Who has long term care insurance?

[pjm-7]

I always looked at LTC insurance like a floor the same way I look at Social security. Look at all of your assets and income at retirement (pension, social security, RMD's). Being single you probably want a policy that includes home care.

One thing I learned with the parents situation about ten years ago is that if a facility has two people wanting admission with the same assets they will give the priority to the person with the LTC policy.

 

[Paulz]

One of the bloggers I follow just did a three part series on LTC that you might find interesting:
https://esimoney.com/thoughts-from-a-long-term-care-insurance-expert-part-1/ )

Make sure you read the comments down at the bottom as the guest answers questions and interacts which I found useful. I did request a quote from the quest (https://www.ltcshop.com/ ) which was good for my calculations. Most valuable to me was he addressed the Federal LTC (I am an Fed) and his analysis on that was worth its weight in gold.

 

[Lucky1]

I don't but we have one for DM. Not sure if this helps because it was bought in 2004. It is w/Lincoln Benefit Life...

Her premiums were $307 month for 10 years. It has a 90 day "elimination period" w/lifetime benefit. Nursing home care is $100/day. She was age 64 when bought.

So far, so good....have not needed it....but seems like a no-brainer considering the average nursing home stay is 2+ years....so would break even after 1 year.

From what I have read, only about 15% of the population ends up in long term care for 2+ years.

 

[mickeyd]

Absolutely no LTCI in our home. We are willing and able to self-insure for the questionable risk. We live in a CCRC has facilities that would care for us if we ever have to give up independent living. Life is good.

 

[davismills]

I have the Federal LTCIP which is currently through John Hancock. It was first offered in 2002 when I signed up while still employed. Every 7 years OPM solicits bids and renegotiates it. The last time only John Hancock bid on it. The two times it has been put out to bid the price has either gone up and/or benefits down. I have kept my premium stable at the cost of a much lower inflation rate, now at 0.9%. It will pay up to $233/day with a max. 5 year payout of $425,000. The contract is up for renegotiation I think in 2023. If it goes up significantly I will likely drop it.

Same boat as you. I took a lower coverage a few years ago, but will likely drop it in 2023....just a feeling JH will go for a huge increase in premium.

 

[RetiredAtThirty-eight]

Ours doesn’t have a time limit, just a dollar limit. Right now it’s over $1M for each of us, so it should last a while.

Long-term care policies are almost always a terrible deal. The daily limit rarely covers the cost of full time care (and if it does, the premiums are outtrageous). Remember, the cost to stay in one of these facilities can be significantly higher than a "cost of living" adjustment will cover.

I was in the unfortunate position of having to shop around for long-term care for my dad when he became too disabled to continue living in his independent living retirement home. All long-term care facilities are very expensive, I couldn't find one cheaper than about $7,000 month (they were all about the same price in the area he wanted to stay), that's $84,000/year or $233/day.

His long-term care policy only paid $125/day (even though it had a million dollar limit) so he was left on the hook for over $30,000 year and plus my mom still needed to rent their one bedroom independent living unit so their costs were huge. Even worse, the long-term care didn't kick-in until he had paid for the first three months which drew down his savings by over $21,000. That was a few years ago, it costs a lot more now.

They were on their way to bankruptcy but he died a few months before they hit it. My mom died a few months later. Had they not had long-term care insurance nothing would have changed. They would have gone bankrupt a few months sooner but the care would not have changed because Medicaid would have covered it.

You are far better off to invest what you would have paid in premiums into the market to fortify your retirement savings.

 

[davismills]

Long-term care policies are almost always a terrible deal. The daily limit rarely covers the cost of full time care (and if it does, the premiums are outtrageous). Remember, the cost to stay in one of these facilities can be significantly higher than a "cost of living" adjustment will cover.

I was in the unfortunate position of having to shop around for long-term care for my dad when he became too disabled to continue living in his independent living retirement home. All long-term care facilities are very expensive, I couldn't find one cheaper than about $7,000 month (they were all about the same price in the area he wanted to stay), that's $84,000/year or $233/day.

His long-term care policy only paid $125/day (even though it had a million dollar limit) so he was left on the hook for over $30,000 year and plus my mom still needed to rent their one bedroom independent living unit so their costs were huge. Even worse, the long-term care didn't kick-in until he had paid for the first three months which drew down his savings by over $21,000. That was a few years ago, it costs a lot more now.

They were on their way to bankruptcy but he died a few months before they hit it. My mom died a few months later. Had they not had long-term care insurance nothing would have changed. They would have gone bankrupt a few months sooner but the care would not have changed because Medicaid would have covered it.

You are far better off to invest what you would have paid in premiums into the market to fortify your retirement savings.

I tend to agree. Other than term life insurance in our productive years, anything else with the "I" word in it, is just not worth it after 65 years of age.

 

[Rustic23]

We do not. Pension income, IRA income, and SS cover will cover current expenses, and enough additional to cover 60-80 thousand in nursing home cost. We also have non IRA savings, that would cover 5 years of nursing home cost. Yes, if one of us went into a 10 year or longer care situation, we would be in a bind. However, finance, might be the least of our worries.

 

[Archman]

My DH and I have each our own policy from Genworth with a partnership with the Indiana Long Term Care Insurance Program. For the both of us we pay $4127.52 , annually. We each would get a monthly benefit of $5448. The parnership protects us from having to withdraw more of our assets if we had to go on Medicaid.

 

[RetireeRobert]

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!!

 

[BeachOrCity]

Would you take this inflation addition?

Hi Folks,
Just got my once every 5 years inflation addition from a LTC policy i bought in 1990. I am now 55 years old. Current premium is $22.28/mo for DMB of $240 and Lifetime $440K. Also includes a home health option for $120 DMB which is nice.

Yes the policy is crazy cheap. John Hancock.

Inflation addition option. $5.84 month for $15 more on the DMB and 30K more on the lifetime.

$$$ Wise this seems like a no brainer, even though the percentage increase of premium is huge compared to the percent benefit increase (25% premium increase for 6% benefit increase).

But it seems like since I purchased it at 25 years old (for 10 bucks a month, now higher because I have taken inflation options); I am benefiting greatly from that and the add in in "hard dollars" still makes sense.

FYI, the payback by paying these additional premiums for 30 years when I am 85 is at 140 days of the DMB.

Thoughts?

 

[REWahoo]

I'd go for it.

 

[easysurfer]

I had LTCI but recently decided LTCI is for fools.

But recently going through a crash course with a relative about the process from hospital to Skilled Nursing Facility (SNF) to nursing home. You know that term "custodial care" keeps on popping up.

Now I think, I'm gonna need a LTC policy that gives me the biggest custodial care amount possible so them careworkers can change me and do what they gotta do to me in my home.

 

[donheff]

Now I think, I'm gonna need a LTC policy that gives me the biggest custodial care amount possible so them careworkers can change me and do what they gotta do to me in my home.

That's why I have it but who knows whether all those custodial care workers will be available when we boomers start checking out.

 

[easysurfer]

That's why I have it but who knows whether all those custodial care workers will be available when we boomers start checking out.

This LTC things is present for me as I'm in the process of looking for a nursing home for a relative. Of about 20 candidates, about 10 turned down because medicaid not accepted.

One place I called and they asked "Oh? What type of insurance do you have?" Sounded interested. Then when I said "medicaid" .. oops.. no beds available. Hmmm.

 

[Dash man]

That's why I have it but who knows whether all those custodial care workers will be available when we boomers start checking out.

The problem with home care workers is will they be there when you need them? If they’re not there 24/7, there will be problems.
We’re in the process of moving a second in-law into a nursing home, both Medicaid. Since they’re married they will share a room.

 

[Dtail]

I'd go for it.

+1 great rates.

 

[Skoach]

To protect savings. Long-term care costs can deplete a retirement nest egg quickly. The median cost of care in a semi-private nursing home room is $89,297 a year, according to Genworth’s 2018 Cost of Care Survey. That money is taxable. $89,297 would actually cost approx. $125,000 in after tax dollars.

I must be missing something, please help me understand how a expense is taxable. The only thing that COULD be taxable is the income you draw tp pay that expense. 401k money - taxable as income at your marginal rate. Selling investments - taxable at capital gains rates. Roth money - not taxable.

What am I missing?

 

[Dash man]

I must be missing something, please help me understand how a expense is taxable. The only thing that COULD be taxable is the income you draw tp pay that expense. 401k money - taxable as income at your marginal rate. Selling investments - taxable at capital gains rates. Roth money - not taxable.

What am I missing?

I assume they’re referring to a taxable retirement account. But my experience is a nursing home is around $10k/ month in our area, SE PA. It varies some on location.

 

[Pellice]

Are you sure you need LTCi? Many who purchase LTCi do so to prevent the possibility of a spouse being impoverished in the event the other had a long stay in a care facility. Who/what are you preserving your assets for if you have no beneficiaries?

A consideration for me, in the same situation: I don't want to go in the cheapest, closest facility because "all I have is Medicaid" - which wouldn't exactly be true anyway, since I would have SS and presumably my IRA distributions and sale of house proceeds. I want a GREAT facility, with activities, good staff, excellent food, and a beautiful setting (very important, at least I think so now).

Am I thinking incorrectly about this? No one ever seems to mention wanting an upgraded LTC experience as a reason for getting a policy.

 

[blueskyk]

An “upgraded experience” wasn’t my reason for getting the policy (offered by mega Corp. with exceptional rates), it was protection for the spouse. Near as I can tell, opting for LTCi now is quite expensive.

Having spent much time in NH facilities over the years with a family member, I did find substantial differences between those that accept Medicaid (upon entry) and those that do not. Another possibility are facilities that will accept you when it looks like you can pay for a while and then keep you once you transition to Medicaid.

I see LTCi as providing additional options and that multiple options are a good thing to have. But then, I also have a very favorable rate and terms from a megacorp group plan that I purchased at age 50 that is no longer available to the general population. Luck of the draw on that one, I think.

I will be thrilled to never use it.

 

[savory]

This LTC things is present for me as I'm in the process of looking for a nursing home for a relative. Of about 20 candidates, about 10 turned down because medicaid not accepted.

One place I called and they asked "Oh? What type of insurance do you have?" Sounded interested. Then when I said "medicaid" .. oops.. no beds available. Hmmm.

I went through this with my Dad a few years ago. I ultimately hired a guy who helps locate a home that has a Medicaid bed. After all the bribe money was distributed, a bed was available.

The system is broken.

 

[timo2]

A consideration for me, in the same situation: I don't want to go in the cheapest, closest facility because "all I have is Medicaid" - which wouldn't exactly be true anyway, since I would have SS and presumably my IRA distributions and sale of house proceeds. I want a GREAT facility, with activities, good staff, excellent food, and a beautiful setting (very important, at least I think so now).

Am I thinking incorrectly about this? No one ever seems to mention wanting an upgraded LTC experience as a reason for getting a policy.

I believe you have it correct. It was brought home to me when my now deceased father was in his local Ozarks town nursing home for rehab after some medical issue. He didn't like it there because, he said, dinner consisted of bologna sandwiches. That was big light bulb going off right there for the younger version of myself. Who wants to be relegated to the care facility that has bologna sandwiches for dinner?

 

[lem1955]

I must be missing something, please help me understand how a expense is taxable. The only thing that COULD be taxable is the income you draw tp pay that expense. 401k money - taxable as income at your marginal rate. Selling investments - taxable at capital gains rates. Roth money - not taxable.

What am I missing?

My understanding is that you can take a tax deduction equal to the medical cost of long term care when you use a tIRA to pay those expenses. No?

 

[Pellice]

My LTC insurance company, Transamerica, sent out a chatty note with their annual privacy notice today that, at the very end, dropped one sentence of news that they were discontinuing selling "standalone long term care insurance." Now, this will not affect my existing policy (supposedly), but it sure seems that options are narrowing for long term care for people. Other companies are exiting the market too.

They want to herd everybody into these "hybrid" life insurance policies, but that would not make any sense for a single person with no need to leave money to heirs. As far as I could tell, a standard LTC policy offered more bang for the buck - IF one used it, and I do understand that IF. I just thought of it as insurance.

Anyway, I do wonder what people in my situation - not enough money to self-insure, but enough to pay for a policy offering upgraded options for LTC planning - will do when these policies become totally unavailable?

Edit: PS: They reference "post-Covid" in their communication. I wonder how many organizations seized the opportunity to reevaluate their business models. Covid tore through nursing homes and presumably reduced the number of LTC care beneficiaries, as well as making nursing homes more expensive and less attractive an option for potential clients. Not sure how that would change their calculations, but it probably did.