Do 70% of Retirees Need Long-Term Care?

[Steelpony]

I came across this video addressing this issue a few weeks ago while traveling, hence the late posting:

The short answer is no. She first explains the makeup of the 70% includes all forms of assistance, including temporary support. She then shows that only about 5% of retirees end up in assisted living facilities. She then presents the statistics on length of stay which was much shorter than I thought. Her alternative to LTCi was to self-insure. What caught me the amount needed in her example. Retiring at age 60 and investing $65,000 for 20 years at 6% will give you over $200,000. My thoughts were you needed a lot more to start. I recall that many here, who planned to self-insure, were saving six figures for their LTC. They may want to re-think the amount.

Our situation was that we went with LTCi offered through our work retirement plan, based on what if one or both of us ended up being in the 5% group. Now that 10+ years have passed, LTC is less likely for us and if it is utilized, it’s likely to be for a shorter period.

I can give you my first hand exoerience with two parents needing LTC one up to 2.5 years.

First of all according to the SS actuarial life table available on line up to 50% of seniors born your birthyear pass by 80. So now we’re dealing with say 50% of the senior population. So double all the numbers.

Where my mom was, the one who lived the longest, it was about 90% smaller people mostly women and 10% bigger bulkier (luckier) men.

The cost for independent living was 2k a month starting in 2000, then about 6k a month when she needed assistance and 10k a month when she passed in 2017. My quick addition is a total of 500k but this was a long stay and I totally managed her money after my dad had passed.

So here’s the point without going over all the nuances. My dad had similar charges for a much shorter time. My mom lived outside a facility then. So she had those bills. As far as I know the average retired couple has 200k+? saved for retirement.

My suggestion which I did myself was set up a set-aside, we use VTI, on reinvestment and give yourself some breathing room until the panic subsides if one spouse goes into a facility. From my experience this women is completely wrong with bad advice and a risk no one needs to take. The couples with inadequate retirement savings are toast but one can fall back on Medicaid. If I’m completely wrong someone may end up with a big chunk of change.

 

[Koolau]

Blister packs are free and there is no additional charge. Drug costs don't increase simply because it comes from a pharmacy that provides blister packing. We were in the elder care business and assisted with getting blister packs for our clients. Same insurance costs for the same drugs.

We all know that WHERE you buy your meds makes a difference in how much you pay. I had meticulously w*rked that out for my mom when she lived at home. When she went into memory care, there was one-and-only-one source for her meds - the pharmacy that the nursing home chose. I'd not suggest there was any kick-back or other nefarious relationship between NH and Pharmacy supplying blister packs. I can say that her drug costs went up - a lot (of course, she was getting more meds as well from time to time).

 

[jtmax]

My sister just passed away. She paid LTC insurance monthly premiums for over 30 years, $36.16 per month - low because she started very early. She was in a LTC facility for 30 days and will get $3000-$3700 in total benefits, about half her actual LTC costs. Only one data point but clearly the insurance company did better than the client…

I suspect most people are in LTC longer than my sister. DW’s Mom was in LTC for over 2 years and did not have LTC insurance but I think she had some benefit as a Navy spouse.

So if u had to do it again, you would self-insure?

 

[GravitySucks]

We all know that WHERE you buy your meds makes a difference in how much you pay. I had meticulously w*rked that out for my mom when she lived at home. When she went into memory care, there was one-and-only-one source for her meds - the pharmacy that the nursing home chose. I'd not suggest there was any kick-back or other nefarious relationship between NH and Pharmacy supplying blister packs. I can say that her drug costs went up - a lot (of course, she was getting more meds as well from time to time).

Same.

 

[audreyh1]

My sister just passed away. She paid LTC insurance monthly premiums for over 30 years, $36.16 per month - low because she started very early. She was in a LTC facility for 30 days and will get $3000-$3700 in total benefits, about half her actual LTC costs. Only one data point but clearly the insurance company did better than the client…

I suspect most people are in LTC longer than my sister. DW’s Mom was in LTC for over 2 years and did not have LTC insurance but I think she had some benefit as a Navy spouse.

Sorry for your loss! My condolences.

 

[Koolau]

My sister just passed away. She paid LTC insurance monthly premiums for over 30 years, $36.16 per month - low because she started very early. She was in a LTC facility for 30 days and will get $3000-$3700 in total benefits, about half her actual LTC costs. Only one data point but clearly the insurance company did better than the client…

I suspect most people are in LTC longer than my sister. DW’s Mom was in LTC for over 2 years and did not have LTC insurance but I think she had some benefit as a Navy spouse.

My mom's LTCi was for only 2 years and she was there for 3 years. SO she got every possible dime from the insurance company - and it wasn't enough.

 

[Imackenzie]

I came across this video addressing this issue a few weeks ago while traveling, hence the late posting:

The short answer is no. She first explains the makeup of the 70% includes all forms of assistance, including temporary support. She then shows that only about 5% of retirees end up in assisted living facilities. She then presents the statistics on length of stay which was much shorter than I thought. Her alternative to LTCi was to self-insure. What caught me the amount needed in her example. Retiring at age 60 and investing $65,000 for 20 years at 6% will give you over $200,000. My thoughts were you needed a lot more to start. I recall that many here, who planned to self-insure, were saving six figures for their LTC. They may want to re-think the amount.

Our situation was that we went with LTCi offered through our work retirement plan, based on what if one or both of us ended up being in the 5% group. Now that 10+ years have passed, LTC is less likely for us and if it is utilized, it’s likely to be for a shorter period.

For a brief period in the 80s and 90s LTC insurance was a great deal--particularly at John Hancock where I worked. They had no long term history to base their premiums on and boy did they blow it. The people who bought policies then got a deal, but ever since the actuaries figured out what was happening LTC has been an awful deal. For Middle Class and Upper Middle Class people, LTC insurance is simply inheritance insurance.

 

[junkanoo]

My sister just passed away. She paid LTC insurance monthly premiums for over 30 years, $36.16 per month - low because she started very early. She was in a LTC facility for 30 days and will get $3000-$3700 in total benefits, about half her actual LTC costs. Only one data point but clearly the insurance company did better than the client…

I suspect most people are in LTC longer than my sister. DW’s Mom was in LTC for over 2 years and did not have LTC insurance but I think she had some benefit as a Navy spouse.

First, sorry for your loss.

That would seem to indicate that your sister had a 15-day elimination period, which is quite uncommon. But, no one gets insurance for the best-case scenario, so she probably did better than most that went the LTC route. Particularly, when you hear the horror stories of LTC increases that some states have allowed.

 

[Jeb-NY]

My parent both had LTCi, my Dad used a couple of months in nursing homes a couple of times and some part time home care for a few years. My Mom zero. She was in her 90s when she passed and I told her not to drop it after the years she paid in just incase. Told her I would pay it if necessary. Based on the amount of time she spent fighting the insurance company for my Dad, I decided to roll the dice and self insure, so far so good and the nest egg is big enough now I think there is enough for both of us if needed. Hoping we will not need assisted care and can do home care if needed.

What I did learn from my Mom's experience is to be sure to keep the original policy you sign in a safe place. The company was refusing to pay anything for home care because the person was licensed/certified but was all they needed and they said that is what the policy said, she dug out the policy from 30+ year before and read it to them, the policy said it would pay $500/week with no stipulation of the credentials of the care person. They caved and paid retroactively but it took nearly a year.

 

[SecondCor521]

What I did learn from my Mom's experience is to be sure to keep the original policy you sign in a safe place. The company was refusing to pay anything for home care because the person was licensed/certified but was all they needed and they said that is what the policy said, she dug out the policy from 30+ year before and read it to them, the policy said it would pay $500/week with no stipulation of the credentials of the care person. They caved and paid retroactively but it took nearly a year.

This description, and @harllee's experience with her Mom IIRC is the nail in the coffin on LTC for me. Even if it met my needs (it doesn't) and even if it's a reasonable price () and even if I end up needing it (), there's still could be my or my kids' hassle in fighting the insurance company to pay. If I'm needing LTC I doubt I'll want to fight an insurance company. Nope, not for me, thanks.

 

[Koolau]

This description, and @harllee's experience with her Mom IIRC is the nail in the coffin on LTC for me. Even if it met my needs (it doesn't) and even if it's a reasonable price confused and even if I end up needing it confused, there's still could be my or my kids' hassle in fighting the insurance company to pay. If I'm needing LTC I doubt I'll want to fight an insurance company. Nope, not for me, thanks.

And as I've mentioned, when my mom was in a nursing home, we had no real issues in getting the LTC insurance to pay as they had promised. And, no, I don't recall the name of the insurance company.

 

[SecondCor521]

And as I've mentioned, when my mom was in a nursing home, we had no real issues in getting the LTC insurance to pay as they had promised. And, no, I don't recall the name of the insurance company.

I'm sure it works sometimes for some people. It's just another risk piled on all the other risks which breaks the camel's back for me personally.

 

[Koolau]

I'm sure it works sometimes for some people. It's just another risk piled on all the other risks which breaks the camel's back for me personally.

I pray that we never need to use our LTCi. I don't have a lot of confidence that, if we do need it, that it will w*rk as well as my mom's did. Her's was a couple of forms and a couple of phone calls as I recall. I still thank God for how smoothly that went. I had one lady I dealt with at the company and she shepherded the whole process with me. I DO wonder what happens if one is without a relative or close friend to run the process, but I hope I never find out.

 

[klec]

I bought a group LTCi policy 15 years ago. My folks had coverage, as well … and after a short deductible period, $8,000 a month kicked in when it was needed. It’s one of those things that you hope you don’t need … like most insurance.

 

[athena53]

For a brief period in the 80s and 90s LTC insurance was a great deal--particularly at John Hancock where I worked. They had no long term history to base their premiums on and boy did they blow it. The people who bought policies then got a deal, but ever since the actuaries figured out what was happening LTC has been an awful deal. For Middle Class and Upper Middle Class people, LTC insurance is simply inheritance insurance.

Yeah, I worked for an insurance sub of GE. When they decided to get out of the insurance business they sold off their insurance subs, one early on to Berkshire and most of the rest to a large Swiss company that turned out to be a very good employer. Neither Berkshire nor the Swiss company wanted to buy Genworth.