LTC Poll

[Gearhead Jim]

...
And, that's the thing. Many of the people on this thread who haven'tbought LTCI certainly understand the reasons in favor of buying and understand that there is a lack of uncertainty about the future. It is just that the existing policies have such issues, that they aren't at all sure that buying a policy will serve to give the protection wanted.

Life is about managing risk. Stocks vs bonds, etc.

LTC policy risk is primarily that the premiums will increase so as to be unaffordable. There is also a risk that you won't get the benefits you expected, but that seems to be much less of an issue.

Self-insurance risk, and gaming the Medicaid rules, has the risk that those rules will change.

Having both types of "protection", if you can, seems like the best bet, because the consequences of "failure" can be so devastating to both of a couple.

 

[JakeBrake]

Another aticle on LTC insurance, specially for women.

Terry Savage | Article 082613 | Long-term Care Prices For Women

 

[LARS]

Seems to me the question of whether to purchase LTCI is fairly simple: if you can easily absorb the expense represented by the total amount of proceeds you'd receive from LTCI then no need to buy (i.e. if insurance amount is $400,000 and that amount won't impact your NW materially then forgo insurance).

Put another way, it is important to recognize that you are not completely insuring a long stay, but rather a specific dollar amount.

 

[samclem]

Seems to me the question of whether to purchase LTCI is fairly simple: if you can easily absorb the expense represented by the total amount of proceeds you'd receive from LTCI then no need to buy (i.e. if insurance amount is $400,000 and that amount won't impact your NW materially then forgo insurance).

There's a difference between "simple" and "simplistic", I'm sure you'd agree. The question is a lot more complicated than you've proposed, and involves the analysis of various alternatives and whether buying LTCI today will even achieve the desired goal.

 

[LARS]

Clearly one can run all sorts of scenarios with varying inputs that generate multiple outcomes, but at the end of the day I think it boils down to what I outlined. If you can easily/manageably absorb the amount of LTCI you are considering than why do it?

Firm believer in trying not to get lost in the trees (assumptions) when dealing with the forest, but YMMV.

 

[ChrisC]

Clearly one can run all sorts of scenarios with varying inputs that generate multiple outcomes, but at the end of the day I think it boils down to what I outlined. If you can easily/manageably absorb the amount of LTCI you are considering than why do it?

Firm believer in trying not to get lost in the trees (assumptions) when dealing with the forest, but YMMV.

Why do it -- because I am leveraging risk and passing that risk off to someone else. I'm doing it with LTCi in the same sense that I am purchasing homeowner's insurance, umbrella insurance, dental insurance (which is a vey good deal through my former employer but perhaps a not so good idea otherwise), or professional malpractice insurance. But I do think it's a bit more complicated (at least we've made it sound rather complicated) than figuring out whether you can absorb the potential hit of LTC. I do believe if you cannot absorb that hit and can pay for LTCi coverage that it makes greater sense to me to purchase an LTCi policy.

In my case, I can well afford to pay LTC for a long period of time -- a greater period than I currently have coverage under my LTCi policies. I chose an LTCi policy because: (1) we're borderline phobic about one of us becoming severely disabled from some unfortunate incident, whether caused by some accident (the car accident that leaves us paralyzed) or stroke of medical misfortune, as well as severe disabilities caused by aging; (2) we like the peace of mind the policy provides us -- this is an incalculable benefit to us; if something does happen to us, the policy has exceptional home care provisions that permit other family members to be caregivers without a financial drain on them and we desire that there to be a simple source of funding this care so that the other spouse or other family members don't have to engage in other financial transactions; (3) we're really using someone else's funds to absorb this hit if the risk occurs and permits us to keep something in our estate if we drain most of our funds for LTC -- funds equal to the amount of the coverage are protected against Medicaid resource spend down. While there are other reasons for lining up this care for us, these are the principal ones.

Now, many of us can safely self-fund the replacement of our home if it were to burn to the ground from some unforeseen event. The risk might be very remote, but year after year we pay for this unlikely event. When we add up all the payments over the years for homeowner's casualty and liability, we don't even blink an eye about sunk costs or whether the regulated insurance company will still be around if we have to file a claim. I feel the same way about insuring against the risk of LTC. Moreover, I can get favorable state income tax treatment for paying LTCi premiums and I can fund the entire policy through my HSA.

It's that simple to me. If premiums do get too high, then I'll reassess the policy. However, I do believe the major warts that caused most of the original underwriting problems with LTCi have been worked out by carriers; these would include inadequate assessments of claims coverage, miscalculating lapse rates, and investment returns. I do believe the strongest carriers are in the market for the long haul.

 

[Bestwifeever]

I think I'll poll my friends to see who has LTC insurance (we don't). No one ever talks about having it; I know BIL had planned to get it several years ago for his wife and him, but told us after thinking about it that they decided against it as it cost a lot more than they expected for what they might get.

But great that it's been available to those who want it.

 

[bamsphd]

if we drain most of our funds for LTC -- funds equal to the amount of the coverage are protected against Medicaid resource spend down.

That is definitely an argument for LTC insurance, unfortunately, I don't believe it is available in my state.

I share your fear of catastrophic physical and/or mental failure short of death leaving one of us needing extremely long term care. I just have not found a policy that would provide meaningful coverage on reasonable terms for that scenario. While I was working, long-term disability insurance at least covered me. Now that I'm retired neither of us have any meaningful coverage for that scenario other than Social Security.

 

[Fermion]

I am not sure I would want to go into extreme LTC and may look for other methods. Hard to say though until you are in that situation. For now we have no plans for LTC insurance.

 

[jIMOh]

Has anyone articulated LTC cost in terms of withdraw rate, meaning a 4% SWR without LTCi or a 4.25% SWR with LTCi?

Thoughts on if this metric is helpful?

 

[ohyes]

Because DH and I do not have LTCI, I was ignoring this thread until a visit yesterday with one of my hospice patients snapped me to attention. His wife and he are both in hospice care. She fell, received some nasty bruises and the husband was persuaded to put her into a nursing home. She is much safer there. DH was doing his best, but he is on oxygen 24/7 and not so strong. They are both in their mid-80's.

They live in a double wide mobile home way out in the boonies. He sold his pick-up truck to fund three months of NH stay for his wife. (If it wasn't such a sad situation, this would be the place to insert a wise crack about Arkansas). It is $165.00 a day for a shared room and this is the one nursing home in our town i would NOT want to stay. He has enough money for one more month.

The wife's name is on the title of a house their daughter lives in. They co-signed her loan many years ago and when the DD stopped making payments, they took it and rented it to her. He is trying to get it sold. The real estate agent visited the house and told him it is a junkyard. The wife cannot receive Medicaid until the house is sold because of the equity in it.

I am rambling and probably not saying anything helpful, but this is the story of a couple that has not much at all, but just enough to cause serious problems at this stage. The state agency for elderly welfare is involved, as well as hospice social workers to help him sort all this out. Right now, a nephew drives 100 miles each day after work, to spend the night with this guy.

In one part of his mind, he knew he should have taken care of this months ago, but he is a WWII veteran (Air Force mementos cover one wall) and I get the idea he has always had bravado. Plus, he and DW absolutely did not want to leave their 5 acres of paradise on the "mountain".

 

[MRG]

Ohyes,

Thank you, a truly sad story. LTC is hard for so many to think about for so many reasons. My DF sold life insurance for most of his career. LTCi none, his 'plan' was suicide by starvation, he tried for 10 days last month. Didn't like how he was feeling.

Seriously, denial is a very large place, many folks live there.

MRG

 

[Fermion]

How can you not be able to sell a house if you have equity in it? If the house will not sell, you are pricing it above the market.

I can't sell my Microsoft stock for $40 a share even though I have the offer out there...

 

[jclarksnakes]

Because DH and I do not have LTCI, I was ignoring this thread until a visit yesterday with one of my hospice patients snapped me to attention. His wife and he are both in hospice care. She fell, received some nasty bruises and the husband was persuaded to put her into a nursing home. She is much safer there. DH was doing his best, but he is on oxygen 24/7 and not so strong. They are both in their mid-80's.

They live in a double wide mobile home way out in the boonies. He sold his pick-up truck to fund three months of NH stay for his wife. (If it wasn't such a sad situation, this would be the place to insert a wise crack about Arkansas). It is $165.00 a day for a shared room and this is the one nursing home in our town i would NOT want to stay. He has enough money for one more month.

The wife's name is on the title of a house their daughter lives in. They co-signed her loan many years ago and when the DD stopped making payments, they took it and rented it to her. He is trying to get it sold. The real estate agent visited the house and told him it is a junkyard. The wife cannot receive Medicaid until the house is sold because of the equity in it.

I am rambling and probably not saying anything helpful, but this is the story of a couple that has not much at all, but just enough to cause serious problems at this stage. The state agency for elderly welfare is involved, as well as hospice social workers to help him sort all this out. Right now, a nephew drives 100 miles each day after work, to spend the night with this guy.

In one part of his mind, he knew he should have taken care of this months ago, but he is a WWII veteran (Air Force mementos cover one wall) and I get the idea he has always had bravado. Plus, he and DW absolutely did not want to leave their 5 acres of paradise on the "mountain".

Really sad story but trying to relate it to the topic of this thread which is long term care insurance my first thought is that the couple probably could not have afforded LTC insurance premiums at anytime in the last decade. Does anyone think that people like this should have purchased long term care insurance many years ago and then lost it when they were unable to afford the premiums later in life? These people seem to be among those people who do not have enough assets to protect or income to pay for LTC insurance. Hopefully someone in their family will sort it out and get them the best possible outcome on keeping a few assets before medicaid starts paying for the long term care.