Long Term Care Insurance

[corn18]

I was just at the benefeds web site signing up for dental and vision because my COBRA runs out on Thursday. Good rates. Basically the same rate I had at megacorp for the same coverage. While there, I saw that they offered LTCI, so I went to have a peek. I got a quote for a few different plans, but they all seemed like really good rates. The max one on the right looks peachy to me. Wanted to check with the pundits and see if I am reading this correctly and what questions I should ask. They do have the right to raise rates, but they have to get permission from the Office of Personnel Management.

What do you think? Sure looks cheaper than self insuring. I am 55.

 

[RetiredHappy]

What is the waiting/elimination period? Plan A and B are a waste of time. If you can afford to partially pay for your own care, then I would pick something closer to $250 or $300 per day, with a 3% inflation rider.

I am 59 this year, bought since 2009, costs $97 per month, 90-day waiting period. Pays $8,555 per month, with inflation rider of 3% per year. Lifetime currently at $513,274 and also grows 3% per year. You can't buy this plan anymore so you can ignore my premium. $300 per day with 3% inflation rider is what I would shoot for if I were to now shop for a LTCI plan. I expect to top up $100 to $200 per day out of my own pocket if I need 24x7 type care.

 

[corn18]

What is the waiting/elimination period? Plan A and B are a waste of time. If you can afford to partially pay for your own care, then I would pick something closer to $250 or $300 per day, with a 3% inflation rider.

I am 59 this year, bought since 2009, costs $97 per month, 90-day waiting period. Pays $8,555 per month, with inflation rider of 3% per year. Lifetime currently at $513,274 and also grows 3% per year. You can't buy this plan anymore so you can ignore my premium. $300 per day with 3% inflation rider is what I would shoot for if I were to now shop for a LTCI plan. I expect to top up $100 to $200 per day out of my own pocket if I need 24x7 type care.

$300/day, 90 day waiting period, 3% inflation rider, total benefit $328,500 (3 years) the premium is $303.70. I'm a simple guy so I just do $303.70 x 12 x 25 to see how it compares to the total benefit. So $91,110 vs. $328,500. That's a lot less.

 

[RetiredHappy]

Obviously $303.70 is still alot of money to pay per month, IMHO. If you never need it, you are out $91,110. Most people use LTCI for about 2 years. Alzheimers tend to run about 8 years, pretty rough the last 4 years or so. The benefits should stretch out beyond the 3 years because lifetime benefit counts rather than the 3 years.

You may want to look at a hybrid policy instead since this is pretty pricey. You pay 1 lump sum, if not used, it converts to life insurance and paid out to beneficiaries.

 

[friar1610]

My wife and I have been enrolled in the Federal LTCi program ever since retired military were first eligible. They have raised the premiums a couple of times but have also offered the option to forgo or reduce the inflation adjustment in order to keep premiums level. The fact that OPM must approve the increases doesn’t mean they won’t. I suspect the insurance company needs to present a credible financial case for the requested increase and if it makes sense, OPM will approve it.

It wasn’t clear to me from your OP whether the costs you presented were for just you or you and spouse. (I don’t have immediate access to my info right now or I’d compare). I purchased 3 years coverage for me and 5 for my wife based on the fact that women actuarially live longer.

We also have the GEHA standard dental plan and have been very pleased with it.

 

[jazz4cash]

We are also looking at Fed LTCi. I applied in May just before my birthday and still waiting on final acceptance. DW just applied. As I understand it the 3% inflation rider will end up providing more coverage when the time comes. We chose 3%/$300/day. At 65 and 62 it runs $8k/yr. I look at the 10 yr premium vs the lifetime max as portfolio insurance. So 80k in premiums protects $600k in assets.

The primary benefit is to protect lifestyle of spouse and legacy to heirs. Still not sure it’s worth the cost but I don’t mind paying up to a year of premium while I look at other options. Price is locked in as of application date.

 

[RetiredHappy]

We are also looking at Fed LTCi. I applied in May just before my birthday and still waiting on final acceptance. DW just applied. As I understand it the 3% inflation rider will end up providing more coverage when the time comes. We chose 3%/$300/day. At 65 and 62 it runs $8k/yr. I look at the 10 yr premium vs the lifetime max as portfolio insurance. So 80k in premiums protects $600k in assets.

The primary benefit is to protect lifestyle of spouse and legacy to heirs. Still not sure it’s worth the cost but I don’t mind paying up to a year of premium while I look at other options. Price is locked in as of application date.

+1 Protecting lifestyle of spouse and family is key. Knowing what we now know because of starting an elder care business after we left our careers in high tech, LTCI is key to improving one's quality of life. People are more likely to get assistance from others because of LTCI than to go without and rely on family to take care of them.

We can afford to self-insure but if we do so, we are less likely to get paid help, and hence reduces quality of life for all.

 

[badatmath]

Well, I can only offer you what I wish I had not done. 1. Take the cheapest possible daily benefit at the age I signed up. 2. Accept the inflation additions since. 3. Taken 5 years (most stays are not that long).

I have no idea how those prices compare to what is being sold now so I can't advise there. It appears your "custom" option is per month about what I pay for a year. I (signed up at like 39 for $11/month). I should have been smarter and take a higher initial rate at my younger age and skipped the inflation I think but can't be undone, only cancelled. And so far I have not done that. Haven't ruled it out but . . .

 

[Ready]

I’m very skeptical of LTC policies. MIL has one and it’s been very difficult to get the insurance company to pay out.

The premiums seems reasonable now because you are 55 and unlikely to need nursing care. They will keep going up every year as you get older and you have no control over how much they might increase. So you will need to look at what happens to your money if you pay up for ten years and then decide to cancel the policy because the premiums have become too expensive.

But I look at LTC care like I look at Las Vegas casinos. They don’t build those hotels on their losses.

 

[CRLLS]

Assume the premiums do not change and/or the benefits do not change over time, if you were to take the amount of the premium and put it into an investment account, I would bet that over that 25 year period, the benefit of LTCI doesn't quite hold up to the hype. Surely the (maximum) benefit would outweigh the investment growth.

One thing I have never found: Many LTC insurers quote the likelihood of needing LTC over a lifetime is "x". It is pretty high. From what I understand, that "x" also includes those in rehab facilities that last a short time and also those who do not make it past the waiting period. I would like to see the numbers for those who have policies and have used up more than their combined premiums (with interest) Surely those numbers exist somewhere.

 

[RetiredHappy]

I’m very skeptical of LTC policies. MIL has one and it’s been very difficult to get the insurance company to pay out.

The premiums seems reasonable now because you are 55 and unlikely to need nursing care. They will keep going up every year as you get older and you have no control over how much they might increase. So you will need to look at what happens to your money if you pay up for ten years and then decide to cancel the policy because the premiums have become too expensive.

But I look at LTC care like I look at Las Vegas casinos. They don’t build those hotels on their losses.

We had never had a client who could not get the claims paid as long as they required assistance with 2 ADLs. Some insurers only require a doctor's note while others will send a 3rd party nurse to come out to do the assessment to ensure that assistance of 2 ADLs are needed. Somethings clients themselves refuse care and the children start the claims process. In these cases, where the nurse comes out, often the clients would tell the nurse that they could do all the ADLs themselves and the nurse goes away indicating such.

It is not true that premiums "keep going up every year". I bought mine in 2009 and have not had a single increase.

LTCI is an insurance product. Just like term insurance policies. You pay into it and may never see a dime back because you didn't die while holding the policy.

 

[RetiredHappy]

One thing I have never found: Many LTC insurers quote the likelihood of needing LTC over a lifetime is "x". It is pretty high. From what I understand, that "x" also includes those in rehab facilities that last a short time and also those who do not make it past the waiting period. I would like to see the numbers for those who have policies and have used up more than their combined premiums (with interest) Surely those numbers exist somewhere.

The 100-day rehab are covered by Medicare. LTCI don't kick in for short stays. The statistics is that the average use of LTCI is 2 years.

 

[REWahoo]

One thing I have never found: Many LTC insurers quote the likelihood of needing LTC over a lifetime is "x". It is pretty high. From what I understand, that "x" also includes those in rehab facilities that last a short time and also those who do not make it past the waiting period. I would like to see the numbers for those who have policies and have used up more than their combined premiums (with interest) Surely those numbers exist somewhere.

This isn't what you are asking for but it does provide information that excludes rehab stays: https://www.geripal.org/2010/08/length-of-stay-in-nursing-homes-at-end.html

It's the second bullet in the quote below that we are most concerned about, especially with our family history of nursing home stays.

DD - 9 months
FIL - 7 months
DM - 26 months
MIL - 31 months

- the median length of stay in a nursing home before death was 5 months
- the average length of stay was longer at 14 months due to a small number of study participants who had very long lengths of stay
- 65% died within 1 year of nursing home admission
- 53% died within 6 months of nursing home admission

 

[fosterscik]

One thing I have never found: Many LTC insurers quote the likelihood of needing LTC over a lifetime is "x". It is pretty high. From what I understand, that "x" also includes those in rehab facilities that last a short time and also those who do not make it past the waiting period. I would like to see the numbers for those who have policies and have used up more than their combined premiums (with interest) Surely those numbers exist somewhere.

This recent paper may answer many of your questions:
https://squaredawayblog.bc.edu/squared-away/retirees-need-for-caregivers-varies-widely/
It has a link to the underlying research paper. This figure is a nice summary of some of the findings:

 

[Scuba]

Assume the premiums do not change and/or the benefits do not change over time, if you were to take the amount of the premium and put it into an investment account, I would bet that over that 25 year period, the benefit of LTCI doesn't quite hold up to the hype. Surely the (maximum) benefit would outweigh the investment growth.

One thing I have never found: Many LTC insurers quote the likelihood of needing LTC over a lifetime is "x". It is pretty high. From what I understand, that "x" also includes those in rehab facilities that last a short time and also those who do not make it past the waiting period. I would like to see the numbers for those who have policies and have used up more than their combined premiums (with interest) Surely those numbers exist somewhere.

Good point. That data would be very interesting but it is unlikely the LTC providers would ever publish that information.

Obviously the majority pay more in than they get in benefits, or the companies offering the plans would be insolvent. I view this as similar to any other insurance in that we are unlikely to benefit by more than we pay in for any of it. Still, we carry auto, homeowners, and health insurance.

We do not carry LTCI because we believe the chances of our needing the coverage for an extended period of time are low, and we have a rental property or financial assets we could sell if we needed to self-fund a lengthy stay. I also wonder what changes there will be in the LTC business models offered over the next 25 years which could make traditional LTCI less relevant/attractive.

If I were going to seriously consider LTC, I would compare it to a Type A CCRC. There are many lifestyle benefits of a CCRC and while CCRC’s are also expensive, at least they provide many other amenities to enjoy for those who are healthy enough to enjoy them.

 

[friar1610]

If anyone is interested, I’ve looked up the paperwork on the policies I mentioned in post #5 of this thread. My original age issue was 57 (a mere 19 years ago); spouse’s age was 55.

I currently have a daily benefit of $300.20, 3 years, max lifetime benefit of $328,719. Monthly premium is $128.54. 2.25% automatic compound inflation option. Orig benefit was $150 per day/$164,250/$123.69.

My wife has $304.92 per day, 5 years, max lifetime benefit $556,497. Monthly premium $233.73, 2.65% inflation. Orig $150 per day/$273,750/$139.50

We declined or lowered the offered inflation adjustment a couple of times when premium increases were announced. This either kept the premiums level or increased them only modestly.

 

[CRLLS]

The 100-day rehab are covered by Medicare. LTCI don't kick in for short stays. The statistics is that the average use of LTCI is 2 years.

True, but from the articles I have read (up till now), they don't differentiate between the short term stays and end of life stays. It is like the LTCI companies and others just lump them all into one group.

This isn't what you are asking for but it does provide information that excludes rehab stays: https://www.geripal.org/2010/08/length-of-stay-in-nursing-homes-at-end.html

It's the second bullet in the quote below that we are most concerned about, especially with our family history of nursing home stays.

DD - 9 months
FIL - 7 months
DM - 26 months
MIL - 31 months

From that article, the mean time in nursing homes for a male is 3 months. That means that even though they are included in the numbers needing LTC, about half would never meet a 90 day waiting period.

This recent paper may answer many of your questions:
https://squaredawayblog.bc.edu/squared-away/retirees-need-for-caregivers-varies-widely/
It has a link to the underlying research paper. This figure is a nice summary of some of the findings:

That underlying paper is also confusing to me and doesn't answer my questions, At least I don't think so. I understand there are all shades of gray in that large group of LTC needs. It is difficult to lump them all. And that is what I suspect the LTCI companies do, Lump them all together. Here is one part of that paper that shows an example of that lump sum.

In fact, a recent study estimated that a 65-year-old has a 7-in-10 chance of developing a “severe” need for long-term services and supports (LTSS), which sounds quite alarming. But this overall risk of needing LTSS masks tremendous variation in the duration and intensity of the required support. While some might require years of around-the-clock care in an institution to cope with dementia, others might just need occasional help from relatives to recover from illnesses and injuries. And, in most cases, getting support will not require spending years in a care facility –

 

[Sunset]

We had never had a client who could not get the claims paid as long as they required assistance with 2 ADLs. Some insurers only require a doctor's note while others will send a 3rd party nurse to come out to do the assessment to ensure that assistance of 2 ADLs are needed. Somethings clients themselves refuse care and the children start the claims process. In these cases, where the nurse comes out, often the clients would tell the nurse that they could do all the ADLs themselves and the nurse goes away indicating such.

It is not true that premiums "keep going up every year". I bought mine in 2009 and have not had a single increase.

LTCI is an insurance product. Just like term insurance policies. You pay into it and may never see a dime back because you didn't die while holding the policy.

Seems to me, the nurse has a tendency to decide in favor of the insurance company, as nurse's that more frequently decide that way, would be more likely hired again by the insurance company.
Simple analytics of visit decisions would show the insurance company which nurse's were favoring the insurance company.

There is of course the slacker nurses, who accept the word of the client. "I can bathe myself". So deny qualification.
Does the opposite apply, a nurse would accept the word of client "I can't do 2 ADLs" and qualify them. I seriously doubt it.

 

[RetiredHappy]

Seems to me, the nurse has a tendency to decide in favor of the insurance company, as nurse's that more frequently decide that way, would be more likely hired again by the insurance company.
Simple analytics of visit decisions would show the insurance company which nurse's were favoring the insurance company.

There is of course the slacker nurses, who accept the word of the client. "I can bathe myself". So deny qualification.
Does the opposite apply, a nurse would accept the word of client "I can't do 2 ADLs" and qualify them. I seriously doubt it.

Regarding 3rd party nurses, they are never hired by the insurance companies. From my experience, a 3rd party company is contracted with the insurers. The 3rd party company contracts with independent contracted nurses. There were certainly slacker nurses but again, from our experience they would normally make the clients perform ADLs to verify that they needed help. Unfortunately, family initiated claims often hit problems because the clients did not want someone else in the house to provide care.

 

[zippy2020]

An interesting article today in our local paper (I DO NOT KNOW if it is one of the subscription-only articles, sorry):

From EBay Times article 17Oct2021:
COVID forced Bay Area families to make agonizing elder-care decisions. Is there a fix?
Four families share how the pandemic changed their care plans during an ’emotionally horrifying’ year
https://www.eastbaytimes.com/2021/1...gonizing-elder-care-decisions-is-there-a-fix/

====
The article references the non-profit SCN facility Chaparral House in Berkeley, CA. It points out "A private room without insurance costs $14,400 a month."

Obviously, we are a high-labor-cost area. My spouse and I have LTCi and have never regretted the purchase. We have both health morbidities and genetic family history that raise the odds against us.

YMMV....but if you are going to go without insurance, I strongly suggest you visit facilities in your area and decide which ones you find suitable and which are not.

Because if an emergency does happen, you don't usually have the time and energy needed to research and compare the merits/disadvantages of several places. Doing so takes time. When we wanted to select the best facility for my MIL (who had mild/moderate dementia), we investigated 8 nearby facilities, and the visits were never shorter than 90 minutes. In the case of the 4 facilities that made the first cut, and the 2 that made the final cut, the succeeding visits were even longer.

 

[Brat]

I am a Long Term Care Ombudsman (on medical leave for cancer treatment). The quality of the care in facilities varies A LOT. In general, the best care can be found at not-for-profit residences.

Don't fall in love with appearances. Carefully read the facilities' care planning documents and before moving in demand a care plan from the Administrator. Get their promises in writing. They should have Ombudsman's contact information posted. Reach out to that person, ask about the concerns residents have shared. There is no heaven on earth but you want to avoid the truly awful.

Because of COVID, most facilities cannot offer congregate dining or activities, loneliness is becoming an issue. For that reason alone visit your family member frequently. Also, ask if a therapy animal program (a visiting animal that is certified).

 

[zippy2020]

If I could upvote Brat's post #21 a hundred times, I would! So very true.

People were surprised we took 18 months before final selection of a facility for MIL (fortunately we weren't in any hurry, LOL). Multiple visits ARE A MUST.

For the final facility, we made extra visits. We visited everything, including SCN wing and their in-house Senior Center. We attended several classes - 2 senior activity and one Memory Care class. We went to a holiday concert and one of the monthly birthday celebrations. We visited three times for meals, bringing MIL with us for two of those meals.

Every facility we visited had a different atmosphere and "feel" to it. Prices were generally the same but "the devil was in the details".

If you haven't visited multiple facilities, you won't have anything to compare your first facility to. It's easy to get snowed by the salespeople (many facilities, even good ones, hire third-party salespeople as organizing these "introduction events" can be time-consuming for already-busy staffers) - it's what they DON'T say that can be very revealing. But you'll only be aware of that if you've already listened to half a dozen other spiels beforehand.

 

[Brat]

During my recent Ombudsman zoom meeting, there was a discussion about a facility that was admitting new residents notwithstanding the fact that they are understaffed. In Oregon, there is a tool that calculates minimum staffing based on resident CARE NEEDS, not the census.

The only way for facility consequences to be assessed is that this is documented during a State audit... and these are infrequent.

 

[Scuba]

I totally agree with the suggestion not to overvalue appearances. What’s most important is the quality of care and the activities/stimulation provided to residents. Sometimes the newer, fancier places that look great don’t have the best care.

I also agree that not-for-profits generally provide better care.

 

[youbet]

YMMV....but if you are going to go without insurance, I strongly suggest you visit facilities in your area and decide which ones you find suitable and which are not.

Because if an emergency does happen, you don't usually have the time and energy needed to research and compare the merits/disadvantages of several places. Doing so takes time. When we wanted to select the best facility for my MIL (who had mild/moderate dementia), we investigated 8 nearby facilities, and the visits were never shorter than 90 minutes. In the case of the 4 facilities that made the first cut, and the 2 that made the final cut, the succeeding visits were even longer.

This makes no sense. Why would only folks choosing to not purchase ltci be advised to visit facilities and plan ahead? EVERYONE should, with or without ltci.