan a number of years ago I took 3 years for me and 5 for my wife. I also took a relatively high deductible ($30K/ea, IIRC.) I reasoned that we could handle the deductible. I took a longer period for my wife than for me because, actuarially speaking, women live longer. Also, in my family nursing home stays before death have been relatively short; my wife had an aunt who hung on for years and years.

Probably not the most scientific approach, but it was the best I could come up with.

 

[FinBiz]

John Hancock did the same in Tennessee last year. I have 5% annual compound inflation increase, lifetime benefits. They offered to reduce the 5% to 3% and leave the premium and other benefits the same. I understand you can reduce the years or wait period yourself at anytime. That doesn't take an offer from JH. Since I am single and with few relatives, I bit the bullet this time. Most likely, there will be a next time, but for now, the 5% inflations makes a big difference. If I have to reduce the number of years later, my daily benefit will have a higher base anyway..