New LTC Study

[wrl11]

So what happens to someone when they cannot pay to stay in the LT care facility and there is no family (or no family money) to pay or take them in and benefits under Medicare/Medicaid is used up? Can they dump someone at their house (if they have one) that cannot take care of themselves?

[jim584672]

Once they spend down all their assets Medicaid will pay for the nursing home.

[daylatedollarshort]

These super, crazy high costs for LTC seem to be only in the U.S. I have read in the UK average nursing home costs are ~$60K USD a year. That is still not cheap, but we could deal with that for a long term basis without impoverishing the surviving spouse.

As has been discussed in previous articles here, America is a place where luxuries are cheap and essentials are expensive. Retiring outside the U.S. is something we are considering. Are there other countries where people who are millionaires or multimillionaires with SS and maybe pensions like many of the retirees on this board have legitimate worries about running out of money?

[REWahoo]

LTC costs vary considerably by state. Here's a website where you can view the average annual cost of various levels of care on a state-by-state basis:

https://www.genworth.com/corporate/a...t-of-care.html

[daylatedollarshort]

Quote:

Originally Posted by REWahoo LTC costs vary considerably by state. Here's a website where you can view the average annual cost of various levels of care on a state-by-state basis: https://www.genworth.com/corporate/a...t-of-care.html

Okay, so it is the EU or Louisiana then for lower nursing home care costs.

[RE2Boys]

Quote:

Originally Posted by REWahoo LTC costs vary considerably by state. Here's a website where you can view the average annual cost of various levels of care on a state-by-state basis: https://www.genworth.com/corporate/a...t-of-care.html

Thanks for the link. For the reasonable costs in my area (NW PA) the right decision for me is to self-insure.

The product I need is a LTCI with an exclusion period of a couple of years to cover the catastrophic events, not cover from day 91.

[donheff]

Quote:

Originally Posted by samclem Yes, almost always true (the Federal program used to offer an "unlimited term" plan, maybe others did, too).

I have the unlimted care option under the Federal program. I don't look at this in terms of an investment but more along the lines of life insurance when we were younger. The likelihood of getting a payback from life insurance was tiny but the impact of death without it was extreme. LTC is more complicated. DW and I could absorb the impact of a long term illness but, in worst case scenarios, it could eat up the bulk of our planned estate. We made the decision to insure the estate on our own but I bet if we put the question to our kids they would vote for the LTC. The question would be along these line: We have the choice of spending a few thousand a year for the rest of our lives to cover LTC that likely will never materialize. Alternatively, we could save that money earmarked for LTC and it would likely suffice and probably even leave you with a somewhat larger inheritance. But, if the LTC costs came in on the far right tail of the curve most or all of the estate could evaporate. It matters more to you than us, what should we do?

[REWahoo]

Quote:

Originally Posted by RE2Boys The product I need is a LTCI with an exclusion period of a couple of years to cover the catastrophic events, not cover from day 91.

+1

I'm not sure that type of catastrophic coverage policy is available, but it has been a very long time since I looked. The longest exclusion period available when we bought was six months, and that's what we went with.

[growing_older]

Quote:

The product I need is a LTCI with an exclusion period of a couple of years to cover the catastrophic events, not cover from day 91.

That product doesn't seem to exist. All the LTCI policies people have been trying to sell me have duration limits that mean they have coverage only for stays in assisted living or nursing home care for a few years, after which I pay for everything. The "risk" I'm trying to insure against is the possibility of a very long stay. The policies all seem to be offering arbitrage between a moderate stay and the premiums (uncapped and rising all the time) charged for the policy. I'm not interested in that bet.

[BBQ-Nut]

Quote:

Originally Posted by RE2Boys Thanks for the link. For the reasonable costs in my area (NW PA) the right decision for me is to self-insure. The product I need is a LTCI with an exclusion period of a couple of years to cover the catastrophic events, not cover from day 91.

Couldn't you do a self-executed 'exclusion' period of not filing for LTC benefits for however long you want up front?

[ggbutcher]

In the Kitces post, I very much like his "Principles of Insurance" section. I do risk management at w*rk, and the fundamental principle of 'each risk has an independent likelihood and consequence rating' is continually forgotten or muddled by the participants. I had that very conversation in a meeting yesterday. Risk is something we encounter, evaluate, and mitigate every day, but we don't usually decouple the likelihood and consequence when we consciously do so.

Insurance is about folks pooling their money to allow those who encounter the egregious 'undesired outcome' to weather it, and the others who do not to finance it. So, what you want to insure against are calamities that have a low probability of occurrence, but could deplete your assets if they occur. Auto accidents are such a risk.

The risk associated with LTC is a muddier proposition, as most have pointed out. A not-so-remote probability of eventually needing some kind of assisted living, but not so debilitating an outcome on assets. Thus, a lot of self-insurers, including me.

[meierlde]

Quote:

Originally Posted by REWahoo LTC costs vary considerably by state. Here's a website where you can view the average annual cost of various levels of care on a state-by-state basis: https://www.genworth.com/corporate/a...t-of-care.html

I suspect that you would also find that LTC costs vary greatly within states being higher in the metro areas and lower in the rural areas. This of course raises the question of where to retire to, LTC costs might become a factor influencing the decision.

[REWahoo]

Quote:

Originally Posted by BBQ-Nut Couldn't you do a self-executed 'exclusion' period of not filing for LTC benefits for however long you want up front?

Perhaps. But if you are paying the premiums for something with a shorter exclusion period, what benefit would waiting provide? It could easily result in the total payout being less if the insured expired before the policy benefit limits were reached.

[samclem]

Quote:

Originally Posted by BBQ-Nut Couldn't you do a self-executed 'exclusion' period of not filing for LTC benefits for however long you want up front?

No, because what you want to gain with a long exclusion period is lower premiums.

The exclusion period is like a deductible on your homeowners insurance. You get a much lower premium if you have a $10K deductible rather than a $500 deductible. But you don't gain anything by buying a policy with a $500 deductible and then just don't make a claim unless the damage exceeds $10K. As far as the insurance company knows, you're planning to make a claim starting at $501 in damage, and they charge an appropriate insurance premium.

[ExFlyBoy5]

Oye. My head aches after reading all these posts. I am of the mindset of the "smother plan" as well...nothing a big bottle of nitrogen wouldn't take care of. Of course there is the slight issue if my DW is with me in a debilitating accident!

[BBQ-Nut]

Quote:

Originally Posted by samclem No, because what you want to gain with a long exclusion period is lower premiums. The exclusion period is like a deductible on your homeowners insurance. You get a much lower premium if you have a $10K deductible rather than a $500 deductible. But you don't gain anything by buying a policy with a $500 deductible and then just don't make a claim unless the damage exceeds $10K. As far as the insurance company knows, you're planning to make a claim starting at $501 in damage, and they charge an appropriate insurance premium.

So, isn't this really just a limited term 'self-insurance' strategy?

If LTCI pays out a limited benefit, then couldn't one determine a self-insurance 'term' (aka the exclusion) and how much in LTCI benefits to cover a given situation, which would result in a lower premium, but lower benefit because of the self-imposed/self-insured period?

[MichaelB]

Quote:

Originally Posted by Fermion $16K a month and she still needed extra care provided by DM? One would think for $200,000 a year that these private facilities would do everything for you. Do the LTC policies pay out whatever absurd rate the facility of your choice charges?

That's the thing. It's not $16K to a facility. It's $7.5K to her assisted living home, and $8.5K to the skilled nursing home once Medicare stops paying. The skilled NH is not a home, it's an extension of the hospital stay, you can't live there. She can't return home (ALF) as long as whe needs the skilled nursing care, but has to keep paying, or she loses it.

The point, which others are making more clearly, is lots of things can happen that can deplete a portfolio and leave a surviving spouse in hardship. LTCI isn't great but it is the best thing available today to help the spouse avoid an extreme outcome.

[W2R]

Quote:

Originally Posted by clifp Nords has a great post on the subject What I won't buy Long-Term Care insurance.

Everything he says is true and if anything, understated IMO. My mother's experience with the same LTC insurance was probably worse, if anything. After years and years of paying through the nose on her premiums, when she was in her mid 90's the time came for her to make a claim. She had a number of very upsetting phone conversations with them. She couldn't get a dime out of them until she had her grandson (a forceful and high powered NYC attorney) contact them. According to him and my brother, the grandson/attorney said the exact same things she had been saying, but they paid attention to him, not her.

She was lucky that she had a grandson in that occupation who was willing to go to bat for her. What good is insurance if you need to hire an expensive attorney as advocate? Pfft. Plus, it didn't really pay that much anyway IIRC.

I'm self insuring and I will be able to come up with more than the total amount the insurance company would promise to pay (which often isn't much). This way I can avoid dealing with CROOKS LTC insurance companies when I am at my weakest and most vulnerable.


YMMV but I just don't personally happen to care for these policies.

[karen1972]

I've been Leary of LTC ever since they hosed my grandma.. wonder if there is a study of those that actually get the benefit they pay for...as I've even heard financial advisors mentioned fighting them for their parents.

I'm going with two years of full care and assume 5 years of assisted living...if something major happens..oh well I am not leaving money to anyone but charities...and if I'm at that point I guess I'm the worthiness charity I know.

[rodi]

Quote:

Originally Posted by meierlde I suspect that you would also find that LTC costs vary greatly within states being higher in the metro areas and lower in the rural areas. This of course raises the question of where to retire to, LTC costs might become a factor influencing the decision.

This is absolutely true. I did an exercise 3 years ago of pricing nursing homes in 3 areas:
Lexington, Kentucky
Philadelphia, PA
San Diego, CA

Those are the 3 cities that family was available to visit, etc.

Philadelphia was SIGNIFICANTLY higher than the rates listed on the Genworth list for Pennsylvania. Like 25% higher.
San Diego - as long as you were inland (think Escondido vs La Jolla) - was pretty much in line with the Genworth survey.
Lexington was pretty much in line with the survey.

One BIL suggested we put FIL in a facility in State College (middle of PA and quite a drive from Philly)... it was pretty much in line with the Genworth data... although still more expensive than San Diego and significantly more expensive than Lexington.

Family members need to consider more than price alone... Convenience/access for family is VERY important.

I'm starting the process of pricing memory care units in the three areas again. Once again - the prices are falling in the same order - Lexington is the cheapest, Philadelphia is far and away the more expensive. I'm not sure why - since CA is more expensive in most other stuff - but Philly is over $100k/year for assisted living w/ memory care.