Is long term healthcare worthwhile?

[cashflo2u2]

I could be wrong, but I think an individual policy for a person in the late fifties (or younger) or even early 60's in GOOD HEALTH should be cheaper than a group policy with all the adverse participants in the group plan. At least mine was.

[Brat]

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Originally Posted by ronin ...Health insurance covers the first 100 days at least. ..

As one who has had to deal with parents who needed nursing care, let me assure you that your health insurance does not cover long term care UNLESS you are discharged from a hospital (after a minimum stay of 3 days, I recall) and need skilled nursing care (typically physical therapy) and there only so long as the patient is making documented progress during that 100 days. In my experience anything longer than 3-4 weeks is rare.

Example: if the husband needs help dressing, eating, bathing and toileting after surgery his 80 yo wife with Osteoporosis and Parkinson's is expected to manage that at home or pay for care. [like my Mom].

Most couples can manage to pay for 60 days in a LTC facility. After that the healthy spouse will be likely draining down resources needed to sustain them for the balance of their lives. In my experience men do not live long in a LTC facility [that may be because their wife has been caring for them at home until their condition is really poor so the husband is at death's door when moved]. On the other hand, women often live years in a LTC facility [probably because there is no one left to care for them at home and they enter earlier in their decline process].

We choose a 90 day wait period because that was the sweet point on the costs. We had to choose the same term because it was a joint policy. The Fed program was not available when purchased, but I recommend it for reasons others discussed. In my experience a 1-year term would cover the risks for 90% of the men in LTC, 6-years for women.

[FinanceDude]

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Originally Posted by brewer12345 Having said all that, I have gone long the stock of one of the largest writers of LTC insurance. I would not touch a big writer of secondary guaranteed VAs with someone else's stick.

Based on your analysis and my meeting yesterday, you should stay away from John Hancock, as they are Number One in LTC and Number 2 in VA............

[brewer12345]

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Originally Posted by FinanceDude Based on your analysis and my meeting yesterday, you should stay away from John Hancock, as they are Number One in LTC and Number 2 in VA............

Owned by Manulife, which is a godawful huge insurer with fingers in (seemingly) every pie. They could take a royal beating from these products in the US and still be pretty much hunky-dory. I don't own this one, but I think management is reasonably savvy.

What do you think of their pricing and terms on these products from Hancock?

[FinanceDude]

Quote:

Originally Posted by brewer12345 Owned by Manulife, which is a godawful huge insurer with fingers in (seemingly) every pie. They could take a royal beating from these products in the US and still be pretty much hunky-dory. I don't own this one, but I think management is reasonably savvy. What do you think of their pricing and terms on these products from Hancock?

Their terms and pricing were competitive. I didn't like how hyped up they were on VUL and UL. Seems like if you're not selling boatloads of that stuff, you're an imbecile..........

Seems that $60,000- $100,000 ANNUAL premiums were all the rage, and folks were buying those insurance plans like "hotcakes"..............

[brewer12345]

Quote:

Originally Posted by FinanceDude Their terms and pricing were competitive. I didn't like how hyped up they were on VUL and UL. Seems like if you're not selling boatloads of that stuff, you're an imbecile.......... Seems that $60,000- $100,000 ANNUAL premiums were all the rage, and folks were buying those insurance plans like "hotcakes"..............

Still selling lots of UL with minimum premium guarantees? Or has that fad gone out for another one?

The old Hancock used to have a really top notch distribution system until they went public and let it go to seed. When Manu bought it, they started edevoting resources to it again. Maybe they have gone a little overboard, since.

[ronin]

Both my mother and father in law had skilled nursing care after hospitalization, so I know exactly what you are talking about. My point (at least to myself) was that for a short duration after stroke or heart attack kind of care, we are covered by insurance. And if pushed out, we could likely afford home care assistance.

I agree on your assessment of coverage length for men and women. I think 1 yr for me might suffice and 6 yrs for her is exactly what I had in mind, so far. CalPERS has a 90 day elimination period. I'd take the 5% built-in inflation protection. Undecided on benefit amount. They offer 150, 170, 200, 250. Probably toward the lower end for me and the higher end for her. Home care benefit is 70%. The facilities only plan is cheaper (no personal care, homemaker services, adult day care or home and community care), but I think home care need is potentially higher so I would prefer the comprehensive plan. There's a return of premium death benefit before age 75 included.

[Brat]

Make sure that inflation protection is compound, not straight line.

Although our own policy provides for home care (lower rate) I think what you want to insure yourself against is the high cost of facility care. Spouse might like in-home assistance caring for other spouse, but frankly families can often afford to have a visiting aid help with bathing, particularly if hospice eligible. In-home care for a frail widow or widower is much more dangerous than facility care. Live-ins often take advantage of the elderly, and the frail elderly living alone are subject to falls and burns.

Read carefully the definition of 'facility'. There is usually no question about a licenced skilled nursing facility but many facilities licenced as assisted living provide the same level of care as the old convalescent nursing facilities. Take the contract to your favorite certified continuing care retirement Care Manager and ask what areas of their would be covered by the contract.

Read over the ADLs so you know what they mean and how the days are counted for the wait period. For example, several years ago husband had both knees replaced at once. After discharge from the hospital, for almost two weeks as I recall, he met the ADLs. I got the paperwork completed and sent it to our insurer because the waiting period didn't need to be continuous.

[youbet]

Quote:

Originally Posted by Brat In my experience a 1-year term would cover the risks for 90% of the men in LTC, 6-years for women.

For purposes of running scenarios for self-insuring for LTC, I assumed a combined 10 years in any combination. DW 5 and me 5 or DW 10 and me 0 or DW 0 and me 10, etc. Sounds like I might be a bit on the conservative side. That's OK I guess. Better safe than sorry.

Edited to add: In the case of purchasing a LTC policy for hubby for one year, why bother? Wouldn't that be like purchasing an umbrella liability policy for $50k?

[Brat]

I haven't seen a policy where either spouse can draw on a single policy. What we have is a single policy that covers each spouse separately.

In my experience a total of 10 years that could be used in the aggregate would be a something really worth considering.

Last summer the monthly cost of care for my Mother in an intermediate level nursing facility was $7,000 a month. While men typically have a shorter stay in LTC the cost of care can really put a dent in the wife's resources.

If a choice had to be made, buy a policy to cover the wife. Women are much more likely to end up in LTC for an extended period.

[youbet]

Quote:

Originally Posted by Brat I haven't seen a policy where either spouse can draw on a single policy. What we have is a single policy that covers each spouse separately. In my experience a total of 10 years that could be used in the aggregate would be a something worth considering.

I think you mis-read my post Brat. I use the aggregate 10 years for planning self-insurance.

[Brat]

Ah, I wondered if I had missed someones offering. A combined bucket would be a real deal for the insureds.

The shortest term I remember is 3 years. My parents each had a very modest 3 year nursing home only policies that covered conditions that required hospitalization, purchased before inflation protection. I think Mom used one year's worth for Dad (brain tumor). A couple years after he passed away she was in and out of LTCs for a couple years, then 6.5 more years before she passed away at 90. The insurer made money on Dad and paid out the limit for Mom.

How you evaluate your risks will depend on your health and familial health history. Cancer and heart disease kill faster after incapacity than stroke, Parkinson's, dementia, Altzheimer's and brittle bones.

[youbet]

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Originally Posted by Brat How you evaluate your risks will depend on your health and familial health history. Cancer and heart disease kill faster after incapacity than stroke, Parkinson's, dementia, Altzheimer's and brittle bones.

Yeah..... it's a tough call. Like all types of insurance, the insurance companies will take in more than they pay out but will serve the purpose of organizing a risk pool where many will contribute and few will collect thus leveling the financial exposure. That's the insurance business and I have no problem with it. If insurance companies paid out more than they collected for very long, they'd be out of business.......

On the other hand, deciding to self insure requires you to be comfortable with the fact that a worse case scenario (20 years of crappy markets devastate your portfolio and then both you and spouse need 15 years each of NH care) probably will overwhelm even a generously funded FIRE portfolio.

So...... what to do, what to do? I'm deep into analysis paralysis!

[Rich_by_the_Bay]

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Originally Posted by youbet So...... what to do, what to do? I'm deep into analysis paralysis!

As if that's not enough, eventual health care reimbursement reform may well bring about the inclusion of limited long term care coverage, at least for certain scanarios. All those premiums you have been paying for 25 years were designed to cover those costs. Do you think you'll get a refund?

I find i perplexing, too. The only comfort I take is that the average length of stay is 2-3 years. Holding off for now, but acknowledge that it's a soft spot in the plan.

[Brat]

I don't think health care reform will provide more LTC coverage that Medicare does today, at least in my lifetime. Medicaid is there for the poorest and their reembursements are so modest the facilities are grim.

It is reasonable to insure for the worst case if you want to self-insure for part or if you think health care reform will have LTC provisions, choose the longest waiting period sweet-point. Some policies are constructed as a 'bucket of money'. The insured who needs care can use it based on the likely length of incapacity.

One form of 'insurance' is to move to a continuing care community with a care facility that co-ordinates with Medicaid should LTC costs exhaust your assets. Most of those communities are non-profits where the residents have contributed to a trust for that purpose over many years. Those communities often require their residents have good health physically and economically when they move in and require substantial move-in fees. There is a CCC in Renton, WA that includes LTC -their monthly fees are substantial.

[Brat]

In the interest of disclosure DH and I purchased LTC insurance 10 years ago. If the OPM sponsored policy had been available we would have gone that route, but it seemed like it would never happen and we were getting older so looked elsewhere. Ultimately we purchased a 10-year paid up policy from Allianz.

We hope we made a wise decision but will never know until we need to use it. This month we discovered that the last payment was made last year. Celebration!!!