Long Term Care Insurance LTCI


Thinks s/he gets paid by the post
Dec 11, 2005
Lake Livingston, Tx
I have been looking into this. There is a Federal Long Term Care Insurance Program that looks reasonable. I have not looked at others. Last time I looked at this it was so confusing that I thought self insurance was not a bad idea. We require about $48,000 a year to live. With SS and pension, we will have about $60,000 in Cola income and another $16,000 a year in non cola income. We have about $400,000 in IRA's

From the Feds site the cost of care in our area is $35,000 a year. Cost for $150 a day comprehensive coverage, unlimited time is $250 for me and $240 for DW. $169 for $100 a day coverage. These are for full inflation coverage also.

Lots of other options https://www.ltcfeds.com/index.html

So for those that have or are thinking about LTCI what do you recommend?
Rustic23 said:
Lots of other options https://www.ltcfeds.com/index.html
So for those that have or are thinking about LTCI what do you recommend?
I called my dad when the federal LTC program started up and I checked with him again last year.

Both times he was getting a better policy & premium from Hancock. (I believe Hancock underwrites part of the FLTC program.) It probably depends on the features chosen by each individual, but I'd recommend shopping around.

Of course you know that the federal program is going attract a huge group of politically-active retired military/civil-service seniors who'll make the Gray Panthers & Weather Underground look like soft-hearted liberals. So I doubt that states or the federal govt will be likely to let the federal premiums get out of hand.
One of OPM's selection criteria is the insurer's record of not raising premiums.  Thus, although the initial rate may be higher than many insurers, the risk of premium increase is less.  Also, because OPM is standing behind the policies the risk of default is less (never say never).

I think Clarke Howard has a list of LTC insurers he thinks are good.
I'm wrestling with the same decision you are--and am thinking we'll likely go with the federal LTC plan for my wife and I. I'm considering $100 per day coverage for 5 years--we'll self-insure for the difference in the real daily cost, and the 5 years will hopefully be all we'll need, or at least provide enough time to work tings out so that the non-institutionalized spouse can remain solvent.

Inflation protection--I didn't think the FLTC site did a good job of explaining this. I was all set to buy the cheap "future purchase" option, figuring that the premiums would go up at the same inflaton rate as the coverage. Nope. If you don't choose the more expensive level-premium "inflation protected" plan, what you will actually be doing is buying additional coverage each year, at the prevalent rates for someone of your attained age. So, the premiums go through the roof when you are 75 years old and up. It's way better to bite the bullet up front and pay the higher premiums for the inflation protection.
If you are relatively young (under 70) the compound inflation protection is a better investment than a flat higher daily rate. 
ACIO= "Automatic Compond Inflation Option" : A fixed monthly premium, does not go up in time. In effect, you pay higher premiums in the early years to account for inflation.

FPO= "Future Purchase Option": Every two years you get the option to increase coverage to keep up with inflation. However, as you get older, te premiums escalate much faster than inflation, since you're buying additional coverage on an older person. If you don't buy more coverage, of course, the benefit gets degraded fairly rapidly by inflation

Examples from "Book 1 - Program Details & Rates, FLTCIP"(the numbers below are from graph, so they aren't precise). Coverage purchased at age 45.

Benefit: $150 per day max, 90 day waiting period, 5 year benefit period

Age Premium ACIO FPO (al increases accepted to keep up with inflaton)
45 $ 80 $ 30
50 $ 80 $ 40
55 $ 80 $ 60
60 $ 80 $ 75
65 $ 80 $ 140
70 $ 80 $ 200
75 $ 80 $ 450

(That's where the graph stops--I think it gets too scary after that. Based on the other charts, it appears that the FPO premiums go up aprox 300% between age 75 to 85, so the monthly premiums would be in the ballpark of $1500.)

I think few folks will be in a position to pay the skyrocketing FPO rates when they get older, so they'll either drop the coverage entirely or stop buying the inflation increases, leading to diminishing coverage.

For us (age: mid-40s) the level ACIO option looks best. But it is certainly not cheap, so I won't be buying any more than necessary, and there'll be some belt-tightening necessary if someone does end up in LTC. Motivation for buying the policies is to relieve the non-afflicted spouse and our daughter from bearing the financial costs of an incapacitated spouse/parent.

Nords was also considering a policy by a company called "Glock"--much lower cost and no uncertainty about the ability of the company to follow-through on promised coverage. ;)
ACIO= "Automatic Compond Infaltion Option" is the option to choose.  While the premiums are higher remember that the level premium will cost less in "real dollars" as you age.

If you do a census of all residents in all kinds of care facilities notice that they are ~80% female.  In my experiance most men are cared for in the home by the wife (who is typically younger), and they tend to not survive as long as women once they are frail. 

If a person is trying to juggle the $ I would insure the male for a shorter time and max coverage on the female.  The insurance on the husband is to protect the finances of the wife, insurance on the wife enables the family to pay for quality care.
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