Long-term care insurance paper

[Chuckanut]

If the premiums were fixed then I might be able to get a bit more enthused.

P.S. I once worked for a guy who went on to be one of Genworth's many CFOs.

+1 on the premiums.

The idea that I could pay for a decade or two, and then have to decide if I want to drop the insurance due to affordability issues does not excite me.

Nords' tales of woe with his father (??) did not help either.

 

[nwsteve]

Very good article. DH and I have decided to move into a CCRC and self insure. My mother has a LTC policy and it has not worked out well for her financially. She is now 89, in a CCRC and is in good health physically and mentally so she fortunately has not been able to use the LTC benefits. .....

We also chose the CCRC approach. We moved into a Type A CCRC 18 months ago and found it to be a comfortable fit. While being here during Covid has proven a bit more restrictive than living independently we have assured access to Skill Nursing and Asst Living if need for recovery.
Our "buy-in" came from selling our home and so basically converted "dead" capital for active benefits. Our thinking was with a Type A we are guaranteed all the benefits of a LTC without all the challenges of claim forms and negotiating with an insurance company so often reported as LTC policies.

 

[harllee]

We also chose the CCRC approach. We moved into a Type A CCRC 18 months ago and found it to be a comfortable fit. While being here during Covid has proven a bit more restrictive than living independently we have assured access to Skill Nursing and Asst Living if need for recovery.
Our "buy-in" came from selling our home and so basically converted "dead" capital for active benefits. Our thinking was with a Type A we are guaranteed all the benefits of a LTC without all the challenges of claim forms and negotiating with an insurance company so often reported as LTC policies.

We have our name on the waiting list for a very nice type "A" CCRC in our area.
It is expensive but fits all our needs and means we have no need for LTC insurance. The waiting list for some of the units is about 10 years but we have been on the list for several years and are near the top.

 

[DatumPoint5]

Just now read it....... Very well done.

 

[CoolChange]

I anticipate at least skimming everything you share here going forward based on the quality of this paper.

Like several others here, I have already done a significant amount of work on this subject and my personal situation. So, I did not find any new information here for my personal situation. But, I do feel comfortable in saying this is a good analysis, making me interested in reading more of your work.

 

[SoReady]

I anticipate at least skimming everything you share here going forward based on the quality of this paper.

Like several others here, I have already done a significant amount of work on this subject and my personal situation. So, I did not find any new information here for my personal situation. But, I do feel comfortable in saying this is a good analysis, making me interested in reading more of your work.

+1

 

[AtlasShrugged]

Thanks for the positive comments on my paper. You have encouraged me to continue.

Please see my last post entitled Short Money Rules.

 

[Dtail]

My mother has a LTC policy which has a premium of 8k yearly, which pays 350 per day and has a max of 3 years. Premiums are fixed until 2028, when she will be 95 years old.
She is not using the policy currently and I had to switch it to a 3 year max, otherwise premiums would have shot up to ~12/13k yearly in a few years, since it was originally lifetime coverage.
No LTC policy for DGF and me. Yeah taking some chances.

 

[big-papa]

Well written paper, especially for anybody who hasn't already made a decision.

We bought LTCi for wife and I about 9 years ago - wife falls into the category of family history for Alzheimer's, and after seeing her mom, her mom's twin sister, and her mom's brother go through that, there was no way we were going with out it, especially after seeing what her dad had to go through financially after cancelling their policy about 2 years before she was diagnosed. Her mom and her sister both ended up needing care for about 7+ years. We've had 1 rate increase and I adjusted my policy downward to get the total premiums back to about where they were before in order to keep her benefits the same and since there is very little family history on my side.

 

[yclipse]

Blog?

With your background, you may find it worthwhile to offer your thoughts via a blog.

This page can provide some ideas - https://www.theminimalists.com/blog/

 

[Ebendana]

Excellent article

I would welcome the opportunity to read more of your summaries...very logical presentation. I am 61, DH is 63 and I had an opportunity when I was 45 and husband 47 to buy LTC insurance with John Hancock thru my employer...at the time, everyone thought I was "nuts", but I thought it made sense. At the time there were different "tiers" of coverage I could choose, so I decided to go with the least amount knowing there would be inflation protection offered every 3 years. I was very fortunate...our combined premium is only $99 per month, for a daily benefit of $275 and lifetime coverage of $324K each...with a return of premium option if I cancel before age 70. Needless to say, I don't plan on ever cancelling this, and I am OK if we never need it...one caveat I learned is that in the State of FL, one additional benefit of having LTC insurance is that you can keep the same amount of assets as the face value of your policy and still qualify for Medicaid.

 

[teej1985]

Wow, that's cool Rick! We bought LTC about 4 years ago and I had studied quite a bit before buying...so I was reading to see if the info matched my experience, which it did.

We originally looked at buying one of the state partnership policies, but found out they must include inflation adjustments or they do not qualify in our state. Adding the inflation protection proved EXTREMELY expensive, so we opted for a different approach. Instead, we "overbought" coverage....about 15 times what we otherwise would have bought. The cost doing this was about 60% lower than with an inflation adjusted policy. We do get the option of buying more coverage in the future.

This is similar to what i did, I bought the maximum benefit in LTCFEDS (like $500/day) for 5 years of benefits which costs about $70/month. I bought when I was 33. they will offer me increases over time for higher premium, but there is no COLA in the benefit. I could have purchased unlimited years of benefits for about double that premium, perhaps i should have. Won't know until it's too late.

 

[WWDog]

Excellent article! The wife and I bought a policy over 20 years ago and the premiums have only gone up once. I will have to dig it out and see what it says. We went with that company because they were excellent when my DF needed it several years ago.

 

[AtlasShrugged]

With your background, you may find it worthwhile to offer your thoughts via a blog.

This page can provide some ideas - https://www.theminimalists.com/blog/

Thanks for the blog suggestion. Someone else suggested that too.

I would like to set up a blog, but I can't figure out how. I tried using some of the popular blog sites and couldn't figure out how to use the tools or how to cut and paste pdf files into it. Finance is my thing, not IT.

Maybe a knowledgeable member can start a separate thread that discusses the easiest way to set up a blog for clueless people like me. Particularly, how to cut and paste pdfs. Maybe such a thread already exists?

 

[Chuckanut]

One good thing about not having LTC insurance is that it is an incentive to minimize the chances that life altering things happen to you. Both of my parents ignored some rather basic health preserving habits. While they lived to 89 and 92, I think they would have had many more 'good' years in their last decade had they done things like getting some regular exercise, seen the doctor more often, and left old grudges buried in the past.

 

[teej1985]

One good thing about not having LTC insurance is that it is an incentive to minimize the chances that life altering things happen to you. Both of my parents ignored some rather basic health preserving habits. While they lived to 89 and 92, I think they would have had many more 'good' years in their last decade had they done things like getting some regular exercise, seen the doctor more often, and left old grudges buried in the past.

Why would having insurance incentivize one to make poor health decisions?

 

[MarieIG]

I recall when DF shopped for LTC insurance DM did not qualify so he did not purchase it.

When he had to be in a nursing home following one of his hospitalizations - due to the need for IV mediations - he hated it and begged us to take him home. We did as soon as he did not need the daily physician monitoring of the meds. He was much happier at home.

I have been uninsurable for quite a while. In any event, I wouldn't buy a policy when I have no idea what the premiums would be.

 

[FinBiz]

This was well written and informative. I am interested in reading your other articles and future “stuff!”. Thank you for sharing.

 

[Alan]

This was well written and informative. I am interested in reading your other articles and future “stuff!”. Thank you for sharing.

There is an excellent paper and thread of his that is now in the FAQ forum if you missed it.

https://www.early-retirement.org/forums/f47/smart-money-rules-106292.html

Note that there is also a link now in the FAQ to his thread on LTC (post #2)

https://www.early-retirement.org/fo...c-and-ltc-insurance-updated-2020-a-30860.html

 

[mickeyd]

Thanks for the informative article Rick. I decided years ago to self insure this risk and have been satisfied with my decision. I wish I would have read your paper earlier, it would have made my decision easier, though it would not have changed it.

 

[sunnyca]

Nice summary

Thank you, I would definitely follow you and I hope you continue to write on retirement topics like this one. My employer used to provide a LTC policy as a benefit & when I decided to retire, I found it was portable & converted the policy into my name and have been paying the same premium for the last 7 years. I just this month received a premium increase notice, the company received approval from my state Dept. of Insurance to increase the premium by 82%. Needless to say, I am now conflicted whether I should continue with the policy and I just wanted to point out that rate increases of this magnitude are possible for those considering LTC policies.

 

[NoEZmoney]

Long Term Care Insurance - A Gamble Either Way

While I can appreciate the value of insurance to limit risk exposure, I have to add a couple stories from my relatives' recent experience.

I had an aunt and uncle who had done very well with their pensions, savings, investments, real estate. She was a retired state healthcare official in San Fran and he was a retired CalTrans engineer who also retired full commander in USNR. They lived super frugally and were very, very well off.

Both also had LTC policies that they paid premiums for years and while they started policies somewhat early, (late 40's early 50's) over the years their premiums added up significantly.

The day they needed LTC, it wasn't a super straight forward process. Both had dementia (one more severe than the other) and it was hard to keep up with everything but eventually we got it straightened out ( one company was quite slow in getting things going and our legal assistant had to play bad cop to get things expedited ).

The sad story is that both were in LTC facility for less than 2 years and they didn't get their money's worth, not by a long-shot. They had enough resources to pay out-of-pocket. But another point is they could've taken all those year's of premiums and applied them to an S&P Index, or any decent interest-bearing account with low expenses and moderate returns.

I did some basic research and discovered that for most people, the average LTC is usually less than two (2) years. Why? Because when you get to that stage where that level of care is needed (again for MOST PEOPLE), you are likely in the downward spiral. Of course, each person is different and your mileage may vary.

Another thing we discovered was the appointed executor of our aunt's estate reviewed the LTC and told us it wasn't a very good one and really didn't have much protection for inflation but since she had one she should use as needed. As with any policy, caveat emptor. Our Aunt and Uncle were accomplished people and were pretty sharp when they were young but once they got closer to retirement, they didn't research their options too well. At least that would explain the cost of and type of LTC policies they got.

As for me and DW, we're planning on geographic arbitrage which will likely involved "age in place" with healthcare visits and caregivers in another less costly country.

 

[Dash man]

While I can appreciate the value of insurance to limit risk exposure, I have to add a couple stories from my relatives' recent experience.



I had an aunt and uncle who had done very well with their pensions, savings, investments, real estate. She was a retired state healthcare official in San Fran and he was a retired CalTrans engineer who also retired full commander in USNR. They lived super frugally and were very, very well off.



Both also had LTC policies that they paid premiums for years and while they started policies somewhat early, (late 40's early 50's) over the years their premiums added up significantly.



The day they needed LTC, it wasn't a super straight forward process. Both had dementia (one more severe than the other) and it was hard to keep up with everything but eventually we got it straightened out ( one company was quite slow in getting things going and our legal assistant had to play bad cop to get things expedited ).



The sad story is that both were in LTC facility for less than 2 years and they didn't get their money's worth, not by a long-shot. They had enough resources to pay out-of-pocket. But another point is they could've taken all those year's of premiums and applied them to an S&P Index, or any decent interest-bearing account with low expenses and moderate returns.



I did some basic research and discovered that for most people, the average LTC is usually less than two (2) years. Why? Because when you get to that stage where that level of care is needed (again for MOST PEOPLE), you are likely in the downward spiral. Of course, each person is different and your mileage may vary.



Another thing we discovered was the appointed executor of our aunt's estate reviewed the LTC and told us it wasn't a very good one and really didn't have much protection for inflation but since she had one she should use as needed. As with any policy, caveat emptor. Our Aunt and Uncle were accomplished people and were pretty sharp when they were young but once they got closer to retirement, they didn't research their options too well. At least that would explain the cost of and type of LTC policies they got.



As for me and DW, we're planning on geographic arbitrage which will likely involved "age in place" with healthcare visits and caregivers in another less costly country.

Well, I’ve been paying homeowners insurance, car insurance, flood insurance, umbrella insurance and health insurance for decades and haven’t gotten my money’s worth out of it yet either! LTC insurance is protection for the unknown, just like all those other types of insurance that most of us have.
My LTC insurance also covers assisted living and in home care. We have one parent in her third year of Medicaid nursing home care after two self paid in assisted living. We have another parent in her fourth year of memory care/assisted living still paying for it herself. Another 12-18 months we’ll be paying for it.
We got our coverage around 2002, two years before my wife’s ovarian cancer struck at age 48. We would never have qualified after that.

 

[PandaBear]

Thank you for your informative article. As some others have noted, we have chosen to purchase LTC insurance. We pay approximately 2K per year for the both of us. However, to keep our premiums stable, we declined the COLA aspect. So a maximum of 6K per month. We figured this gives us a compromise......a little extra help if needed, but reasonable premiums. We can use it for facility or home care and have an unlimited time frame.

Both mine and dh’s parents carried LTC insurance. Both dads never accessed it, for various reasons before dying and my mom is still healthy and doing well. My MIL accessed benefits about 8 years.

We actually purchased our policies at a relatively young age, because of my work background. I worried about an early, life altering event and destroying my family’s finances. I know it wasn’t likely but for me, the cost was (and is) worth the peace of mind. However, I understand many other people may feel differently.

 

[RobLJ]

I've known too many where their premiums were jacked up to the point of unaffordability in their mid/late 70's and 8\0's, so I've decided to self-insure.

I understand those of you who have bought, since my grandparents all lived well into their 80s or 90s and my father had a very difficult last 6 months in Rehab.