LTC coverage, one real life example

[Sunset]

....... But one challenge is today's RetiredHappy (and rational) and the person who needs to say Yes! to the rate increases in the distant future may very well be two different people, in effect.

I think that anyone with a LTC policy should have their loved ones/heirs involved in the annual bill paying and decisions so the policy does not get abruptly cancelled or reduced for cost saving. Genworth for example has some tools so that others can be alerted if there's a major policy change.

Really good point.
My dear FIL wanted one day to cancel his umbrella coverage as he wasn't getting any value out of the $212 yearly cost, he had it for around 15 yrs but suddenly thought it was bad. .

 

[MisterBill]

I hear that far more often.^
My employer's mother used hers up, and the father is doing the same now.
My sister and her late husband were able to use some of their benefits.
My mom? 8 days at home in her bed.
Dad died in my arms while grocery shopping.

But isn't that a great reason for getting a hybrid policy? At least your heirs get something back if you don't get use of the policy while you're alive.

 

[RetireeRobert]

But isn't that a great reason for getting a hybrid policy? At least your heirs get something back if you don't get use of the policy while you're alive.

That is reason number 1 while I went the hybrid route. Reason number 2--never any premium increases or coverage decreases.

 

[Koolau]

LTC insurance is much like any other insurance in that: If you end up using it, it was well worth the premiums and it may be a real God-send. If not, it was a waste of money.

Mom had a policy that paid for two years in a NH. When it ran out, we sold her house and liquidated what small amount of assets she had. She came out even at death and never had to go through the process of Medicade.

Perhaps on the strength of that experience, DW and I took out policies and have kept them up. Someone suggested that the LTCi companies "wait" until you are about ready to need the policy and begin raising premiums (my take on the gist of the conversation.) It is true that LTCi policies CAN have premium increases, but they are not based on the age of the holder of the policy. The increases are based on the overall results of the payouts and number of folks who drop their policies and (I think) how well the company does with the money they take in (not sure about that part.)

BUT, LTCi companies can not simply raise their premiums. They must got through governmental bodies to justify the increases in premiums. We have had one raise of premiums and it was substantial. I'm of two minds on LTCi. It's not like life insurance since we all die but not all of us end up in LTC. Given the chance to go back now (25 years) I'd probably not take out LTCi. BUT, now that I have it and DW and I both have "issues" that could eventually land us in the NH, I'm hanging on to our policies. As always, and especially on LTCi, YMMV - and I hope NONE of your policies (and mine included) EVER pay off!

 

[ProGolferWannabe]

LTC insurance is much like any other insurance in that: If you end up using it, it was well worth the premiums and it may be a real God-send. If not, it was a waste of money.

I am going to respectfully disagree with you on this point. I don’t see that failing to make a claim on LTC or any insurance for that matter is a waste of money. Insurance is intended to mitigate or off-load risk, and one has to pay for that ability. Yes, it is certainly possible to pay too much too off load that risk, or that one is over insured, but that is true of pretty much any product or service. My purchase of a LTC policy was done for the purpose of preventing catastrophic financial loss….limiting the downside risk to my nest egg. I sleep better at night knowing I have that protection. Honestly, I hope my wife and I never file a claim…instead we just go quietly and quickly into the night after living full, complete, and active lives.

 

[earlysignoff]

Hence you need to buy enough LTC coverage and have some more savings to cover the shortfall.

When I bought mine in 2009, it was for $6,000 per month with a 3% compound inflation rider. At that time, a day's care was about $300 for both (24hr) home care and facility care. Home care costs have since sky rocketed due to removal of overtime exemption in wage and hour law. I was planning on covering the balance of $100 through investments. As of today, my coverage is $8,555 per month. It covers for a maximum of $515K and also growing at 3% compound. Many people do not realize how expensive is home or facility care and buy so little that it ends up being insignificant compared to actual costs. In my case, not bad for $97 per month in premium.

I also bought a policy from Genworth thru AARP in 2009 on very similar terms that have been cited by Retired Happy. It was a LTCI with spousal/couple benefits. I also got a preferred health discount. It started with a monthly benefit of $6,000 per month which on a 5% compound rider is around $10,262 i.e. $342 per day. Between DW and I , we share the total certificate amount of $576,000. We pay a premium of around $385 each month. So far I have not seen a premium increase. Couple of years ago, I reached out to the Long Term Care Association and asked them to review my policy. I heard from them that the AARP/Genworth policy was a very good one and they advised me to hold on to it if I can afford it. If for any reason the premium increased big time, they asked me to reduce the benefits but not cancel the policy. If I die before DW, the policy gets fully paid up and DW does not have to pay any more premiums.

Time will only tell if the decision I took when I was around 50 years was the right one. Better safe than sorry, I guess. LTCI is the most ignored topic by the politicians. By 2050, citizen above 65+ are going to outnumber the young guys

 

[someday soon]

I am going to respectfully disagree with you on this point. I don’t see that failing to make a claim on LTC or any insurance for that matter is a waste of money. Insurance is intended to mitigate or off-load risk, and one has to pay for that ability. Yes, it is certainly possible to pay too much too off load that risk, or that one is over insured, but that is true of pretty much any product or service. My purchase of a LTC policy was done for the purpose of preventing catastrophic financial loss….limiting the downside risk to my nest egg. I sleep better at night knowing I have that protection. Honestly, I hope my wife and I never file a claim…instead we just go quietly and quickly into the night after living full, complete, and active lives.

Thanks for posting this. Most ( perhaps all? ) of us will happily pay home and auto premiums for decades -- and if there is never a claim/payout, we won't complain a bit. Yet somehow, the idea that "LTC ins without some guaranteed payoff/refund is a waste of money" is very popular.
I get that LTC premiums hurt more due the the higher price tag - no argument there ...but apart from that, doesn't the "waste of money" notion seem like a bit of a logical disconnect compared to other ins like auto/home/etc ?

 

[skyking1]

I think the stories of denied claims and delayed claims has colored that comparison, even though similar things happen with all insurance.

 

[audreyh1]

I think the stories of denied claims and delayed claims has colored that comparison, even though similar things happen with all insurance.

Yeah, constant ongoing claims too and paperwork. A facility can deal with a lot of it. Nords was constantly having to ride herd on this. Getting it started seems to be the hardest.

 

[RobbieB]

Dealing with Genworth was a nightmare. Pops was out his 100 days, I was sending them everything I had, invoices, CMS stuff and they cancelled the claim. Shortly after he died.

I will never ever deal with Genworth again.

Pops paid thousands in premiums for years, benes always decreasing and when he was needing them...cancelled.

 

[RetiredHappy]

Dealing with Genworth was a nightmare. Pops was out his 100 days, I was sending them everything I had, invoices, CMS stuff and they cancelled the claim. Shortly after he died.

I will never ever deal with Genworth again.

Pops paid thousands in premiums for years, benes always decreasing and when he was needing them...cancelled.

Why did they cancel the claim? As long as policy holder requires assistance with 2 ADLs, the insurer will pay. They may accept a doctor's letter or they may send out an independent nurse to assess prior to approval. We have never had a client whose claim was denied.

 

[ProGolferWannabe]

Why did they cancel the claim? As long as policy holder requires assistance with 2 ADLs, the insurer will pay. They may accept a doctor's letter or they may send out an independent nurse to assess prior to approval. We have never had a client whose claim was denied.

I have no first hand experience in dealing with filing claims, but I’ve read a number of articles in the WSJ about policyholders often having “challenges” in getting claims paid. If you google Jim Cramer (from CNBC) LTC you might read about his experience dealing with his father’s LTC carrier. It wasn’t a glowing review. All of these could be unusual situations… the average Joe might have few issues filing claims. But I think it’s fair to say there is some skepticism from from the press and public about these firms meeting their obligations timely.

 

[RobbieB]

He was in the nursing home where he died after denying my claim. After he died they refunded a pro-rated premium.

So, they knew he died and where he died (I didn't tell them) and sent a friggin refund.

Genworth never again.

 

[RetireeRobert]

If you google Jim Cramer (from CNBC) LTC you might read about his experience dealing with his father’s LTC carrier. It wasn’t a glowing review.........

I suppose Jim Cramer approached filing his claim with the same calm, soothing, collected manner with which he presents his investment tips!

 

[ProGolferWannabe]

He was in the nursing home where he died after denying my claim. After he died they refunded a pro-rated premium.

So, they knew he died and where he died (I didn't tell them) and sent a friggin refund.

Genworth never again.

I’m sorry to hear about your experience. Beyond not meeting their initial financial obligation, it sounds like they handled you dad’s death in an insensitive manner. I’m sure it only added to the stress of the situation, and I can understand why Genworth left a bad taste in your mouth.

 

[Koolau]

I am going to respectfully disagree with you on this point. I don’t see that failing to make a claim on LTC or any insurance for that matter is a waste of money. Insurance is intended to mitigate or off-load risk, and one has to pay for that ability. Yes, it is certainly possible to pay too much too off load that risk, or that one is over insured, but that is true of pretty much any product or service. My purchase of a LTC policy was done for the purpose of preventing catastrophic financial loss….limiting the downside risk to my nest egg. I sleep better at night knowing I have that protection. Honestly, I hope my wife and I never file a claim…instead we just go quietly and quickly into the night after living full, complete, and active lives.

Actually, I don't think we disagree because I completely agree with what you have said here. It was perhaps an unfortunate use of the word "waste" in my previous post. I agree - it's NOT a waste since you get the coverage. Bad use of the language on my part.

 

[ProGolferWannabe]

Actually, I don't think we disagree because I completely agree with what you have said here. It was perhaps an unfortunate use of the word "waste" in my previous post. I agree - it's NOT a waste since you get the coverage. Bad use of the language on my part.

Pretty easy to write something knowing what you mean to convey, but having someone else interpret it otherwise…I’ve done it dozens and dozens of times.

 

[RetiredHappy]

I have no first hand experience in dealing with filing claims, but I’ve read a number of articles in the WSJ about policyholders often having “challenges” in getting claims paid. If you google Jim Cramer (from CNBC) LTC you might read about his experience dealing with his father’s LTC carrier. It wasn’t a glowing review. All of these could be unusual situations… the average Joe might have few issues filing claims. But I think it’s fair to say there is some skepticism from from the press and public about these firms meeting their obligations timely.

For eight years, we ran a home care agency and helped clients navigate the LTCI claim process and had never encountered a case where the clients qualified but the insurers refused to pay. Once the waiting/elimination period was over, the LTCI companies would pay us directly and we balance billed the clients if the cost was more than the LTCI coverage. We did have rather onerous documentation that we had to submit together with the invoices to the the LTCI companies. When I hear that someone did not get a claim approved, there had to be some other issues which disqualified the claim. Genworth was the number 1 company in paying the most claims in the country.

 

[RetireeRobert]

For eight years, we ran a home care agency and helped clients navigate the LTCI claim process and had never encountered a case where the clients qualified but the insurers refused to pay. Once the waiting/elimination period was over, the LTCI companies would pay us directly and we balance billed the clients if the cost was more than the LTCI coverage. We did have rather onerous documentation that we had to submit together with the invoices to the the LTCI companies. When I hear that someone did not get a claim approved, there had to be some other issues which disqualified the claim. Genworth was the number 1 company in paying the most claims in the country.

And given the onerous regulatory environment for an insurer to even be able to get licensed in any particular state where they sell policies, my opinion is that more likely than not, when a policyholder meets the terms of the written policy for submitting claims, policyholder is likely to get them paid. My opinion is that a lot of the complaints about denied claims trace back to deficiencies in the claims themselves (i.e. at least 2 ADLs not impaired, waiting period not met, documentation not submitted when requested, etc.). In the stress and emotion of dealing with ailing loved ones, those submitting claims may often go astray on just when claims are covered or not adequately prepare claim for submission.

But, that is only an opinion.

 

[Dalmore]

I want to share some real numbers DMIL experienced in her last year or so. She had a LTC insurance policy and needed assistance. She filed to collect on her policy. To start, there was an evaluation to determine she really needed assistance.

Once approved, there was a 90 day waiting period before she could begin receiving any benefits. In addition, since she was still at home, she still was required to continue paying her premiums.

Her benefit was lower than it could have been due to her selecting home care instead of a 24hr care facility.

Her 12 hr/day home care cost was around $324 per day/$9720 per month. From that $86per day/$2589 per month was covered by her LTC policy. That meant her out of pocket was $7,140 per month.

Had she chosen to go into a care facility, the average costs here run around $6,000 per month. She would have been getting 24 hr care not just 12hr care at home. Her LTC policy would have paid the higher $156 per day/$4,680 per month, leaving her out of pocket expense of only $1,320.

In her last month, she needed 24 hr care and that was still done in her home. I do not know the financial numbers for that last month. I do know she still had premiums to cover.

She was more comfortable staying in her own home until the end. I think the wanting to stay in their home is more than commonplace as we age. 12hr care per day is expensive and care time per day is lower than being in a facility. It is more personal care for certain. That is good. Fortunately DMIL had the resources to cover her share of the costs.
.

Pretty much the exact same scenario as DW and I are facing with my FIL.

 

[mcbraemer]

Like tontine, you lose if you die without fully utilizing what you have paid into. For those who manage to use it for far more that have been paid into win big. Oh, that is also called insurance.

Another take on this is those who manage to use it for far more than have paid out are actually not "winning big" either. It's probably not much fun having to be bathed, dressed and fed (or worse).
I guess the winners are those without insurance who live healthy happy lives and die peacefully at 90+?

 

[RetiredHappy]

Another take on this is those who manage to use it for far more than have paid out are actually not "winning big" either. It's probably not much fun having to be bathed, dressed and fed (or worse).
I guess the winners are those without insurance who live healthy happy lives and die peacefully at 90+?

Very true.

 

[RetireeRobert]

Another take on this is those who manage to use it for far more than have paid out are actually not "winning big" either. It's probably not much fun having to be bathed, dressed and fed (or worse).
I guess the winners are those without insurance who live healthy happy lives and die peacefully at 90+?

Make that "who die peacefully at 100+" and I agree!

 

[bzribee]

My mother brought a policy at 60 and used it several times in her late 70's and into her 80's. If we requested a "Care Manager" (I forget the exact title but it was a person who would keep track of her needs and the policy) from the company, the benefits would start immediately and she stopped paying premiums while receiving care. There was a max/day that they'd pay, $163 I believe. And, it was a lifetime policy. We calculated that the insurance company was ahead until her last two-three years--then we were ahead. Benefits were not available when she was hospitalized (we would pay the aides out of pocket to stay on) but I would call the Care Agent directly when she'd come home and the benefits would be reinstated immediately. I believe Mom was not covered when she went onto hospice.
This was with Mutual of Omaha who no longer offers LTC or at least not lifetime benefits. We really lucked out with this policy. Our Care Manager was wonderful to work with and we were thrilled we had that particular policy.
I fretted over getting a policy for myself and think I could self-insure but as a single female living alone and no nearby family, I went ahead and got a policy. I curse it every year when I pay the premiums and second guess myself about keeping it (even if I stop paying, the premiums paid can be banked and used towards care I was told). I have Genworth but not through AARP...hmmm--I wonder if that version would lower my premiums. I did not buy inflation protection and rates haven't changed in the 7 years I"ve had the policy.

 

[Koolau]

My mother brought a policy at 60 and used it several times in her late 70's and into her 80's. If we requested a "Care Manager" (I forget the exact title but it was a person who would keep track of her needs and the policy) from the company, the benefits would start immediately and she stopped paying premiums while receiving care. There was a max/day that they'd pay, $163 I believe. And, it was a lifetime policy. We calculated that the insurance company was ahead until her last two-three years--then we were ahead. Benefits were not available when she was hospitalized (we would pay the aides out of pocket to stay on) but I would call the Care Agent directly when she'd come home and the benefits would be reinstated immediately. I believe Mom was not covered when she went onto hospice.
This was with Mutual of Omaha who no longer offers LTC or at least not lifetime benefits. We really lucked out with this policy. Our Care Manager was wonderful to work with and we were thrilled we had that particular policy.
I fretted over getting a policy for myself and think I could self-insure but as a single female living alone and no nearby family, I went ahead and got a policy. I curse it every year when I pay the premiums and second guess myself about keeping it (even if I stop paying, the premiums paid can be banked and used towards care I was told). I have Genworth but not through AARP...hmmm--I wonder if that version would lower my premiums. I did not buy inflation protection and rates haven't changed in the 7 years I"ve had the policy.

Wow, sounds like your mother had a very good experience with her policy.

My mom also had some sort of "contact" within the company. She would keep us informed and give suggestions. She pointed out that mom could extend her policy if she ever got home and began paying premiums again. Of course, that wasn't possible. All in all, I was satisfied with mom's policy. No, I don't recall the Ins. Co.'s name - that's been 25 years ago.

If you have had the policy for 7 years, it is at least possible you will not experience premium increases. As I mentioned elsewhere, the primary reason for increases was NOT because too many people used their policies. Insurance companies have good actuaries on staff. They know how many people will die (life insurance) and how many people go into care facilities (LTCi). What they got wrong was how many folks would pay for 5, 10, 15 years and THEN drop their policies without ever actually using them. I think they have a much better handle on that now. Probably 7 years ago they had figured most of that out. Of course, I don't know that for a fact, so YMMV.