LTC policy for retirees??

[albireo13]

I've been listening to radio financial talk shows where they are recommending long term care (LTC) insurance policies for retirees.
This is something I have not looked into yet.

How many people do this?
Does it really make sense or is it another way to get your money?

I am 62yo, DW is 58, and 2 yrs from retiring. Finances look good so far
(100% on Firecalc) but, the thought of decimating savings if LTC pops up is disturbing.

Rob

 

[Choices]

We both have LTC ins. Bought it at about age 55.

 

[Fedup]

I bought it at 50, but I let it go at 56, premiums kept going up. I’ve not heard it’s going up this year or not.

 

[marko]

From what I understand, LTC insurance is pretty steep nowadays with limited coverage. Mom bought it 30 years ago and hasn't cashed in yet.
We don't have it.

Our take is that our current, healthy living expenses are higher than what LTC would cost.

If one of us needed LTC, the other spouse's life would change equally dramatically and my/her outside costs would plummet. No more travel or big dinners out, one car, get rid of the boat, etc. and more time sitting bedside holding each other's hands.

So the cost would not be $120K on top of what we already spend but more like $30K over and above. Just shifting one set of expenses for another.

 

[Brat]

Do a search on this site about this issue and you will find the results mixed. Even if you have LTC insurance it can be a challenge getting them to pay up.

The policy we purchased is no longer available likely because the actuaries blew it.

If you have the requisite number of hospital days (3) then Medicare picks up the skilled nursing tab for a month or two.

In our area there are options such as licensed adult foster care, many offering basic nursing care for invalids that is much less expensive than a nursing home.

You need to push your numbers, maybe even consulting an attorney who specializes in seniors.

 

[bingybear]

I looked at it in our early 50's and decided against it. We were too late to catch where they would pay for life, so you usually pay for less than 5 years of coverage. The problem is that the insurer can up you premium payments as they need, thus figuring out the cost/benefit is a moving target.

Note that two states (one is NY) have partner plans that provide for unlimited asset protection. Effectively if you have those plans and use them correctly you can get government paid LTC without exhausting you assets.

Most other states have partner plans that will protect the amount of assets that your LTC plan paid. Note - must be a partner plan. Not sure about reciprocity between states.

We did not buy the plan. We have be fully funding HSAs and investing them. This will provide a part of our planning. We will also set some assets as a buffer that could be used to cover LTC... consider it as a buffer in the budget.

Search the ER board. There are many threads.

 

[Fedup]

Be aware that on BH forum, there is an LTC insurance salesman, he’s been pushing for new and improved LTC plans. Who knows how it works with the new plan, but since he is direct benefit from selling LTC, I would be wary of his comments if you do search there.

 

[marko]

It's also a bit of a crap shoot. Our elder care attorney said that the average stay in a NH is about three months now. (I know...average; someone will come up with an aunt who spent 15 years at one).

That's because home-care and other non-NH options are increasing quite a bit so people mostly end up going to NHs to 'wait for God' as opposed to long-term care as in years ago.

 

[braumeister]

I've been listening to radio financial talk shows where they are recommending long term care (LTC) insurance policies for retirees.
This is something I have not looked into yet.

First, please don't get your financial advice from the radio talk shows. That's usually a mistake.

Second, when you decide to do your own research you'll find it to be a very difficult decision. You can search here on this site and find many discussions about it, with no clear consensus. Some have had good experiences, others terrible problems. There are (or were) some excellent policies available, but many of them are no longer offered.

Third, the biggest problem for those who have LTC policies seems to be constant and very large increases in premiums, so that's something to consider carefully.

Finally, don't be misled into thinking you must have a LTC policy. Many people self-insure for this possibility, for good reasons. But only you can decide what's best for you, not any third party.

 

[mickeyd]

I have never bought into the LTCi scare, even when I w**ked in the insurance biz years ago. That risk is easy enough to self-insure.


Looking back, I sure have saved a boat-load of cash by not sending my hard-earned money to an insurance company and putting up with all of their non-sense. That boat-load of cash that I mentioned is now available to me if I ever need it for LTC. If I never need that cash for LTC, I shall spend it on fun and adventure.

 

[Fedup]

I’m the one who spends lots of money on insurance, so naturally I thought from reading the internet, it was a good idea, especially it came out of my pretax income. After I retired, it came out of my after tax income, that’s why I had to do some serious thinking. That’s let me to drop my LTCi.

 

[joeea]

We purchased Long Term Care insurance when we both reached age 59.
It's been over 4 years and no increases in the premiums so far.

Some folks believe they can save up a sufficiently large pile of money and thus "self insure". Some of these folks may be right. Some aren't. Others have so little money that they will plan to have Medicaid pay for their long term care should it be needed.

It's the folks in the middle who don't want to burden their spouse and/or children that have tough decisions to make.

If you have a financial adviser, this is a decision where you'll want to get their input. There are lots of variables that go into a good policy. Don't be scared off by those crying "but the premiums go up so much" - that's not something everyone experiences.

 

[joeea]

It's also a bit of a crap shoot. Our elder care attorney said that the average stay in a NH is about three months now. (I know...average; someone will come up with an aunt who spent 15 years at one).

That average includes the majority of folks who never go to a nursing home at all.

The problem is that you don't insure for the average, otherwise nobody would ever purchase homeowner's insurance, since the average house never burns down.

Instead, you purchase insurance for the extremes. According to the 2004 National Nursing home survey, the average length of stay for nursing home residents is 835 days (see: https://www.longtermcarelink.net/eldercare/nursing_home.htm)

 

[Fedup]

I thought the average was 3 years, that’s what I bought the coverage for.

 

[Dtail]

Do a search on this site about this issue and you will find the results mixed. Even if you have LTC insurance it can be a challenge getting them to pay up.

The policy we purchased is no longer available likely because the actuaries blew it.

If you have the requisite number of hospital days (3) then Medicare picks up the skilled nursing tab for a month or two.

In our area there are options such as licensed adult foster care, many offering basic nursing care for invalids that is much less expensive than a nursing home.

You need to push your numbers, maybe even consulting an attorney who specializes in seniors.

Bolded - I believe the Medicare coverage is for 100 days.

 

[aja8888]

I thought the average was 3 years, that’s what I bought the coverage for.

Yep, after three years, they would boot you out.

 

[Fedup]

Yep, after three years, they would boot you out.

I doubt that I would last a day there. They maybe boot me out after a day, that’s why I don’t buy LTCi.

 

[bingybear]

What I would like to see is LTCI with a 3 year elimination period and open ended coverage. If you end up with dementia and live a long time your 3 year policy doesn't solve the issue. In theory this insurance should be less expensive based on the longer elimination period since many people would not live long enough for pay out.

I see the shorter term policies more like pre-paying LTC vs insurance.

 

[COcheesehead]

I have a rider on a life policy that will pay 90% of the death benefit for LTC care. It’s paid in cash so you can apply it as needed. I’ve had the policies long enough that they are self paying based on earnings. People hate whole life, but they can be of value.

 

[joeea]

Bolded - I believe the Medicare coverage is for 100 days.

Maybe: https://www.elderlawanswers.com/medicares-limited-nursing-home-coverage-12131

"Medicare Part A covers up to 100 days of "skilled nursing" care per spell of illness. However, the conditions for obtaining Medicare coverage of a nursing home stay are quite stringent. Here are the main requirements:

- The Medicare recipient must enter the nursing home no more than 30 days after a hospital stay (meaning admission as an inpatient; "observation status" does not count) that itself lasted for at least three days (not counting the day of discharge).
- The care provided in the nursing home must be for the same condition that caused the hospitalization (or a condition medically related to it).
- The patient must receive a "skilled" level of care in the nursing facility that cannot be provided at home or on an outpatient basis. In order to be considered "skilled," nursing care must be ordered by a physician and delivered by, or under the supervision of, a professional such as a physical therapist, registered nurse or licensed practical nurse. Moreover, such care must be delivered on a daily basis. (Few nursing home residents receive this level of care.)

As soon as the nursing facility determines that a patient is no longer receiving a skilled level of care, the Medicare coverage ends."

 

[Brat]

I agree that if you purchase an LTC policy buy one that meets your State's "partner" requirement.

In a skilled nursing facility care is delivered by, or under the supervision of, a professional such as a physical therapist, registered nurse or licensed practical nurse daily. It is when you are moved out of the skilled nursing environment issues arise but, frankly, most nursing homes are under the supervision of a LPN. What Medicare want to see is care that leads to rehabilitation. Medicare certifies the facility and it must report at least weekly the treatments provided and progress of the patient.

 

[marko]

That average includes the majority of folks who never go to a nursing home at all.

The problem is that you don't insure for the average, otherwise nobody would ever purchase homeowner's insurance, since the average house never burns down.

Instead, you purchase insurance for the extremes. According to the 2004 National Nursing home survey, the average length of stay for nursing home residents is 835 days (see: https://www.longtermcarelink.net/eldercare/nursing_home.htm)

Well of course.
But even at an average of 3 years it's about a $350k problem (with a hefty tax write off). A big hit but still within the self insuring realm for those who do.

From personal experience, the newer care-at-home approach mitigates a lot of those months that otherwise would be spent paying for NHs

 

[joeea]

But even at an average of 3 years it's about a $350k problem

Average...

 

[Fedup]

What I would like to see is LTCI with a 3 year elimination period and open ended coverage. If you end up with dementia and live a long time your 3 year policy doesn't solve the issue. In theory this insurance should be less expensive based on the longer elimination period since many people would not live long enough for pay out.

I see the shorter term policies more like pre-paying LTC vs insurance.

Exactly, this is why I cancelled it. But in the market right now, there is no such thing.

 

[marko]

Average...

I don't see your point. Are you suggesting that one should insure for a possible worst case scenario? Like 15 years in a NH?

From what I see here, there're no policies out there that make much financial sense, are difficult to deal with and likely quite limited in duration/coverage.

I see self insuring as the most likely option. Rolling the dice? Sure. But I don't see many other ways to go. I'm open to suggestion.

As I noted above, in our personal case, a long, long term NH stay would change our lives, but not break the bank as we're already spending that kind of money on our current lifestyle; it would end up being the same money spent differently rather than an over-and-above cost.

Sadly, I've learned more about NHs, SNFs and in-home-care over the past two years than I ever wanted to know. I do believe there's a notable shift to in-home-care that will greatly mitigate the NH length of stay.

Here's a quick article to that effect: http://www.modernhealthcare.com/article/20170817/NEWS/170819912

Excerpt: "...Although the number of aging baby boomers has swelled in recent years to the fastest growing population in the U.S.....people are more likely to end up in assisted living facilities or rely on home health professionals for care, said Jason Lundy, partner of the health practice group at law firm Polsinelli. Only the sickest patients now end up in nursing homes, he said..."