Long Term Care Decision Time...

[Torrensl]

I've had LTC that I purchased in 2003, and every 7 years they are allowed to change the premiums. This year, they are offering 3 options:

1. Keep daily benefit $127 plus 3.9% auto-compound inflation, unlimited lifetime benefit. New premium goes from the current $52/month to $64 a month, then in Jan 2025 to $78/month, then in Jan 26 to $96/month (quite the increase!)
2. keep premium the same at $52/month, same $127 daily benefit, unlimited lifetime benefit, inflation 1.9% automatic adjustment.
3. no more premiums and if I need long term care, I get the $127/daily up to a max of $9000 (which is how much I've paid in premiums since 2003).

So, with all I read here about having trouble getting insurance companies to pay up on these policies, and the fact that $127/day is well below TODAY's national average of $169/day (assisted living), or $315/day (nursing home)....do I part ways with this insurance and just take #3? or ...are the higher premiums worth it (option #1) what with the automatic inflation adjustments (3.9% annually)?

Any advice would be so helpful~! Thx, linda

 

[SnowballCamper]

I'll just observe that #3 takes almost all risk from the insurance company and leaves you with nothing more than a 0% savings account that you can't use for anything else.

Do you want/need LTC insurance? How much? Then compare the options to what else is on the market.

 

[Aerides]

Couple of things I'd consider:

How old are you, and/or how near is the time when you might want to use the policy for car?

How robust is the company, what are the stories about them and their issues or lack thereof?

Depending on the answers, I'd go with #2 or #3.

 

[friar1610]

I just bit the bullet and opted for #1 (albeit with different numbers than yours). That doesn’t mean you should do the same.

Spouse and I are 77 and 78, respectively. My spouse had a recent health scare that turned out not to be as serious as I feared when I found her lying on the floor, bleeding and only partially coherent. Not the stroke I initially thought it was, but the possibility really helped focus the mind. Although we don’t like the increase, we can afford it and having it gives more peace of mind than many other things we could spend it on.

ETA: I’d like to think that since this insurance is sponsored by the Feds (who must have demanded reams of data before approving the increase,), it might be a little easier to collect on vs. some of the horror stories I’ve read. But that’s not a certainty..

 

[Sanstar]

I did a lot of research on LTC. We’ve had our policies for years and every year the bill gets higher. We cashed it out this year, used the proceeds to pay taxes on Roth conversions and will continue to convert as much as we can, paying taxes from post-tax savings. Hope to never need it, but just in case. We are 71 & 67.

Just don’t trust LTC will be there for us if/when we need it.

 

[LateToFIRE]

I did a lot of research on LTC. We’ve had our policies for years and every year the bill gets higher. We cashed it out this year, used the proceeds to pay taxes on Roth conversions and will continue to convert as much as we can, paying taxes from post-tax savings. Hope to never need it, but just in case. We are 71 & 67.

Just don’t trust LTC will be there for us if/when we need it.

You might be doing the Roth conversions for other reasons, but if it's to pay for LTC someday, what I saw in handling my MIL's tax filings when she was in a skilled nursing facility was that she had a massive amount of deductions - turns out the nursing home fees (as well as in-home care by a CNA) were largely tax-deductible as medical expenses. Just sayin, when/if the time comes, taxes on tIRA WD's probably won't be a problem.

I share your distrust of LTC insurance - hers gave us a very hard time, clearly systematically tried to delay/limit pay-out, succeeded in keeping more of her premiums than the benefits she received by a significant amount.

Would also add, with LTC insurance (goes for annuities too), you never know which insurer you'll end up with - companies sell portfolios of policies to other insur co's on a regular basis. You might think you started out with high-rated, high-quality, blah blah blah, and then end up with whatever bottom-feeder after putting in years of premiums.

 

[Sunset]

OP - Not knowing your age makes this hard to estimate. Women tend to live longer, but that can mean longer in a nursing home...
The answer also could depend upon other things, if you have a few Million dollars in the bank, then it's not needed and it's not a crushing cost either.

In your shoes, I would opt for
#2 keep premium the same at $52/month, same $127 daily benefit, unlimited lifetime benefit, inflation 1.9% automatic adjustment.

Reason being, then they cannot raise the rate for another 7 years.

Then you can decide how you feel at that point.
It would only take 71 days in a nursing home to have the payout equal $9K

 

[TXBev]

I've had it since I was in my 50's. When my husband had to go into the nursing home, that and his SS covered everything except his meds. A nursing home, 2 beds to a room, is very expensive. The cost could wipe someone out in a matter of a just a few years. My policy has a yearly 5% inflation rider. The policy is apparently too good, so they are looking at ways to reduce your coverage or charge a higher premium. I will pay the higher premium when it comes to that. Maybe I'll never use it but none of my children can take care of so I'm covered.

 

[TappyGee]

I’ve had LTC insurance since I was 42. I am 63 currently. I’m pretty sure it is your same plan. My benefit amount is $323.51 daily with a 5 year max. My premium is currently $144.52 monthly, the new premium will be $216.03 monthly.

Both of my parents had LTC insurance and both had dementia. My dad totally exhausted his policy to the tune of almost $400k. My mom spent 7 years in memory care, all paid by LTC insurance before she passed without hitting her max. The reason my dad hit his max was because he spent his last year in a nursing home which was significantly more expensive than memory care. We had no problems with the claims.

On the first rate increase with this LTC insurance (7 years ago?) I reduced my inflation option (ACIO) from 5% to 3.9% to keep the premium the same. This time I am going to take the rate increase. For me it is another $70 a month which I can afford. And the increase is phased in over three years.
The deciding factors for me are
- 1. The current high inflation rates.
- 2. My parents dementia and use of their LTC.
- 3. I am a single mom to one son. I do not wish to burden him with my care and I would like to leave him my paid off home in this crappy world we are living in.