Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
your strategy for long term care
Old 02-27-2021, 05:22 PM   #1
Recycles dryer sheets
 
Join Date: Sep 2018
Posts: 219
your strategy for long term care

I am educating myself and DH on options for long term care.

I ve read about Whole Life life insurance policy with a Continuation of Benefits (COB) Rider. We can make a one-time deposit (Tax free, using tIRA funds) into a life insurance contract with the COB rider and receive a death benefit for our heirs as well as a lifetime long-term care benefit.

Does anyone here have experience with this type of policy ?
Are my assumptions correct re:Tax free use of tIRA for payment ?
I would like to hear from others your strategy for long term care.

Also - I wonder if the Biden Admin will change tax policy on LTC -
We are mid 60's and thankfully in good health but one never knows what can happen in life
Thanks
Octogirl is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-27-2021, 05:26 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: NC
Posts: 16,620
We’re planning on self funding LTC if necessary. There have been quite a few discussions here, just one fairly recent that might interest you https://www.early-retirement.org/for...ce-104487.html
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 50% equity funds / 30% bond funds / 20% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 02-27-2021, 06:12 PM   #3
Full time employment: Posting here.
 
Join Date: Aug 2018
Posts: 510
We are self-funding for long-term care. By the time we looked into it, at ages in our late 40s, it was cost prohibitive for us.
Lewis Clark is offline   Reply With Quote
Old 02-27-2021, 07:10 PM   #4
Recycles dryer sheets
 
Join Date: Jun 2011
Posts: 355
Are you sure about moving tIRA money to life insurance? I doubt that this is a tax-free move. IRS publication 590-A addresses permitted rollovers from tIRA's. The rollovers are permitted to other IRA's, Simple-IRA's, SEP-IRA's, Government 457(b) plans, 403(b) plans and Qualified employer plans.

The IRS publication 590 is currently being revised and is not currently available. I took the above information from the December 2018 edition. If an insurance agent is trying to sell you a policy that by taking a "tax-free" withdrawal from an IRA I would be very suspicious.
pjm-7 is offline   Reply With Quote
Old 02-27-2021, 07:31 PM   #5
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 3,586
We are self funding. MIL has a LTC policy which we have been put in charge of managing and so far they have not paid a dime in spite of the fact that she has had some serious health issues requiring extensive amounts of assistance. And the premiums keep going up each year. It feels like a complete scam.
Ready is offline   Reply With Quote
Old 02-27-2021, 08:00 PM   #6
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 54
Quote:
Originally Posted by Ready View Post
We are self funding. MIL has a LTC policy which we have been put in charge of managing and so far they have not paid a dime in spite of the fact that she has had some serious health issues requiring extensive amounts of assistance. And the premiums keep going up each year. It feels like a complete scam.

Same issue for my sister and I. Mom paid for LTC for 10-11 years and even when she was terminal and in hospice care they refused to pay.

$400,000 set aside we don't consider in our overall portfolio valuation or SWR.
rt-texas is offline   Reply With Quote
Old 02-27-2021, 08:15 PM   #7
Thinks s/he gets paid by the post
rk911's Avatar
 
Join Date: Dec 2018
Location: DuPage County IL
Posts: 1,365
Plan A for me...a LTC insurance policy backes by our net worth. my wife cannot get LTC so it"s cash flow from the get-go.
__________________
Rich
Ham Radio, Sport Pilot, RVer
FIRE: 8/11/2005, age 55y,1d
Administrator for a regional 9-1-1 call center
rk911 is online now   Reply With Quote
Old 02-27-2021, 08:48 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 28,736
We’re planning on using a CCRC. It will be self-funded.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 02-27-2021, 08:49 PM   #9
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,931
Self-fund. I don't trust the policies, the premiums, or the industry.
__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 02-27-2021, 08:49 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 1,287
My wife and I bought a single pay, combined insured, hybrid life policy with LTC benefits from One America/State Life company four years ago. It is a "two insureds" policy which provides the LTC benefits to either one, or the other, or both of us until the policy limits are reached. It also has a 3% inflation rider which we pay annually, and can quit paying for that at anytime if we feel we are adequately covered for our life expectancies. The policy pays up to $7000 a month LTC benefits, and will cover home care as well. It has a 60-day elimination period. The life insurance pays upon second to die, and amount is reduced by any LTC benefits paid. Policy was issued based on "combined age" (i.e., wife was 62 and I was 69 at issue, so premium based on combined age 64. Paid $121,000 up front, life insurance amount is $233,000. So, if LTC benefit is never used, our kids get the $233,000! So, I figured for peace of the LTC coverage and "refund" feature to our family via life benefits, the insurance company gets to use/invest our upfront premium. Fair deal!!
__________________
Dreams Worth Dreaming are Dreams Worth Planning For. I Spent a Career Planning for Early Retirement.
RetireeRobert is online now   Reply With Quote
Old 02-28-2021, 05:22 AM   #11
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 3,486
Quote:
Self-fund. I don't trust the policies, the premiums, or the industry.
+1
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 02-28-2021, 07:57 AM   #12
Thinks s/he gets paid by the post
The Cosmic Avenger's Avatar
 
Join Date: May 2016
Location: Mid-Atlantic
Posts: 1,766
Quote:
Originally Posted by Ready View Post
We are self funding. MIL has a LTC policy which we have been put in charge of managing and so far they have not paid a dime in spite of the fact that she has had some serious health issues requiring extensive amounts of assistance. And the premiums keep going up each year. It feels like a complete scam.
Quote:
Originally Posted by rt-texas View Post
Same issue for my sister and I. Mom paid for LTC for 10-11 years and even when she was terminal and in hospice care they refused to pay.

$400,000 set aside we don't consider in our overall portfolio valuation or SWR.
Can I ask who the problem policies are with? I signed up for LTC insurance at 27 because my employer paid part of it, my payment was less than $20/month. It's gone up, but so has the coverage; since I knew the power of compounding I purchased the inflation protection, 4% per annum. Mine is with Unum Provident, I'm hoping that if my spouse ever needs to use it for me that it will be a help, not a pain.
__________________
-Looking to FIRE in the mid-2020s, which would be our mid-50s.
The Cosmic Avenger is online now   Reply With Quote
Old 02-28-2021, 08:05 AM   #13
Full time employment: Posting here.
racy's Avatar
 
Join Date: May 2007
Posts: 736
Quote:
Originally Posted by DrRoy View Post
+1
another +1

OP, as you're researching, I suggest getting a good handle on exactly what you're insuring for. i.e. How long do people typically need LTC? How expensive is it in your area? Do you really need to buy insurance (vs. saving the premium cost & self insuring)?
A good definition of the problem often leads to the best answer.
__________________
"It is better to have a permanent income than to be fascinating". Oscar Wilde
racy is offline   Reply With Quote
Old 02-28-2021, 08:42 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 28,918
Quote:
Originally Posted by pjm-7 View Post
Are you sure about moving tIRA money to life insurance? I doubt that this is a tax-free move. IRS publication 590-A addresses permitted rollovers from tIRA's. The rollovers are permitted to other IRA's, Simple-IRA's, SEP-IRA's, Government 457(b) plans, 403(b) plans and Qualified employer plans.

The IRS publication 590 is currently being revised and is not currently available. I took the above information from the December 2018 edition. If an insurance agent is trying to sell you a policy that by taking a "tax-free" withdrawal from an IRA I would be very suspicious.
I had a similar reaction... at first I thought that the tIRA might hold and own the life insurance policy but found information that an IRA cannot own a life insurance policy.

But those clever insurance agents have found a workaround... you buy a 20-pay life insurance policy with an LTC rider and simultaneously the tIRA uses tIRA money to buy a 20 year annuity certain with annual benefits equal to the 20-pay life insurance policy premiums. The annuity benefits are paid directly to the life insurance company and the annual benefit is treated as a tIRA withdrawl.

Quote:
Option 1: Convert Your IRA into LTC Insurance with a Tax-Qualified Annuity

If you invest in a tax-qualified annuity that makes internal distributions to an insurance carrier, you can indirectly pay for long-term care coverage using IRA money without additional tax penalties. Here’s how the process works:

Step 1: Apply for 20-pay life insurance with LTC features
Apply for a 20-pay life insurance plan with an LTC rider, which can accelerate the death benefit to pay for long-term care. This policy will be funded with tax-qualified annuities that make annual distributions to the insurance policy over a 20-year period. After you apply, complete the underwriting process, and receive approval, you will be given a quote for the annual premiums required for this plan. The premiums may be higher than those for term insurance, but limited-pay plans offer lifetime security.

Step 2: Apply for IRA-based annuity plans to fund the policy
The second step is to determine the up-front cost of an IRA-based annuity where the annual dollar amount of income is the same as the insurance premiums, over a period of 20 years. Apply for this annuity type and include instructions for the company to directly credit your 20-pay life insurance plan with the annual gains from the annuity.

Step 3: Use a direct transfer of IRA funds for annuity premiums
Directly transfer funds from your IRA to purchase your 20-year annuity. By paying an equal dollar amount directly into your life insurance policy, this annuity will fund your insurance coverage and keep it active for 20 years, after which the LTCi policy is paid in full.

You will receive IRS tax form 1099-R from the annuity company every year on the amount of taxable IRA money moved into the life insurance policy. While you still pay income tax on this amount, the payout and benefits from the policy will be tax-free for you and your beneficiaries. After you’ve made premium payments over a 20-year period, the death benefits will apply for your entire lifetime.
https://www.elderlawanswers.com/how-...nsurance-16150

While I'm still not keen on actually doing this and we plan to self-insure, I have to admit that it is clever.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA TBD
pb4uski is offline   Reply With Quote
Old 02-28-2021, 09:38 AM   #15
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,675
Plenty of exercise and protein. A DNR order. Living in a single-level home. That's about it.
twaddle is offline   Reply With Quote
Old 02-28-2021, 12:23 PM   #16
Recycles dryer sheets
Lucie's Avatar
 
Join Date: Aug 2018
Posts: 50
We have LTC policies which are unnecessary given that we could self-insure, but after my father had a fatal stroke 1 month after his 65th birthday and my mother passed at 53, I sleep better knowing that our assets won’t be drained if I end up in a nursing home.

My question is how much should I reduce the daily amount of coverage to be worthwhile? My renewal came with a letter indicating that the price is increasing again and we can reduce the daily coverage (currently $375/day) or reduce coverage from 3 years to 2 years. By reducing the coverage we can semi-self-insure but still sleep well. Recommendations?
Lucie is offline   Reply With Quote
Old 02-28-2021, 12:37 PM   #17
Thinks s/he gets paid by the post
 
Join Date: Apr 2015
Posts: 2,236
LTC was available when I was working, but too expensive over long term
I have looked at it again now retired, and came to the same conclusion.
We plan on self pay, Plan to either sell home and move to CCRC at a later date, or sell home and rent apt for other spouse. Proceeds from sale of house would/should provide enough $.
Non affected spouse would still have income from pension/SS/investments to live from.
__________________
You are no longer in a savings mode.
You are now in a slow spend down mode.
pacergal is offline   Reply With Quote
Old 02-28-2021, 02:04 PM   #18
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 2,922
Self-funding, no LTC insurance.
__________________
The advice we're giving you is invaluable, that's why it's free
Experience is a good teacher, but the tuition can get expensive real fast

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 02-28-2021, 02:19 PM   #19
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 54
Quote:
Originally Posted by The Cosmic Avenger View Post
Can I ask who the problem policies are with? I signed up for LTC insurance at 27 because my employer paid part of it, my payment was less than $20/month. It's gone up, but so has the coverage; since I knew the power of compounding I purchased the inflation protection, 4% per annum. Mine is with Unum Provident, I'm hoping that if my spouse ever needs to use it for me that it will be a help, not a pain.

With my mom the Ins company sent a nurses aid to assess her. She was still in her home with full time care and officially under hospice care. Terminal cancer with no more treatment only pain mgt and quality of life mgt. Insurance company (major US company) wrote back that she was denied because they didn't think she met "their" requirements of needing full time or LTC. We could appeal. We did.

This was August 2019. Thanksgiving week she was admitted full time into a private care facility. She passed December 16th.

After she had passed we received a letter to the appeal saying she was still denied. Good call, she was dead!

Plan had 90 day wait period. Discussed with attorney and decided not to pursue since at most we could push for would be two months. She paid over $80,000 into this and was so proud it would help cover her end of life and not burden us. We never told her it was denied.

Biased...big time. So wife and I have $400k set aside for LTC and I know I can access when and if needed. If we don't use it, it's earmarked for a specific charity we chose.
rt-texas is offline   Reply With Quote
Old 02-28-2021, 02:37 PM   #20
Thinks s/he gets paid by the post
Finance Dave's Avatar
 
Join Date: Mar 2007
Posts: 1,550
Can't address your specific question about that one type of policy, but...

We bought LTC policies at ages 56/59 a few years ago through LifeSecure. We are in Indiana, which offers "Partnership" policies. These offer the benefit of not requiring you to spend down to the standard Medicaid levels before being eligible for Medicaid. This sounded very attractive to me, so we started out leaning this way. However, Indiana law requires that such a policy have inflation protection of a certain amount...and we found those policies to be EXTREMELY expensive.

Therefore, we opted for a less-expensive but maybe riskier choice. We "overbought" coverage...about 4x what would be needed today. We were able to buy this coverage at significant discount to a Partnership policy (IIRC about 40% less). The risk is that inflation may eat up our coverage. We do have the option every 3 years of buying more coverage. We are paying about $550/mo for $700,000 coverage each, monthly benefit of $12k, 90 day benefit wait period. The policies have a shared benefit rider...so if I don't use mine it can be applied to her and vice versa. Benefits are not taxed, and we are able to deduct the premiums (up to a limit) since I have self-employed income. Once I close the business I'm not sure what current tax law is but used to be deductible only if over 10% of AGI or 7.5% if over 65.

We were on the fence about self-insuring. My research said "Really rich can self-insure, and low NW clients don't need it because they have little to protect." We are not "really rich" nor are we low NW. I can certainly understand the opinions of many on here who are self-insuring.

The other downside of a Partnership policy is that if you move to another state after holding the policy for a number of years, you need to ensure the new state has a reciprocity agreement where that state will honor the partnership nature of the policy. We plan to move to another state in the future, so this was a consideration for us.
__________________
"Live every day as if it were your last, and one day you'll be right" - unknown
Finance Dave is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Hi. Long term strategy review request pfin_focus FIRE and Money 5 06-18-2017 03:25 PM
A long term strategy for bonds Lsbcal FIRE and Money 10 12-13-2014 06:10 PM
Long term loss combined with long term gain dmpi FIRE and Money 9 12-21-2012 04:27 PM
US Pulls plug on Long Term Care portion of health care reformct ("CLASS Act") samclem Other topics 14 10-15-2011 10:27 AM
Long-Term Care - Part of Health Care Reform Bill chinaco Health and Early Retirement 3 07-19-2009 02:53 PM

» Quick Links

 
All times are GMT -6. The time now is 11:05 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.