Long term care meeting

[kmt1972]

I am meeting with an agent today that is selling LTC insurance. I really have enough assets to self-insure but I wanted to learn more about this. What sort of questions do people on this forum recommend I ask this agent.

 

[PandaBear]

I am by no means an expert, but here are a couple of thoughts (in no particular order)...

1. Is there a waiting period before benefits start? If so, how long?
2. What is benefit?
3. How long can the benefit be paid? (1 year, 2 years, as long as needed?)
4. Can the benefit only be paid to a long term care facility? (In our case, the benefit can be used to pay caregivers so person can remain at home, including a family member acting as a caregiver)
5. Is there a limit on how premiums can rise?
6. How long has the company been in the LTC industry?

I'm sure there are many more, but it's a start.

Panda

 

[rodi]

#4 and #5 would be my main focus of questions.
Additionally I'd ask:
Is there a COLA adjusted plan?

 

[OrcasIslandBound]

Is the insurance company healthy enough to be expected to be around for 30 + years?

Sent from my Nexus 4 using Early Retirement Forum mobile app

 

[CaliforniaMan]

I am by no means an expert, but here are a couple of thoughts (in no particular order)...

1. Is there a waiting period before benefits start? If so, how long?
2. What is benefit?
3. How long can the benefit be paid? (1 year, 2 years, as long as needed?)
4. Can the benefit only be paid to a long term care facility? (In our case, the benefit can be used to pay caregivers so person can remain at home, including a family member acting as a caregiver)
5. Is there a limit on how premiums can rise?
6. How long has the company been in the LTC industry?

I'm sure there are many more, but it's a start.

Panda

I would also make sure they show you in print the answers to these questions. In my one experience with one of these salesmen they really didn't seem to have solid answers, just a script, and scripted answers. Great questions from Panda, just get the official contractual answer.

 

[athena53]

Expanding on Panda's Question 4: how is the decision made that you can go "on claim"? In other words, who decides whether you need home help or that you need to move into a nursing home? If they pay for in-home care, is that semi-nursing stuff such as bathing, helping you dress, etc. or will they also pay for housekeeping and meal preparation?

I've avoided LTC coverage, although an agent I know says he'd be happy to sell it to me since I'm 61 and in excellent health so I'm unlikely to go "on claim" for years. He's less enthusiastic about DH, who's 75 and has chronic health issues! My two biggest concerns have been mentioned above: how much can the premium go up, and will the company be around when I actually need it? Note that they may trade a premium increase for a benefit reduction; some plans are offering people, say, a 50% reduction in benefits instead of a doubling of premium.

So, if the agent says that they can never increase premiums, ask if they have the ability to decrease benefit levels. And, frankly, I'd be concerned about a plan that promised no premium increases/benefit decreases; they do need to make adjustments if the claims under the program are worse than anticipated or the company will go out of business. OTOH, a plan that increases its rates too much will lose the healthier members in the group while the ones that are 2 months from being admitted to a nursing home will hold on and pay the premiums. That's called "adverse selection" and it can turn into a death spiral for the company.

 

[mathjak107]

I am meeting with an agent today that is selling LTC insurance. I really have enough assets to self-insure but I wanted to learn more about this. What sort of questions do people on this forum recommend I ask this agent.

keep in mind while assets can be protected , income for the stay at home spouse is generally not protected after the insurance runs out and medicaid is used..

that means the stay at home spouse is still limited by medicaid rules. in ny that is about 2900 bucks a month.

so it is all well and good you got to transfer assets and protect them when the insurance was in effect but now try living off the income.

some states offer partnership plans. we just applied for the ny one.

it requires no asset shifting and protects up to 75% of income. as of now it is 100% as they only request you contribute 25%
for the spouse being cared for.

any income though the spouse in the home has still falls under medicaid rules , such as a pension they had would fall under medicaid rules. but asset income does not and that falls under the extended medicaid rules.

you might want to see if your state offers partnership plans.

if they do check on what the out of state coverage is.

we lose most of the perks.

we took 3 years in a facility/ 6 years in home as our plan. after 3 years of payouts you go right on to extended medicaid.

that is one sweet deal as there is no 5 year look back.

this is nys partnership plan, remember though conventional ltc plans have no extended medicaid income protection as far as i know but you really have to check as i am not 100% certain .



Total Asset Protection (TAP) Plan
The resources of the TAP QPP are exempt from consideration in determining Medicaid eligibility. In addition, if the TAP QPP is married, his/her spouse’s resources are not considered in determining the QPP’s Medicaid eligibility. Therefore, it is not necessary to collect and/or document information on the TAP QPP’s resources or the resources of his/her spouse except to the extent that such information documents income derived from such resources.
In accordance with 96 ADM-8, “OBRA ’93 Provisions on Transfers and Trusts,” since resources are exempt from consideration in determining a TAP QPP’s eligibility for Medicaid Extended Coverage, the transfer of resource provisions (i.e., look-back period and penalty period) do not apply. However, since income is not exempt, a transfer of a lump sum income payment or a stream of income during the look-back period may result in a transfer penalty. If an exempt resource that generates income is transferred, no transfer penalty may be imposed."

"Total Asset Protection Plan
The Total Asset Protection Plan (TAP) allows for the disregard of all of the QPP’s assets in determining eligibility for Medicaid Extended Coverage. Under the Total Asset Protection Plan, there are two types of insurance policies.

a. Total Asset 50 policies, identified by the number “3/6/50,” provide a minimum benefit of:
��
Three years in a nursing home; or
��
Six years of home care (community-based long-term care services).
In order to be eligible for Medicaid Extended Coverage, a QPP must use benefits under the policy equal to 36 months of paid nursing home care or its equivalent. A combination of nursing home care, home care (where two days of home care equal one nursing home day), and certain other policy benefits may be used to satisfy this requirement
"
Where the community spouse of a Medicaid eligible nursing home resident has monthly income which exceeds the allowance, he or she is requested to contribute 25% of any income over the allowance to the costs of care of the Medicaid eligible nursing home spouse. This circumstance also applies to a couple at home where the Medicaid recipient is receiving specific home and community-based waiver services under the New York State Medicaid Long-Term Home Health Care Program, or receiving services under a Program of All-inclusive Care for the Elderly (PACE) program. For a description of Medicaid eligibility and the treatment of income and assets under the Partnership program, click

 

[marko]

With a NW of >$6M at <45 of age, I'm not sure what problem you're trying to solve.

By the time you'd need LTC your NW could be well over $25M in today's money. Pay the bill.

 

[mathjak107]

of course the flip side is:
A ----- The growth might not be as great as you project

B-- You may need long term care way before you think. my-co-worker just fell off a ladder painting. broke his hip. had a stroke during surgery and is paralyzed on one side at age 50.


c: costs escalate as much as your net worth does. lets not forget the name of the game with insurance is stay out of the home and have 24/7 in home care if needed. you don't want to go on medicaid and be shipped to a home so the longer you can hold out using insurance and your own assets the better.

 

[mathjak107]

finally we got approval yesterday for our long term care policies. it took just shy of 3 months from start to finish..

marilyn got the lowest prefered rate but being pre-diabetic my a1c was 6.5 so i got the standard rate.

i was wondering if they would accept me at all as strict as they are today so i am not surprised .

the blood test results spanned a few pages that they ran testing everything from hiv to drugs and nicotine. the memory tests they did were interesting though.


my back up plan would have been a linked benefit policy if i was rejected.

anyway glad that hurdle is finished and will finally be in place any day now.

 

[jerome len]

If you really have enough, self insure through a trust, appoint a competent administator and don't worry. If you don't have enough.....talk to the salesperson with all the great questions you've been given.

 

[mathjak107]

here is my view on self insuring. the truth is no one really does.

to self insure really requires one to set aside an obscene amount of money in a safe , secure liquid form that is available at a moments notice.

my co-worker at 52 fell off a ladder painting ,broke a hip and had a stroke during hip surgery leaving him paralyzed.

I can invest that sum of money I would have to hold conservatively and invest it in more volatile assets and take just a percentage of the average returns and buy a policy.

one other factor is when the insurance runs out I can stay in that home of my choice and as long as they accept Medicaid I have a nice place to stay as well as:

I do not have to shift assets as with the partnership plan there is no look back and most important that stay at home spouse has no restriction on income while on extended Medicaid.

all well and good you could self insure and shift assets but the income is limited.

most who say they are self insuring are really not. they just coast along as is and hope they don't have to actually sell assets.

as mike Tyson stated so beautifully" everyone has a plan until they get punched in the face"

 

[Peter]

I've been looking into this as well recently. For my wife and myself, the monthly premium would be $350.83, for a total benefit limit of $328,000. (It's actually more complicated than that, but those are the basic numbers.)

My biggest reservation is that $328,000, while a substantial sum of money, wouldn't be a make or break issue for us. And, realistically, the actual cost of long term care could be a lot more than this.

So it might not cover everything, just be a way of softening the blow.

I was not aware of the Partnership programs described by mathjak; thanks for drawing attention! This could make the overall insurance deal a bit more attractive.

 

[nuke_diver]

I've looked into this a little as ER draws near but I'm leaning towards not getting it. The reasons are similar to some of the questions to ask the agent

1. It would be, hopefully a long ways off. While there are risks of a freak accident like the one posted you aren't really buying it for a freak accident but for declining health in your old age. Given that, what are the odds that the company would still be around and paying benefits in 30, 40 years...what happens to your policy if they become insolvent or simply get out of the business.

2. How much would it cost long term versus how much would you get in benefits and does the max benefit make it worthwhile?

I think Calif has some offered LTCI but I'm not sure if it is similar to that quoted by mathjak. However since I'm not sure I will stay in Cal going that route doesn't seem wise unless I was 100% sure I was staying

 

[Chuckanut]

Given that, what are the odds that the company would still be around and paying benefits in 30, 40 years...what happens to your policy if they become insolvent or simply get out of the business.

I think it is likely that most major insurance companies are still in business. What I fear is that they will choose to get out of the business, and, to expedite matters, increase the yearly premiums until most policy holders will have now choice but to give up the policy.

Several people I know of had had past increases in the area of 15-20% per year. After a year of two of promised no premium increases, they are again looking at double digit increases. So, as they age and the probability of using the insurance increases, it is becoming more and more unaffordable. Not so good.

 

[dtbach]

I'm rolling the dice and self insuring. My family history (on both sides) were either sudden or fairly quick deaths. I'd rather buy cruises than LTC policies.

 

[mathjak107]

having had my dad in a home for many years after a stroke we are not going to play the aint happening to me card.

i believe that a good plan has all kinds of the needed catastrophic insurance at the base of the investmant pyramid mitagating damages to all the assets above it.

the gains on those assets can pay the relatively small premium in comparison for the protection of those assets.

 

[mathjak107]

I'm rolling the dice and self insuring. My family history (on both sides) were either sudden or fairly quick deaths. I'd rather buy cruises than LTC policies.

so my question is what are you doing with the money for the long term care you are self insuring with?

if keeping it invested what if we have an extended down turn and it is a fraction of the amount?

usually self insuring just means i will roll the dice, hope i don't need care and no provisions are generally made .

what really swayed us is when we met with our estate attorney he was telling us how a big part of his business today is folks coming to him after the fact they need that care and trying to scramble to protect assets and negotiate settlements with medicaid so as to avoid actually blowing through that money they never really set aside.

one other big factor when self insuring and not all that wealthy:

every dollar you spend as the stay at home spouse is a dollar less you yourself have to live on or as security. it means alot of expenditures for things do not get made because everything becomes a trade off.

more often than not the care would be alot nicer and better if someone else was paying for it other than the spouse that has to continue to pay these bills and maintain their lifestyle as well.


just food for thought.

 

[SJ1_]

I would also make sure they show you in print the answers to these questions. In my one experience with one of these salesmen they really didn't seem to have solid answers, just a script, and scripted answers. Great questions from Panda, just get the official contractual answer.

+1
and make sure that that is what the policy actually says. What a salesman
said or didn't say will not matter 30 yrs from now, what is in the policy will.

I was under the impression that there is no such think as a policy that
does not have the premiums go up? and that is one of the main reasons
LTC is a waste

 

[youbet]

most who say they are self insuring are really not. they just coast along as is and hope they don't have to actually sell assets.

I don't know if what you say applies to "most" or not. It certainly doesn't apply to me. DW and I are self-insured and without any of the potential negatives you mention.

 

[youbet]

finally we got approval yesterday for our long term care policies..

How much are the premiums and what is the maximum payout in dollars?

 

[Rustic23]

I consider us 'self insured' however, I don't have a huge stack of bills in a safe to cover the expenses. We have current income to cover LTC and current living expense.

 

[mathjak107]

+1
and make sure that that is what the policy actually says. What a salesman
said or didn't say will not matter 30 yrs from now, what is in the policy will.

I was under the impression that there is no such think as a policy that
does not have the premiums go up? and that is one of the main reasons
LTC is a waste

Does not your home and auto insurance go up over time?

I wouldn't say it is a waste.

in fact 77% of us will need in home care at some point . what do you think home insurance would cost with a 77% chance we would all file claims.

 

[Taxman59]

Getting it in writing is meaningless UNLESS the letter is signed by an officer of the insurance company. The agent can't bind the insurance company. I have gotten a $500k settlement (all premiums paid, legal fees and interest lost) on a policy that turned out to be what the agent promised. The insurer said we could get the CSV only, but when their legal dept talked to our attorney and looked at the letter signed by the insurance company corporate officer, the only remaining question was how much interest!


Sent from my iPad using Early Retirement Forum

 

[Chuckanut]

Does not your home and auto insurance go up over time?

I wouldn't say it is a waste.

in fact 77% of us will need in home care at some point . what do you think home insurance would cost with a 77% chance we would all file claims.

No. It's not a waste. IMHO, LTCI is more like life insurance. When I bought my life insurance I was given a premium table. It showed the lowest, expected and highest premium I would pay. Obviously, by purchasing it earlier in life, I got a better rate than buying it later, or after I had been seriously ill.

When I can see that in a LTCI plan, I will consider buying it. Currently, from what I understand of LTCI, new customers are paying huge rates to make up for the fact that they insurance companies underestimated the usage of the previous LTCI policies. At some point the insurance industry has to get a grip on this problem.