Genworth LTC strikes again

[mf15]

Just got the notice this morning. Last year there was a big increase for us. They now want 1030 a quarter as opposed to 755, that is for a monthly max benefit of 9,428. Mine is lower.

Of course you can pick option C keep basically the same premium but reduce
payout to 6700/month.

I fail to see how state insurance people are approving these increases.

This is getting insane.
Oldmike

 

[youbet]

I fail to see how state insurance people are approving these increases.

It seems similar to how the PBGC approves taking over a pension fund while allowing the company to remain in business. Analysis of the numbers tells them that the company will go belly-up if it must add to the pension fund in appropriate actuarial amounts so the PBGC takes over and the company marches on freed from the burden......

I guess with LTCI increases the state insurance boards feel that without the increase the insurance company is at significant risk of defaulting and grants the increase (or decrease in benefits) as being better than the insurance company being gone.

 

[athena53]

I fail to see how state insurance people are approving these increases.

This is getting insane.

Insurance Departments have two main responsibilities: protecting the consumer, and keeping insurance companies solvent. The well-regulated Departments realize that sometimes you have to give priority to the second objective even if the consumers are unhappy. Everyone loses if a company becomes insolvent and can't pay its claims.

There's also an "adverse selection" death spiral here. As rates go up, the policyholders who keep paying the premiums include a disproportional share of those who have a high probability of needing LTC for an extensive period of time, given health issues or family history, so the experience gets worse and the insurers need more money to pay claims.

 

[Dawg52]

I dropped mine long ago. I could see the writing on the wall.......

 

[HI Bill]

Is there a risk that you might eventually not be able to afford payments, or that it will no longer make sense to make them? LTC insurance is such a conundrum. Most who need it can't afford it over the long haul (like my Mom, who paid maybe $15K into it, before I talked her into dropping it, as I saw her running out of money, long before 80 if she had kept up the payments), and those who don't need it can be self-insured.

 

[REWahoo]

Our LTC premiums had no increase for the first 14 years we owned them, then increased 50% in 2014 and another 30% in 2016. I don't know the waiting period or the length of coverage Old Mike has on his policies but even after our two big increases we are paying just under $300/quarter each for $7,300/mo in coverage for each us for a max of three years.

Not great, but still cost effective enough for us to keep the policies.

 

[MrLoco]

Just got the notice this morning. Last year there was a big increase for us. They now want 1030 a quarter as opposed to 755, that is for a monthly max benefit of 9,428. Mine is lower.

Of course you can pick option C keep basically the same premium but reduce
payout to 6700/month.

I fail to see how state insurance people are approving these increases.

This is getting insane.
Oldmike

Yup. I agree Old Mike. We just purchased a LTC Policy from MassMutual. They were proud of the fact that they never raised their premiums. Well.. guess what/ Now they are raising premiums on their older policies. None of these insurers properly priced these policies when they were issued. So now you either pay the increase or decrease your benefits. You can't win.




Which is why I told my wife . Screw it. No more donations. No more giving to charity. We now keep our money and spend it and gift it only to our children. Everyone needs to take care of their own. Money is meant to be enjoyed and spent on oneself.

 

[joeea]

we are paying just under $300/quarter each for $7,300/mo in coverage for each us for a max of three years.

Not great, but still cost effective enough for us to keep the policies.

Looks great enough to me.

 

[Big_Hitter]

Looks great enough to me.

agreed - most of us can't even get ltc nowadays

 

[Marita40]

I'm very, very conflicted on my Genworth policy. Last year it went up hugely, to be phased over two years. It is due again in a month and, I'm again conflicted about renewing. Last year I did all sorts of research and reading, and for every yea-sayer there was a nay-sayer.

What a conundrum.

 

[mf15]

Ours is for 5 year coverage, but this is getting crazy. But then again who knows what will happen with health. My mother made it 3 years in a home, which ran about 3200/month and that was 10 yeas ago. I guess will go with option C, for now. One good clause in the policy is that if one spouse dies, then the other pays no premium for the duration. The other thing I dont like is the 90 day exclusion before any payment. Then you have to get them to start paying. The other option is to stop payments, and you get to use the money you have contributed over the years if you need to go into a home.

Bottom line is, I hope I never need it.
Oldmike

 

[athena53]

Which is why I told my wife . Screw it. No more donations. No more giving to charity. We now keep our money and spend it and gift it only to our children. Everyone needs to take care of their own. Money is meant to be enjoyed and spent on oneself.

I'm not quite that cynical- fortunately, I can happily squander a lot on travel and a similar amount on charity- but my top fiscal priority is having enough to provide for LTC if I need it. Given that most of my other expenses would be zero if I enter a nursing home, I should be fine. No LTC coverage here.

 

[Dtail]

Our LTC premiums had no increase for the first 14 years we owned them, then increased 50% in 2014 and another 30% in 2016. I don't know the waiting period or the length of coverage Old Mike has on his policies but even after our two big increases we are paying just under $300/quarter each for $7,300/mo in coverage for each us for a max of three years.

Not great, but still cost effective enough for us to keep the policies.

My mother's LTC nursing/home care coverage is 10,500 monthly lifetime unlimited and 5% inflation increases.
BUT the yearly premium is $7,700.

 

[HI Bill]

Given that most of my other expenses would be zero if I enter a nursing home, I should be fine. No LTC coverage here.

If you enter a nursing home, there may be charges for:
>In-house pharmacy (higher than a regular pharmacy)
>Visiting Physical therapists
>Special supplies
>Health Insurance (still have to keep paying)
>Co-pays on meds and doctors and hospital
>Cable television
>Telephone / Internet
>Transportation to out-of-town doctors

A La Carte personal services (depends on the facility), but some have individual charges for dressing, feeding, turning, bathing, etc. My Mom's base rate was only $4K per month in a memory care unit, but care services alone added $2K for my mom.

 

[athena53]

If you enter a nursing home, there may be charges for:
>In-house pharmacy (higher than a regular pharmacy)
>Visiting Physical therapists
>Special supplies
>Health Insurance (still have to keep paying)
>Co-pays on meds and doctors and hospital
>Cable television
>Telephone / Internet
>Transportation to out-of-town doctors

A La Carte personal services (depends on the facility), but some have individual charges for dressing, feeding, turning, bathing, etc. My Mom's base rate was only $4K per month in a memory care unit, but care services alone added $2K for my mom.

Thanks- I should have added "except for out-of-pocket medical", which covers most of that. I anticipate I'll still need regular dental care, eyeglasses and maybe hearing aids, too. Expenses that will go to zero (assuming I'm paying month-to-month, haven't bought into a property I need to maintain, no longer have a car): mortgage, property taxes, home maintenance, car and car maintenance, travel, charity, insurance other than Medicare and supplement. Last year was a biggie for travel but travel and charity were 40% of my expenditures. It's 35% 2018 YTD. Still nothing to sneeze at.

 

[Koolau]

If you enter a nursing home, there may be charges for:
>In-house pharmacy (higher than a regular pharmacy)
>Visiting Physical therapists
>Special supplies
>Health Insurance (still have to keep paying)
>Co-pays on meds and doctors and hospital
>Cable television
>Telephone / Internet
>Transportation to out-of-town doctors

A La Carte personal services (depends on the facility), but some have individual charges for dressing, feeding, turning, bathing, etc. My Mom's base rate was only $4K per month in a memory care unit, but care services alone added $2K for my mom.

When my mom was in a facility, the meds were outrageously priced. I don't know if any of the insurance we currently have (DW and I) would cover any of these meds as distributed by care homes. I don't know if any of these "services" are negotiable (including NOT providing them.)

The whole thing sounds like a racket. How is it that care homes need to charge more than a luxury resort to keep you in a semi-private room with essentially no amenities (no pool, no ocean, no gym, etc.)? $10K/month seems outrageous. YMMV

 

[aja8888]

Thanks- I should have added "except for out-of-pocket medical", which covers most of that. I anticipate I'll still need regular dental care, eyeglasses and maybe hearing aids, too.

Don't forget the hair cut/styling/coloring, nail Solon services, makeup, and other assorted chemicals/treatments that women routinely need on a periodic basis. If you get into a higher end facility, you may have access to massages, use of sauna, etc.

 

[GalaxyBoy]

DW was able to convert her state employee LTC policy when she retired eight years ago. I just got the latest bill and she pays $23.85 per quarter for a $75/day benefit for up to 2 years of care. I think the premium might have gone up once in the time we've had it.

Sure, 75 bucks a day doesn't nearly cover all expenses, but we figure it's relatively cheap and better than nothing. I had no idea these policies have been getting so pricey.

 

[Independent]

There's also an "adverse selection" death spiral here. As rates go up, the policyholders who keep paying the premiums include a disproportional share of those who have a high probability of needing LTC for an extensive period of time, given health issues or family history, so the experience gets worse and the insurers need more money to pay claims.

I've been away from this for 11 years, so my experience may be outdated.

But, the word then was that policyholders were remarkably sticky. They complained about rate increases, but almost everyone kept their policies.

I think a big part of that is the lack of non-forfeiture values. The new, higher premium is still cheaper than a new policy at the current attained age. You can't roll the cash value like you would in replacing a permanent life insurance policy.

 

[Scuba]

When my mom was in a facility, the meds were outrageously priced. I don't know if any of the insurance we currently have (DW and I) would cover any of these meds as distributed by care homes. I don't know if any of these "services" are negotiable (including NOT providing them.)



The whole thing sounds like a racket. How is it that care homes need to charge more than a luxury resort to keep you in a semi-private room with essentially no amenities (no pool, no ocean, no gym, etc.)? $10K/month seems outrageous. YMMV

Skilled nursing is one of the most highly regulated industries in the US. The regulations are no doubt intended to ensure that the elderly are treated properly. However, it is very difficult for operators to make a profit and with the ACA and related reduced reimbursement to care providers, revenue is declining while labor and other costs are increasing. Many operators who used to eke out a small profit are exiting the business.

I really wonder how the landscape will change over the next 10-20 years. I think LTC may be delivered in very different settings than exist today.

 

[MrLoco]

One of the things that swayed us to purchase our LTC policy was that it is part of a "partnership" program. If we ever use all of the benefit in future years, we will be able to shield close to $1 million of our estate from Medicaid. This means if my wife or myself ever needs to apply for MEdicaid in the future; Medicaid cannot touch the $ 1 million and this guarantees an inheritance for our children. Plus, I believe 48 states have a reciprocal program where if you relocate; the state you move to will honor the terms of your LTC policy.

 

[calico1597]

We've had Genworth LTC since retirement 8 years ago. Had our first premium increase this year, about 30%. We paid it, decided as long as we can easily afford the premium, we'll keep the policy.

 

[athena53]

Don't forget the hair cut/styling/coloring, nail Solon services, makeup, and other assorted chemicals/treatments that women routinely need on a periodic basis. If you get into a higher end facility, you may have access to massages, use of sauna, etc.

Ha! I don't use makeup, color my hair, get manicures or pedicures or paint my nails now- probably will not need those services at age 90. I understand I'll still need regular cuts and, if I can't do it myself, nail clippings (a big deal if you're not mobile enough to cut your own toenails).

My bottom line: what I'm spending annually right now is about $30K more than the current cost of a private room in a nursing home in the area where I'd be (near DS and DDIL). That's at a 3% withdrawal rate. Only $24K/year of my income is fixed (a couple of small non-COLA pensions). I figure I should be good even if I have to increase my withdrawal rate as I get older. Family history is on my side, too. One uncle (Dad's brother) just died of Alzheimer's but the rest were only briefly in nursing homes, if at all.

One of the things that swayed us to purchase our LTC policy was that it is part of a "partnership" program. If we ever use all of the benefit in future years, we will be able to shield close to $1 million of our estate from Medicaid. This means if my wife or myself ever needs to apply for MEdicaid in the future; Medicaid cannot touch the $ 1 million and this guarantees an inheritance for our children. Plus, I believe 48 states have a reciprocal program where if you relocate; the state you move to will honor the terms of your LTC policy.

Yes- a spouse would really change the picture. My poor Aunt inherited money from her family but by the time my Uncle died she'd paid so much out of pocket for his LTC that she was near the asset level ($120-$130K) when Medicaid would have kicked in. That's not a lot of assets for an 85-year old lady with macular degeneration. I hope her kids take darn good care of her.

 

[samclem]

I've been away from this for 11 years, so my experience may be outdated.

But, the word then was that policyholders were remarkably sticky. They complained about rate increases, but almost everyone kept their policies.

From what I've read, this is the primary driver behind the increase in LTCI premiums. The insurers badly overestimated how many customers would abandon their policies. "Hey, boss, bad news. It looks like most of these folks are actually gonna keep these policies until they are really old, and we are going to have to pay out on a lot more than we'd figured."

 

[Hermit]

From what I've read, this is the primary driver behind the increase in LTCI premiums. The insurers badly overestimated how many customers would abandon their policies. "Hey, boss, bad news. It looks like most of these folks are actually gonna keep these policies until they are really old, and we are going to have to pay out on a lot more than we'd figured."

I am a little more cynical about the insurance companies than you. They have a lot of bean counters who do nothing but run numbers on this stuff. I would have a hard time believing that they don't know exactly what they are doing. I think they probably have some great spin doctors in the advertising department too. I don't think they lump the younger customers in with the older customers, but start new policy groups on a regular basis. The older policy groups have to self-sustain their policy plus a profit and their costs rise to make that happen. I don't have any references, just my humble opinion.