LTC alternatives?

[mathjak107]

Sounds to me like a single retiree with an AGI> $150k per year is inherently self-insured for LTC without needing to sell any assets or real estate, beyond RMDs...

if i was single i wouldn’t have insurance.

but that is 150k today ,it can be.double in the future

 

[mathjak107]

We are not buying LTCI at this point, but I am pondering adding another annuity (SPIA) to the mix with a 3% step up or a QLAC. Both would be 100% joint and survivor. DH has longevity on his father's side, and I would like him to have a larger stream of reliable income that he doesn't have to manage, in addition to any liquid assets that he may have.

The SPIA with the step up starts with a very low payout and the "break even" would be a number of years down the line - but the purpose is for the higher payment later in life which could be used (along with other income sources) to supplement health care or long-term care costs.

I briefly explored buying a QLAC before I left my last job. The "wealth managers" tried to sell me a single QLAC, and I told them no joint and survivor, no purchase. They then determined that a QLAC could have a joint and survivor provision - but I loathed that group and their offerings had huge commissions so I didn't end up purchasing from them.

the problem is spias lack liquidity and long term care can see 5-7% inflation. as well as taxable

our partnership plan requires at least 5% guaranteed adjustments yearly

 

[Route246]

Earlier, before FI I looked into it from two different insurers. We were in our 40s and the thought of LTC was daunting at the time. After reading fine print and being victimized by the worst fear mongering sales pitches I've ever heard I flat out told them that their approach of fear and uncertainty was not going to work and I told them I've made my decision. The strange thing is they persisted like they thought they had a chance to separate us from our money. "What about blah blah blah?" was how they operated. Incredibly insensitive.

Anyway I made the decision at that point to self-insure if it came to this and it made me work harder and save more for that unpleasant thought. It was probably one of the significant driving forces to get us to FI. At this point I'm thinking a minimum of 100K/year for possibly a decade plus and that may be on the low side given where we live in California.

We made the decision years ago to self-insure, by investing the money we would've spent for LTC (and not spending it). It's tricky...turns out my MIL has Huntington's disease and had at some point opted in to LTC through her public school teaching. It's been immensely helpful but it took quite a while for her to actually qualify for the benefits. They burned through a lot of money getting 24/7 care before Genworth would cover anything. My own parents do not have LTC and while they could sorely use it for my dad, I'm not 100% sure he would qualify for the benefits b/c they are so picky. Even though my dad is mostly immobile and my mom cares for him 24/7 and they need more help (my mom can get him into the shower more or less and sit him on the shower chair, etc. but she has her own physical/medical issues), I do not think they'd qualify for the benefits even if they had LTC coverage.
DH and I are aware that Huntington's is a genetic disorder with a 50/50 chance of inheriting it which sucks. Both his brother and sister have tested positive for the gene and, at this point, we are skipping testing b/c there is no cure so and the burden of knowing is crushing. Luckily, we feel confident we can weather the storm b/c we prepared for the unexpected. And we've always lived below our means...
So I don't know. I appreciate the help MIL is getting but as we've learned, qualifying for the benefits is pretty stringent and then you've tied up all of that money and you don't get the benefit from it. We know several people whose parents this has happened to.

 

[ncbill]

the problem is spias lack liquidity and long term care can see 5-7% inflation. as well as taxable

our partnership plan requires at least 5% guaranteed adjustments yearly

yep, expect LTC costs to rise faster than the general inflation rate.

25 years ago it cost mom in a skilled nursing facility $125/day as a private pay resident.

5 years ago her sister in a SNF cost $275/day private pay.

Even Medicaid went from paying $90/day to $200/day over the same time period.

 

[mathjak107]

we are more than 130k a year here in new york city and long island .

we have no medicaid homes ..all homes are private homes with a certain amount of medicaid beds .

however if you come in as a paying customer after 2-3 years they will take medicaid assignments.

for us our partnership plan is ideal

it pays for 3 years in a facility or 6 years at home care .

then a special version of medicaid pays all the bills while assets are 100% protected as well as the stay at home spouse has uncapped income.

to bad unless your were grandfathered in by having a policy there are no more insurer’s taking part

 

[harllee]

I think I mentioned this earlier in this thread but my recommendation would be a Type A Life Care CCRC instead of long term care insurance. I live in one and it is excellent. In a Type A Life Care CCRC your monthly payment stays the same if you have to move from independent living to a higher level of care. No long term care insurance is needed (they do not even accept it). I have a separate thread on my CCRC experience if anyone is interested.

 

[mathjak107]

in the tri state areas crc is off the table unless one is wealthy .they are brutally expensive .

tri state meaning nj ,ny ct

over 4 million americans will turn 65 this year , the highest ever .

the boomer generation size has insurers turned upside down

 

[athena53]

We are more than 130k a year here in New York City and Long Island.

We have no Medicaid homes ..all homes are private homes with a certain amount of Medicaid beds.

However if you come in as a paying customer after 2-3 years they will take Medicaid assignments.

And this is what I think a lot of people don't get when they figure Medicaid will pick up the costs. My understanding is that the private places have a certain number of "Medicaid beds" because that qualifies them to get MediCARE rehab patients (e.g., people there temporarily after knee replacement), which carries a higher reimbursement rate. NCbill mentioned Medicaid paying $200/day for LTC; that comes out to $73,000/year. I'd imagine that no decent facility, especially in a HCOL area, could make it with 100% Medicaid patients.

So, you don't get to choose where you go if you can't self-pay for at least a couple of years.

 

[mathjak107]

we pay about 12k a year for the two of us for that partnership plan.

we get about a 1600 Dollar state tax credit back

 

[Dtail]

And this is what I think a lot of people don't get when they figure Medicaid will pick up the costs. My understanding is that the private places have a certain number of "Medicaid beds" because that qualifies them to get MediCARE rehab patients (e.g., people there temporarily after knee replacement), which carries a higher reimbursement rate. NCbill mentioned Medicaid paying $200/day for LTC; that comes out to $73,000/year. I'd imagine that no decent facility, especially in a HCOL area, could make it with 100% Medicaid patients.

So, you don't get to choose where you go if you can't self-pay for at least a couple of years.

My mom has an LTC policy plus an irrevocable trust with 60% of the assets in it, so there is the combination of LTC, protected assets and self pay in the equation.

 

[mathjak107]

last thing we wanted was an irrevocable trust cutting the stay at home spouse off from unrestricted use of our assets.

it was never an option we would consider

 

[Dtail]

last thing we wanted was a irrevocable trust cutting the stay. at home spouse off from unrestricted use of our assets.

it was never an option we would consider

Understood but my mom is alone now, so this concept would not apply to her.

 

[mathjak107]

well it still would if she can’t access enough to do the things she wants.

trusts limit the amount you can take out

 

[Bigdawg]

And this is what I think a lot of people don't get when they figure Medicaid will pick up the costs. My understanding is that the private places have a certain number of "Medicaid beds" because that qualifies them to get MediCARE rehab patients (e.g., people there temporarily after knee replacement), which carries a higher reimbursement rate. NCbill mentioned Medicaid paying $200/day for LTC; that comes out to $73,000/year. I'd imagine that no decent facility, especially in a HCOL area, could make it with 100% Medicaid patients.

So, you don't get to choose where you go if you can't self-pay for at least a couple of years.

My understanding is that if you get into a facility on self-pay and later on go to Medicaid, they will keep you on. Obviously, that is not a guarantee. Something to definitely ask about. It worked that way with the (2) facilities I've dealt with. One in WI and one in Arkansas. I've looked into a few more and that's how they operated also.

 

[razztazz]

My understanding is that if you get into a facility on self-pay and later on go to Medicaid, they will keep you on. Obviously, that is not a guarantee. Something to definitely ask about. It worked that way with the (2) facilities I've dealt with. One in WI and one in Arkansas. I've looked into a few more and that's how they operated also.

Seconded here. The key is to pay the full retail rate for, I would recommend, at least two years to get into the facility you want. If you happen to have more staying power than you thought, the nursing home will, 99% of the time, (Yes, some still won't but they're for movie stars and politicians) accept Medicaid to cover the difference between your social security and their bill.

 

[athena53]

My understanding is that if you get into a facility on self-pay and later on go to Medicaid, they will keep you on. Obviously, that is not a guarantee. Something to definitely ask about. It worked that way with the (2) facilities I've dealt with. One in WI and one in Arkansas. I've looked into a few more and that's how they operated also.

I agree- my Uncle had such an arrangement but there were two "catches"- first, they put him in a "Medicaid bed" (basically two in a room with a curtain between) immediately even though he was self-pay, and just when my Aunt had come close to spending down the max she could keep for him to qualify for Medicaid, they hit her with an exorbitant rate increase and she moved him to another facility. He died a few months later. He had Alzheimer's, so very poor quality of life, but my cynical view is that it was no longer profitable to keep him going.

My remark about "you don't get to choose" applied to people with no ability to self-pay for two years.

 

[ncbill]

I agree- my Uncle had such an arrangement but there were two "catches"- first, they put him in a "Medicaid bed" (basically two in a room with a curtain between) immediately even though he was self-pay, and just when my Aunt had come close to spending down the max she could keep for him to qualify for Medicaid, they hit her with an exorbitant rate increase and she moved him to another facility. He died a few months later. He had Alzheimer's, so very poor quality of life, but my cynical view is that it was no longer profitable to keep him going.

My remark about "you don't get to choose" applied to people with no ability to self-pay for two years.

The SNFs I've seen were at best two to a room for custodial care, whether or not you were private pay.

Some were old enough that they still had wards with up to 8 residents.

Medicare rehab patients were one to a room.

For SNFs that take government aid once you are a resident can't kick you out because you run out of money...they apply for Medicaid for you, and you give up all but a trivial amount of your monthly SS benefits.

But that's not the case for assisted living.

 

[youbet]

Seconded here. The key is to pay the full retail rate for, I would recommend, at least two years to get into the facility you want. If you happen to have more staying power than you thought, the nursing home will, 99% of the time, (Yes, some still won't but they're for movie stars and politicians) accept Medicaid to cover the difference between your social security and their bill.

The big catch here in northern Illinois is whether they have a Medicaid bed available timely to when you run out of money. They won’t keep you in your private pay accommodations for long waiting for Medicaid level accommodations to open up. And you may not even be next in line.

 

[harllee]

In my area most nice skilled nursing/memory care facilities do not take Medicaid at all. The ones I have seen where Medicaid is taken are pretty awful.

 

[athena53]

The big catch here in northern Illinois is whether they have a Medicaid bed available timely to when you run out of money. They won’t keep you in your private pay accommodations for long waiting for Medicaid level accommodations to open up. And you may not even be next in line.

That was their reason for putting my Uncle in a Medicaid bed right away.

And, in response to an earlier post, my Dad (self-pay for 18 months till his death) did have a private room in LTC, so they exist.

 

[youbet]

Sounds to me like a single retiree with an AGI> $150k per year is inherently self-insured for LTC without needing to sell any assets or real estate, beyond RMDs...

+1

We’ve been doing a deep dive into CCRC’s and also into self-insuring. For self-insuring, we plan on $300k/yr ongoing and have a plan. And a similar amount for type C CCRC’s.

 

[youbet]

That was their reason for putting my Uncle in a Medicaid bed right away.

.

+1

That’s how we handled my MIL’s situation. It was the only way to guarantee her staying on after her funds were depleted.

 

[LateToFIRE]

You weren't asking for opinions on the value of LTC insurance, so I'll keep it short. DW and I have been pitched a variety of LTC products over the years, including the lump sum type policy you mentioned. In the end, we decided to self-insure. Our reasons:

1) Experience collecting benefits from parent's LTC policy was a nightmare and once we were able to collect, the benefits still never came close to the total premiums paid over many years (i.e. our parent clearly would have been better off should self-insured).

2) The policies are expensive and premiums can escalate over time, which is why the lump sum policy was pitched to us by an advisor. But, there is no way I'm parting with $100K upfront to an insurance co. NO WAY.

3) The policies are impossible to understand and written in gibberish. Trust, I'm no stranger to complex legal documentation. If I can't read it and understand it, 99% of the population would not be able to either - and its clearly written that way to obscure important stuff, like how much you're being ripped off. If I need an expert to interpret what I'm buying, no thanks.

4) These policies can be bought, sold, and traded between insurance co's, which means you could start out with a decent, creditworthy, well-rated company but end up with a really crappy fly by night one.

That's my [reasonably well-informed] take.

 

[Gotadimple]

You weren't asking for opinions on the value of LTC insurance, so I'll keep it short. DW and I have been pitched a variety of LTC products over the years, including the lump sum type policy you mentioned. In the end, we decided to self-insure. Our reasons:

1) Experience collecting benefits from parent's LTC policy was a nightmare and once we were able to collect, the benefits still never came close to the total premiums paid over many years (i.e. our parent clearly would have been better off should self-insured).

2) The policies are expensive and premiums can escalate over time, which is why the lump sum policy was pitched to us by an advisor. But, there is no way I'm parting with $100K upfront to an insurance co. NO WAY.

3) The policies are impossible to understand and written in gibberish. Trust, I'm no stranger to complex legal documentation. If I can't read it and understand it, 99% of the population would not be able to either - and its clearly written that way to obscure important stuff, like how much you're being ripped off. If I need an expert to interpret what I'm buying, no thanks.

4) These policies can be bought, sold, and traded between insurance co's, which means you could start out with a decent, creditworthy, well-rated company but end up with a really crappy fly by night one.

That's my [reasonably well-informed] take.

add #5) The LTC company goes out of business and the state guarantee fund may limit the total payout (up to the policy limit or $xxx,xxx whichever is lower). Check with your state insurance commissioner.

 

[LateToFIRE]

add #5) The LTC company goes out of business and the state guarantee fund may limit the total payout (up to the policy limit or $xxx,xxx whichever is lower). Check with your state insurance commissioner.

Oh don't be ridiculous, regulators keep such close eye on this sector that could never happen