LTC alternatives?

[Sunset]

My mom had to temporarily go into a nursing home and I was put in charge of contacting her LTC insurance. I called and found the salesperson who sold her the policy many years ago. This salesperson instructed me on how to handle the claim and was very helpful. She also told me to change my mother's cell phone number temporarily, and to change the phone number on the LTC policy to mine. She said the LTC insurance company would call her shortly after her procedure, hoping she was on meds, and convince her to convert or cancel her policy. Said it happens all the time. Sure enough they called me the day after my mom checked in the nursing home.

How Despicable of them and perfectly legal.

 

[rembrandt]

My LTC policy costs about $500. It is a .38 Special in my desk drawer.

 

[Gumby]

My LTC policy costs about $500. It is a .38 Special in my desk drawer.

What if you have a massive stroke? What if you fall off your horse (or have a car crash) and break your neck like Christopher Reeve? What if you have been intubated and in an induced coma and have been removed from your home already? There are many end of life scenarios where you will be in no position to carry out any scheme to shoot yourself. So you should make an actual plan.

 

[FI_RElater]

wonder which gets more commission

My mom had to temporarily go into a nursing home and I was put in charge of contacting her LTC insurance. I called and found the salesperson who sold her the policy many years ago. This salesperson instructed me on how to handle the claim and was very helpful. She also told me to change my mother's cell phone number temporarily, and to change the phone number on the LTC policy to mine. She said the LTC insurance company would call her shortly after her procedure, hoping she was on meds, and convince her to convert or cancel her policy. Said it happens all the time. Sure enough they called me the day after my mom checked in the nursing home.

I wonder which would get the salesperson more commission: getting someone to start one, which they might only keep for a decade based on the lapse rate, or getting someone to cancel after finally being in a condition to use benefits, and thus is virtually guaranteed to be a cost to the company for probably about two years (although could be longer). I'd bet that the latter... and would expect that the (likely new) salesperson is somewhat dumbfounded by the contradiction by the company.

 

[ncbill]

What if you have a massive stroke? What if you fall off your horse (or have a car crash) and break your neck like Christopher Reeve? What if you have been intubated and in an induced coma and have been removed from your home already? There are many end of life scenarios where you will be in no position to carry out any scheme to shoot yourself. So you should make an actual plan.

That's where a health care POA comes in handy.

As long as it grants your agent total authority & you've had the conversation with them about how medical care you do or more likely don't want in scenarios like the above.

 

[Sojourner]

I agree with steady saver regarding self-insuring. Set the money aside. Keep it in low-risk investments. You then decide when it's appropriate to draw from it. You don't have to jump through any hoops, there is no elimination period, there is no delay, you don't have to justify anything.

+1

I have no intention to ever pay for LTC insurance. I have enough to cover a years-long stay, if needed. And in my experience with all my older relatives and with myriad older friends and acquaintances, it has been quite rare for anyone to ever need more than two (maybe three) years of memory care or skilled nursing care, at the most.

 

[mathjak107]

the hybrid life insurance long term care policies are the most costly way to get long term care coverage.

as kitces points out

EXECUTIVE SUMMARY

As traditional long-term care (LTC) insurance becomes more and more expensive, and interest rates remain at ultra-low levels, planners and their clients have become increasingly interested in so-called "Hybrid LTC" policies that match together a life insurance or annuity policy with LTC coverage, especially with a more favorable set of tax rules that took effect in 2010.

For many, though, the primary appeal of hybrid policies is the simple fact that, unlike their traditional LTC insurance brethren, the premiums really are guaranteed and cannot be increased in the future.

Given some of the extraordinarily large premium increases that traditional LTC coverage has experienced in recent years - especially for some of the early policies issued in the 1990s and early 2000s - a cost guarantee is remarkably reassuring.

Yet the reality is that the guarantee of LTC premiums in a hybrid policy may be entirely offset by the fact that the insurance company controls the cash value, and is under no obligation to pay a going rate of return, especially if interest rates rise.

In other words, it doesn't really matter that the insurance company can't increase the premiums on the policy by $4,000/year, when the company can simply under-pay on the interest rate by $4,000/year to accomplish the same result!

And while the cash value of a hybrid LTC policy generally does remain liquid, taking a withdrawal to reinvest to get better, higher rates would entail surrendering the policy and forfeiting the LTC coverage!

In fact, for some types of hybrid LTC policies, the arrangement contractually provides no rate of return to the client at all, and is essentially the equivalent of the client selling a call option on interest rates to the insurance company, where the more rates rise the greater the company wins at the expense of the client!

Given the unique structure of hybrid LTC policies, though, there are still several circumstances where they may be appropriate, despite the concerns about how they may perform in a rising rate environment.

In some cases, simplified underwriting provides a way to get coverage for those who otherwise couldn't get any, and in other scenarios, the favorable tax treatment alone can make a hybrid policy compelling as a place to park an existing appreciated annuity.

Nonetheless, the bottom line is that in today's environment, consumers must be careful not to engage into hybrid policies that amount to little more than offering the insurance company the unilateral right to profit if/when interest rates rise, when the reality is that simply following a "buy LTC insurance and invest the rest" philosophy would lead to a far better outcome in the long run.

https://www.kitces.com/blog/is-the-...-annuityltc-insurance-policies-just-a-mirage/

 

[mathjak107]

we have a new york state partnership plan for long term care ..

it provides 100% asset protection after the 3 years nursing home care or 6 years in home care insurance is up .

a special version of medicaid takes over paying the bills .

no spend down , no look backs , no restrictions on stay at home spouses income .

these plans are now golden as insurance companies all pulled out .

premium’s have skyrocketed as insurers learned old statistics about usage from a generation ago were very off and boomers are not even in the age range yet .

today two people in a couple usually have to work and can’t take in a parent .

or as most found out where siblings are involved m one sibling steps up to the plate and takes an income and social hit and the others step back .

this has broken up more families or ended in divorce as the spouse argues what about your siblings helping out .

our estate attorney says the self insurers are his biggest group of clients .

when the crap hits the fan and the stay at home spouse realizes they can be impoverished they p antic .

my date spent 5 years in a home and impoverished his second wife .

but here is the thing about self insuring .

i don’t know how many remember but almost two decades ago money magazine did a feature story on my wife and i .

they wanted to have their team of pros review my self planning i was doing .

we did well , except i wanted to self insure long term care .

they were against it ..why?

because to self insure you need to do more than say i am self insuring .

you need to act like an insurer.

that means taking that money for self insuring out of the general investments and income generating pool of money , and into low yielding safe , always there and ready money .

for just a small percentage of the average gain if i left everything alone we could have an actual policy …they were right

what be forgets is if they are pulling an income off of their investments, a safe withdrawal rate means that money can be spent down to live .

you cant risk having hit sub par outcomes in your retirement and are spending down to far . so that self insuring money may not be there in the quantity needed , plus the stay at home spouse has an income diminishing with those care pay outs .

so self insuring can be very costly in what’s given up in income and gains if you are doing more then just saying i am self insuring.

 

[athena53]

Our estate attorney says the self insurers are his biggest group of clients .

When the crap hits the fan and the stay at home spouse realizes they can be impoverished they panic .
<snip>
my date [Dad?] spent 5 years in a home and impoverished his second wife .

<snip>
Because to self insure you need to do more than say I am self insuring .

You need to act like an insurer.

That means taking that money for self insuring out of the general investments and income generating pool of money , and into low yielding safe, always there and ready money .

I totally agree on the risk of impoverishing the spouse. I saw it happen with my Aunt, who almost spent down to the level that would have qualified my Uncle for Medicaid after he developed Alzheimer's. He died shortly before that point. Fortunately, she has two sons who did very well financially and they help her. I don't have a spouse, don't intend to acquire one unless he's as financially secure as I am.

I also agree that self-insurance does NOT mean, "I'll save money by not buying insurance and hope nothing happens". I disagree on the need to have a giant chunk in safer, low-yielding investments. (I do have some but it's not a giant chunk.) Right now my withdrawal rate averages 3.5%/year and that amount in itself is enough to pay for most LTC facilities even before you add in my SS and a couple of small pensions. Travel would go to zero. I'd sell the house (value $400K, mortgage under $50K) and all the expenses associated with the house go to zero. Charity and funding my grandchildren's 529s could go to zero.

I know I'm not typical but I truly believe I'll be fine self-insuring unless I buy myself a plan or a yacht- or marry someone who WILL need Medicaid for LTC.

 

[mathjak107]

plans are usually priced so you payin about a years stay in future dollars .

today homes run 130-140k a year in todays dollars .

insurance companies got blind sided because so many longer term patients like my dad were not in actual homes , but in private homes where health care professionals provided 24/7 care .

these are very popular in florida .

so loads of long term users were never counted .

insurers also found way less today are able to be cared for by their children.

as well as when you have insurance you tend to use it .

so policies were way under priced compared to usage and so many insurers pulled out .


almost all states had some form of partnership plan , although few had total asset protection like us ..most states are a dollar for a dollar plan , meaning if medicaid spent x amount on your care , that same amount is exempt from medicaid recovery


most of states had the insurers back out.

here is what our state has posted


No current Partnership policies being offered at this time

As of January 1, 2021, there are no insurance companies currently offering new policy purchases of Partnership qualified products in New York State. This means that there are no new Partnership policies available for purchase at this time. This does not affect current, active insureds who are Partnership qualified.

 

[DuluthGA]

From Genworth’s last qrtly conference call - “LTC, which continues to benefit from premium increases and benefit reductions from IFAs, including more favorable impacts from reserve releases related to legal settlements and higher terminations compared to the prior quarter”. Premium increases and benefit reductions. More people cancelling policies. Add that to the deny, deny, deny claims and makes you wonder why buy?

 

[mathjak107]

it is very hard to deny claims today as the policies are simplified in most states and very specific as to what gets paid .

basically a check list .

so claims are being paid .

genworth pays out almost 1 million a day in long term care claims.

there will likely policy options at renewal. like they may offer you a buyout of your policy for the premiums you paid , or offer a paid up policy for a lump sum .

few insurance companies want this open ended risk with usage increasing and no stats for our generation yet

 

[athena53]

There will likely policy options at renewal. like they may offer you a buyout of your policy for the premiums you paid , or offer a paid up policy for a lump sum .

Few insurance companies want this open ended risk with usage increasing and no stats for our generation yet

Quantifying costs for our generation can be scary- as noted in an earlier post, people are more likely to enter LTC if they have coverage for it. I can tell you that my Aunt tried to keep my Uncle at home for years, even though she had to sleep in a recliner in the living room to make sure he didn't go out and wander at night. He even started to get violent sometimes, but fortunately she was able to calm him. He would have entered LTC far earlier if the insurance had been there.

Since the insured population will likely enter at a younger age, that means they'll be there longer.

Finally, as premiums rise, the ones who stick around and pay them (or accept lower benefits but level premiums) are those who really believe they'll need LTC in the near future. It can become a death spiral for the insurers.

 

[harllee]

it is very hard to deny claims today as the policies are simplified in most states and very specific as to what gets paid .

basically a check list .

so claims are being paid .

genworth pays out almost 1 million a day in long term care claims.

there will likely policy options at renewal. like they may offer you a buyout of your policy for the premiums you paid , or offer a paid up policy for a lump sum .

few insurance companies want this open ended risk with usage increasing and no stats for our generation yet

This has not been true with my mother's Metlife long term care policy. Mother is 92, has Alzheimers and heart failure, 2 doctors certified she met the requirements to get benefits under her Metlife policy. Metlife still denied her claim. I had to hire an attorney and threaten to sue them. Metlife finally paid $27,000 in back payments and now are suppose to be paying $5000 per month for mother's care but every month they delay payment--"lose" the claim etc. Mother's CCRC says that all long term care insurance companies are doing the same--denying and delaying payments of the claim. They hope the families will give up.

 

[mathjak107]

This has not been true with my mother's Metlife long term care policy. Mother is 92, has Alzheimers and heart failure, 2 doctors certified she met the requirements to get benefits under her Metlife policy. Metlife still denied her claim. I had to hire an attorney and threaten to sue them. Metlife finally paid $27,000 in back payments and now are suppose to be paying $5000 per month for mother's care but every month they delay payment--"lose" the claim etc. Mother's CCRC says that all long term care insurance companies are doing the same--denying and delaying payments of the claim. They hope the families will give up.

how old a policy .

a million a day paid out by genworth says a lot of bills are being paid

 

[harllee]

how old a policy .

a million a day paid out by genworth says a lot of bills are being paid

Her policy is about 20 years old--has the language requiring that she not be able to perform 2 activities of daily living. Metlife claimed she did not meet the ADL requirements because she could still hold a spoon, etc. How do the newer policies differ from this?

 

[mathjak107]

more modern policies are written in plain language with few ways for the insurer to duck out .

ours is very simple….its simply a check list and they have to pay.

older policies were like reading a variable annuity contract

 

[harllee]

more modern policies are written in plain language with few ways for the insurer to duck out .

ours is very simple….its simply a check list and they have to pay.

older policies were like reading a variable annuity contract

So have they actually started paying? You better have someone in your family that can fight to get payments for you. I guarantee that the company will deny and delay when it comes time to pay.

 

[mathjak107]

i hope i don’t have to find out.

some people have problems with claims all the time no matter what the insurance.

it can be home , auto , etc

somewhere someone will hit snags in their claim

 

[Rianne]

DB does not have a LTC policy. Recently he decided he wanted to live in a community with healthcare professionals available and people he could see every day and get to know. He's single and lives in Fort Lauderdale. This is not an advertisement for John Knox Village in Pompano Beach. I was very curious and concerned about this CCRC. I then realized how affordable and accommodating this place is. He would have to pay $350K and $3700/month for a lovely 2b/2b apartment. There are many floorplans available and single dwellings. The place has restaurants and swimming pools, and includes one meal, and cleaning services every 2 weeks. Medical personnel are available 24/7. He is relatively healthy with rheumatoid arthritis.

I know websites can be misleading, but he's visited several times and finally decided to go for it. Am I missing something? This seems very affordable.

 

[TheWizard]

plans are usually priced so you payin about a years stay in future dollars .

today homes run 130-140k a year in todays dollars ...

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...

 

[MarieIG]

DB does not have a LTC policy. Recently he decided he wanted to live in a community with healthcare professionals available and people he could see every day and get to know. He's single and lives in Fort Lauderdale. This is not an advertisement for John Knox Village in Pompano Beach. I was very curious and concerned about this CCRC. I then realized how affordable and accommodating this place is. He would have to pay $350K and $3700/month for a lovely 2b/2b apartment. There are many floorplans available and single dwellings. The place has restaurants and swimming pools, and includes one meal, and cleaning services every 2 weeks. Medical personnel are available 24/7. He is relatively healthy with rheumatoid arthritis.

I know websites can be misleading, but he's visited several times and finally decided to go for it. Am I missing something? This seems very affordable.

Perhaps a review of the CCRC's finances . . . It may be fine.

 

[Rosie]

DB does not have a LTC policy. Recently he decided he wanted to live in a community with healthcare professionals available and people he could see every day and get to know. He's single and lives in Fort Lauderdale. This is not an advertisement for John Knox Village in Pompano Beach. I was very curious and concerned about this CCRC. I then realized how affordable and accommodating this place is. He would have to pay $350K and $3700/month for a lovely 2b/2b apartment. There are many floorplans available and single dwellings. The place has restaurants and swimming pools, and includes one meal, and cleaning services every 2 weeks. Medical personnel are available 24/7. He is relatively healthy with rheumatoid arthritis.

I know websites can be misleading, but he's visited several times and finally decided to go for it. Am I missing something? This seems very affordable.

What type of CCRC is this - Type A, B, or C? Makes a huge difference.

What happens if he needs Assisted Living or Skilled Nursing care? Will that $3700/mo increase, and by how much?

Loads of info on the different types of CCRCs in this forum.

 

[RetiredHappy]

So have they actually started paying? You better have someone in your family that can fight to get payments for you. I guarantee that the company will deny and delay when it comes time to pay.

Your mother's situation is an exception from my experience. When we owned our home care company, half of our revenue came from LTCI payments, which amounted to 7 figures every year from LTCI. We never had a client whose LTCI did not pay when they truly could not perform 2 ADLs.

I still believe the CCRC failed to provide adequate support to you. It is telling when they did not want to accept assignment of benefits once approved.

 

[MarieIG]

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.