Long Term Health Care

[oliverdickens]

I know there is a tread somewhere, but was wondering how the participants feel about purchase of Long Term Health Care while still "young", say mid fifties.

Just curious on discussion about the pros and cons

Thanks

 

[REWahoo]

http://early-retirement.org/forums/index.php?topic=7335.0

 

[ziggy29]

I know there is a tread somewhere, but was wondering how the participants feel about purchase of Long Term Health Care while still "young", say mid fifties.

Just curious on discussion about the pros and cons

I hate to oversimplify, but the bottom line is -- the "pro" is that it can save your financial butt if you need it. The "con" is that it's an awful lot of money to spend if you don't.

 

[Brat]

Whether or not to purchase LTC insurance is a financial decision that depends on individual economic circumstances. I will leave that for others to comment on.

We purchased ours when I was in my mid-50s, before DH turned 60.

The advantage of buying early is that your rate is lower. Also, if you develop indicators of need for long term care you may not be insurable.

 

[Rich_by_the_Bay]

Consumer Reports did a piece on this in the past year or so. Their conclusions were cautious. One thing that stuck with me is that the very rich don't need it, the very poor don't need it, and of the rest of us, many can't afford it.

Premiums go up and up, policies get dropped in bulk for certain groups, and companies can, if rarely go out of business - all the usual insurance issues.

Then you have to weight the opportunity cost of all those premiums not being invested, etc.

Not an easy decision, no clear right and wrong.

 

[JohnEyles]

Another thing I've heard is that women are FAR more likely to need it than men,
or at least that men's typical tenure in LT-care facility is a lot shoter. In other
words, men tend to die more suddenly (heart attack) whereas women tend
to linger in a state requiring assisted-living, etc.

I am not factoring my house into my retirement income calculations at all,
figuring it is like the nuke I will roll out if I need a lot more - investments
fall well below par, need LT care, whatever - by reverse mortgaging, selling
and moving into LT facility or apartment, whatever.

 

[ziggy29]

Another thing I've heard is that women are FAR more likely to need it than men,
or at least that men's typical tenure in LT-care facility is a lot shoter. In other
words, men tend to die more suddenly (heart attack) whereas women tend
to linger in a state requiring assisted-living, etc.

Plus, since women tend to live longer AND because most men are older than their wives, most men still have their wives around to help care for them if they suddenly become unable to care for themselves. Statistically speaking, women are less likely to still have their husbands around to care for them, and thus more likely to end up in a long-term care facility. Men are much less likely to be widowed.

 

[youbet]

Consumer Reports did a piece on this in the past year or so. Their conclusions were cautious.

I was surprised at the Consumer Reports position on LTC insurance, especially their concern that insurers may not be there for you when you need them. Or that insurers can and do change the rules midsteam.

Supplemented with additional research, this report was the straw that caused me to work longer and plan on a lower WR so that we wind up being reasonably self-insured in most scenarios.

 

[mykidslovedogs]

I know there is a tread somewhere, but was wondering how the participants feel about purchase of Long Term Health Care while still "young", say mid fifties.

Just curious on discussion about the pros and cons

Thanks

I am mykidslovedogs DH and own a financial planning company.

The longer you wait to purchase LTC insurance the more expensive the premium. The premiums for a 55 year old male paid over a 25 year period of time would be less than the premiums paid for coverage for a male age 62 that are paid over a 18 year period of time. My premium for $150 per day daily benefit with all the bells and whistles at age 40 is less than $100 per month. I would suggest that you purchase the best possible policy you can at the earliest age possible. Reason being: at some point in your lifetime, you will become uninsurable, you will not know exactly when that point of time is. So, assuming you are healthy and can qualify for coverage now, it would be best to apply while you are healthy.

 

[ziggy29]

My premium for $150 per day daily benefit with all the bells and whistles at age 40 is less than $100 per month.

But by the time you need it, say 30 years from now...that $150 per day won't go very far...I'm sure that's not inflation-adjusted for under $100 per month.

 

[youbet]

My premium for $150 per day daily benefit with all the bells and whistles at age 40 is less than $100 per month.

Just curious. Is the $150/day benefit inflation adjusted? Can your rate be raised? Can the policy be cancelled? Can the "bells and whistles" offered along with the policy be changed?

You suggest puchasing the "best possible policy." What's that? When I researched, I found various "experts," all with flawless credentials and much experience, suggested different policies with different features as the "best possible policy."

 

[Rich_by_the_Bay]

Just curious. Is the $150/day benefit inflation adjusted? Can your rate be raised? Can the policy be cancelled? Can the "bells and whistles" offered along with the policy be changed?

... and is there a risk of carrier insolvency over 40 years
... and will there be health care reform over the next 40 years which will decrease (or increase) the LTC costs
... and the opportunity cost of $1200 per year premiums today, increasing annually
... and if over the next 40 years you decide it's not working, do you get any refund on premiums (rhetorical question, answer: no)

etc. etc.

I don't know the answer, but I do know that it's not a slam dunk.

 

[grumpy]

One should not assume that LTC insurance will only be needed when you are very old and near the end of life. We have all heard about healthy middle aged folks who suffer a brain injury in a car accident, a stroke, or some other condition that leaves them in a coma or fully disabled but with modern medicine, the prospect of many years of survival in a nursing home. That, to me, is the worse case scenario. If that were to happen to me, with no LTC insurance, my DW would exhaust all of our carefully built resources long before her life expectancy was reached. We both bought LTC policies at age 50 and fear of that scenario was one of the reasons. It is relatively cheap protection from what would otherwise be a catestrophic situation.

GRumpy

 

[youbet]

One should not assume that LTC insurance will only be needed when you are very old and near the end of life. We have all heard about healthy middle aged folks who suffer a brain injury in a car accident, a stroke, or some other condition that leaves them in a coma or fully disabled but with modern medicine, the prospect of many years of survival in a nursing home. That, to me, is the worse case scenario. If that were to happen to me, with no LTC insurance, my DW would exhaust all of our carefully built resources long before her life expectancy was reached. We both bought LTC policies at age 50 and fear of that scenario was one of the reasons. It is relatively cheap protection from what would otherwise be a catestrophic situation.

GRumpy

Grumpy,

I agree that protection in early years is the most important feature. More important than needing coverage for a few years when you're in your 80's or 90's.

Since you seem to be a happy customer, what features, protections, etc. did you choose? How did you pick the company to purchase from? How about all the other questions Rich and I asked above?

I definitely am not trying to say you were wrong to buy it. It's just that, for me, I'm concerned that the features, coverage and premiums I start with today won't be appropriate down the road or that the company will change the premiums or the features or the rules or even go belly-up.

 

[Brat]

Those who have the OPM program available, it is more expensive than most BUT the financials of the insurers have been carefully vetted because they are standing behind it. Even if the program isn't available to you it has a lot of information about options and the cost of options.

 

[brewer12345]

How did I know MKLD would be on this thread shilling away? :

I would not suggest LTC insurance in its present form to anyone. The policies are expenseive, limited, prone to risk of carrier failure, and the rates can be jjacked up any time the insrer can justify it to the insurance commissioner of your state (has happened many times). It is a product that is a good idea, but lacks much in the execution of the idea.

 

[youbet]

Those who have the OPM program available

OPM program

 

[Rich_by_the_Bay]

One should not assume that LTC insurance will only be needed when you are very old and near the end of life.

There are exceptions, but the vast, vast majority are over 70 and many are over 80. The exceptions don't prove the rule.

 

[Brat]

OPM program

http://www.opm.gov/insure/ltc/

 

[honobob]

I bought my LTC thru CalPERS in my 40's. I bought the whole shebang, lifetime coverage, 5% yearly inflation protection, at home care etc. The premium just recently increased (after 8 years) and was less than a hundred a year.

Under 3 bucks a day for piece of mind! And if CalPERS isn't there when I need them ($230 Billion in assests) then that will probably be the least of my problems.

The figures I've seen show 40% of the people in nursing homes are under 65.

MyKidsLoveDogs made a good point in that the expense factor is usually because people wait until they're older. I am happy I locked in early. My work buddy who waited is now paying quite a bit more because he never got around to it, but is definitely buying because as he says" I'm not gonna be stuck in some p*ss smelling place".

If you are related to a federal, state, govt. ee you should check if you can buy thru them.

 

[Rich_by_the_Bay]

This authoritative reference states that (as of 1994, so dated a bit but still broadly useful):

"The likelihood of being in a nursing home also rose with age, from less than 1 percent for those aged 65 to 69 to more than 43 percent of those aged 95 or older."

This excludes home care, etc. but the cost of these is considerably lower.

 

[larry]

OPM program

I always thought it was Other Peoples Money

 

[Brat]

The funding for the OPM LTC program is entirely on its participants. It is not, "other peoples' money". Sorry to disillusion you.

 

[youbet]

The premium just recently increased (after 8 years) and was less than a hundred a year.

Did they tell you why the premium increased? Your age? Total expenses related to the risk pool? Is there a cap which guarantees future increases will be modest like this one?

My work buddy who waited is now paying quite a bit more because he never got around to it, but is definitely buying because as he says" I'm not gonna be stuck in some p*ss smelling place".

There are options other than LTC insurance or medicaid!

 

[grumpy]

Grumpy,

I agree that protection in early years is the most important feature. More important than needing coverage for a few years when you're in your 80's or 90's.

Since you seem to be a happy customer, what features, protections, etc. did you choose? How did you pick the company to purchase from? How about all the other questions Rich and I asked above?

I definitely am not trying to say you were wrong to buy it. It's just that, for me, I'm concerned that the features, coverage and premiums I start with today won't be appropriate down the road or that the company will change the premiums or the features or the rules or even go belly-up.

Youbet,

The LTC policies my wife and I got are from CNA. We had a friend who is a financial planner and he researched and recommended three companies that we looked into. I am a cancer survivor and was concerned that I wouldn't get past the medical review. We got the polices at age 50. The features are:

Elimination period: 30 days
Daily home care benefit: $50/day ( 5% annual escalation)
Daily Facility benefit: $100/day ( 5% annual escalation)
Maximum Lifetime benefit: unlimited

Premiums are: Me - $991/yr, Wife - $779/yr.

We will be coming up on the end of 10 years with the policies, so there is the possibility of a substantial premium increase. We will reevaluate whether we are to the point of being able to self insure when we see what the increase is.

I'm not too concerned about whether the company will be there 30 years from now. Do you worry about whether your car insurance company will be there in 30 years? LTC insurance is just like car insurance in some ways. If you don't have a claim, the premiums are $'s down the rat hole. If the company goes bust sometime in the future its only a concern if I am already receiving benefits at that point. It was my impression that state insurance commission regs protect those already receiving benefits from default - anybody know more about this?

Grumpy