Should I take the inflation addition on LTC?

[badatmath]

Should I take the inflation addition on my LTC? It is about $17/month increase to raise the benefit $30/day. Either way I didn't make a good policy choice and it isn't enough (180/day current vs 210/new). It is however fairly cheap ($500/year)

My gut reaction was nope wasn't a great buy anyway. . . but the inflation additions are priced with age so of course I will be older by the next one in 3 years if not dead! . . .I think they stop offering if you never take any at some point as well. . . I could look that part up . . .

 

[pjm-7]

I have a small LTC policy that I received when I was working. The premium is around $450/year. I retired ten years ago. I have declined the inflation adjustments. My net worth has continued to grow while my expenses are fairly stable. I will have more than enough to cover any type of assisted living services. I keep the policy as a base. The added premium I don't feel is justified.

 

[Koolau]

I have a small LTC policy that I received when I was working. The premium is around $450/year. I retired ten years ago. I have declined the inflation adjustments. My net worth has continued to grow while my expenses are fairly stable. I will have more than enough to cover any type of assisted living services. I keep the policy as a base. The added premium I don't feel is justified.

We started our policies 25 years ago and took the 5% per year increase. I've forgotten how much it cost. Our premiums (though they've nearly doubled) were/are affordable (less than $4K/year for the two of us - payout should cover us for (I think) 3 years.)

 

[njhowie]

From personal experience:
Financially astute folks, like those on this site will work out whether the inflation protection makes sense and come to the correct answer for the set of parameters they are considering.

However, that doesn't work in the end, because your insurer is packing the most dangerous curve ball that you cannot hit.

The LTC industry (today) is shady (again, personal experience here) and they are working against you, more so than the insurance companies we are all more familiar with, like home, auto, and life. The fact that you've worked all the numbers, have paid your premiums for many years, possibly had the premiums increased when the LTC companies went through their years of pain - all that doesn't matter when you get to that one moment when you need to begin collecting on it and they just say "No". When the time comes, your LTC provider will fight you tooth and nail to deny your claim. You pay in to this for a good portion of your life - because, of course, we all know the younger you are when you buy, the better your rates...but then, at that one moment, they simply say "No" and what are you going to do? They've just stolen all the money you've paid.

Understand, based on the "rules", you almost need to be in a catatonic state where you are unable to do most anything for yourself and are in an advanced state of requiring an assisted living facility.

Again, from experience, I would recommend carefully reviewing your policy, how much you are paying, what the maximum benefit is, over what period of time, what the elimination period is, what exclusions are in place, and seriously consider terminating your policy and simply saving that monthly premium letting it grow along with your other investments. In the end, if you are looking at it objectively, it is unlikely that your benefit (if you are able to collect) will justify the premiums.

For folks on this site, who are financially in a good position, looking to protect themselves and their assets, LTC, if it did function as we'd like, would be wonderful. However, in my view, it is a big scam, little different than those shady car and home warranty outfits that advertise with 3am infomercials.

 

[badatmath]

Thanks everyone.

I have considered cancelling the policy and may still do so IDK. It was one of those things that "seemed like a good idea" when they offered it via my employer but eh. . . not so much really.

Mine covers 5 years and I might reduce that if they offer that in the next rate increase. IIRC there has only been 1 rate increase that was not an optional inflation thing and they offered some alternate options at the time.

 

[Spock]

Dear old Dad's LTC policy has been working out great so far.
LTC is covering 100% of his current Assisted Living costs. IIRC his initial policy for ASL was $100/day. The inflation rider (3%/year?) has increased the benefit to $204/day for ASL.
Since he's not in SNF, we are still paying his premium of $555/month and getting about $4200/month in benefits with headroom for future cost increases.
This math doesn't include all the premiums he paid over the years... it's just a snapshot of "right now"... but I'd guess he's past break even.
They don't write policies like his any more (no lifetime benefit cap)... but we're definitely keeping the policy and happy for the inflation rider.

 

[Koolau]

From personal experience:
Financially astute folks, like those on this site will work out whether the inflation protection makes sense and come to the correct answer for the set of parameters they are considering.

However, that doesn't work in the end, because your insurer is packing the most dangerous curve ball that you cannot hit.

The LTC industry (today) is shady (again, personal experience here) and they are working against you, more so than the insurance companies we are all more familiar with, like home, auto, and life. The fact that you've worked all the numbers, have paid your premiums for many years, possibly had the premiums increased when the LTC companies went through their years of pain - all that doesn't matter when you get to that one moment when you need to begin collecting on it and they just say "No". When the time comes, your LTC provider will fight you tooth and nail to deny your claim. You pay in to this for a good portion of your life - because, of course, we all know the younger you are when you buy, the better your rates...but then, at that one moment, they simply say "No" and what are you going to do? They've just stolen all the money you've paid.

Understand, based on the "rules", you almost need to be in a catatonic state where you are unable to do most anything for yourself and are in an advanced state of requiring an assisted living facility.

Again, from experience, I would recommend carefully reviewing your policy, how much you are paying, what the maximum benefit is, over what period of time, what the elimination period is, what exclusions are in place, and seriously consider terminating your policy and simply saving that monthly premium letting it grow along with your other investments. In the end, if you are looking at it objectively, it is unlikely that your benefit (if you are able to collect) will justify the premiums.

For folks on this site, who are financially in a good position, looking to protect themselves and their assets, LTC, if it did function as we'd like, would be wonderful. However, in my view, it is a big scam, little different than those shady car and home warranty outfits that advertise with 3am infomercials.

My only experience (as far as the insurance company paying off) is with my mom's LTC policy. I never had any problem with it. There were forms to fill out, of course, and her doctor(s) had to sign off and make statements. Other than that, it was easy/peasy. IIRC the process took about a month. They paid like clock-w*rk. The nice lady that I spoke with a few times on the phone even mentioned that if mom ever went home for 6 months, she would again accrue more benefits by starting her premium payments up again (premiums were waived when her case was approved.) Of course, mom was in memory care so she was never going home, but I thought it a nice gesture for Joy (the nice lady's name) to remind me of one of the policy's benefits.

I've heard of horror stories from other folks, but did not experience it myself. Honestly, the first thing to determine is whether you need the coverage. If you're sitting on $5Mil, you probably don't need it. If you're "iffy" about dropping $120,000 per year on LTC, then I'd keep the policy and fund the inflation rider to the max - but that's just what I did and I'm between iffy and $5Mil, so YMMV.

 

[DuluthGA]

My parents have had a GenW… policy for about 20 years with inflation rider. About 10 years ago mom went into memory care. Paid for 6 years no problem. Dad did not have to pay premium while she was in. After she passed 4 years ago Dad started paying again. He rec’d letter this year (he’s 90) stating they were either doubling the premiums, cutting his benefit or canceling his policy and receiving a check. Given he’s 90, has plenty of money, and a 90 day waiting period he took the check.
The inflation rider was needed. That and her SS covered her care.

 

[harllee]

I am one of those with a bad LTC insurance claims experience. My mother, age 93 with Alzheimers and many other health issues, has a policy with Metlife. I have had to fight them tooth and nail to get them to pay, I have spent at least 100 hours on this. I had to hire a LTC insurance expert and a lawyer and after 6 months they finally started paying (they owed mother about $40,000 at that point.). Even after all that I have to call them every month to find out where her payment is, they always claim they did not get the claim, it was lost or some other BS. It has been an awful experience. My mother has had this policy over 30 years and has paid in more than she will ever get back. She would have been much better just sticking the premium money in a savings account.

 

[njhowie]

I am one of those with a bad LTC insurance claims experience. My mother, age 93 with Alzheimers and many other health issues, has a policy with Metlife. I have had to fight them tooth and nail to get them to pay, I have spent at least 100 hours on this. I had to hire a LTC insurance expert and a lawyer and after 6 months they finally started paying (they owed mother about $40,000 at that point.). Even after all that I have to call them every month to find out where her payment is, they always claim they did not get the claim, it was lost or some other BS. It has been an awful experience. My mother has had this policy over 30 years and has paid in more than she will ever get back. She would have been much better just sticking the premium money in a savings account.

Ditto - mom had MetLife, paid for about 20 years, and when she needed it her claim was denied. Based on their reasons for denial, I was not going to put the energy into fighting it. We made adjustments to make things work financially without the insurance. Mom passed away almost exactly a year later.

Between our experiences, I think we can safely say folks should steer clear of MetLife.

 

[Montecfo]

Thanks everyone.

I have considered cancelling the policy and may still do so IDK. It was one of those things that "seemed like a good idea" when they offered it via my employer but eh. . . not so much really.

Mine covers 5 years and I might reduce that if they offer that in the next rate increase. IIRC there has only been 1 rate increase that was not an optional inflation thing and they offered some alternate options at the time.

If it was a group policy rates probably not bad. I would not rush to cancel unless net worth had skyrocketed.

Just another view.

 

[badatmath]

Thanks Montecfo.
I should have taken a higher daily benefit at the beginning when I was at a younger age and skipped the inflation additions and I bet the rate would be lower but it isn't terrible or anything. I suppose that is part of why it bothers me - it reminds me that I didn't choose well! But it was kind of a new thing back then so it was hard to determine the right option.

I will probably just leave it as is for now I suppose.

 

[ncbill]

I will absolutely be buying LTCi for both of us.

I got to see plenty of what I will call standalone nursing homes over mom's ~15 years with dementia.

And they all had most residents on Medicaid, so care biased downward to the lowest common denominator.

Even though mom was private pay her care in those wasn't any better.

So I am more than willing to pay for insurance to cover care at home.

The only decent SNFs I ever saw were the ones connected to CCRCs, like where mom's parents lived.

But even then there is no guarantee for a SNF bed at those facilities.

They might well have to send residents to outside nursing homes given their space constraints.

 

[Koolau]

I will absolutely be buying LTCi for both of us.

I got to see plenty of what I will call standalone nursing homes over mom's ~15 years with dementia.

And they all had most residents on Medicaid, so care biased downward to the lowest common denominator.

Even though mom was private pay her care in those wasn't any better.

So I am more than willing to pay for insurance to cover care at home.

The only decent SNFs I ever saw were the ones connected to CCRCs, like where mom's parents lived.

But even then there is no guarantee for a SNF bed at those facilities.

They might well have to send residents to outside nursing homes given their space constraints.

I did not notice a serious degradation of care due to Mediciad beds. Also, the CCRC I visited had a "warehouse" with a dozen beds for their SNF type patients. They let us stick our heads into the room and then rushed us to the very nice "bar and grill" that was available to the folks still in assisted living care.

You may have to really shop for a policy that adequately covers home care. Our policies pay HALF for home care what they would pay for an approved facility. That's not nearly enough.

Both mom and dad ended their days in memory care at a SNF and I lived less than 2 miles away so was able to monitor their care at the facility. NO, it wasn't perfect but it was more than adequate and better than I expected. Keep in mind this was 25 years ago now.

Structuring home care that would compete with the locked unit mom and dad occupied would probably cost 6 times as much - not half as much. SO, do a lot of research before you decide what kind of LTCi you need and how it is structured.

LTC is a serious issue to the USA and to millions of people who are affected. It's gonna get worse as the Boomers age out. Good luck in your search for LTCi.

 

[RetiredHappy]

My Genworth LTC policy pays the same amount for home care as at facilities. It currently covers about $10K a month and has a 3% inflation rider. It covers the equivalent of maximum amount for 5 years and will stretch beyond 5 years if the max daily amount is not utilized.

 

[Koolau]

That is a VERY generous benefit. How are the premiums?

 

[athena53]

I will absolutely be buying LTCi for both of us.

I got to see plenty of what I will call standalone nursing homes over mom's ~15 years with dementia.

And they all had most residents on Medicaid, so care biased downward to the lowest common denominator.

Even though mom was private pay her care in those wasn't any better.

I'm not sure how LTC facilities make their decisions about what % of their beds are Medicaid but I'm sure it drives the overall quality of care. From what I've read, Medicaid doesn't pay enough to cover the costs of decent care so it's subsidized by private-pay residents and by MediCARE rehab reimbursements. They're required to take some % of Medicaid LTC residents in order to get the Medicare rehab business.

When my Uncle was in LTC as private pay, they put him in a "Medicaid bed" (basically half a room with a cloth divider separating him from the other guy) with the excuse that if/when my Aunt spent down to he max she could keep before he qualified for Medicaid, they might not have a Medicaid bed available for him. He died when she was dangerously close to the Medicaid max. (Fortunately her sons have done very well and she won't starve.) So, they paid the sticker price for a Medicaid be, anyway.

I'm single and planning to self-insure. It's feasible since there's no scenario of needing to keep a residence for a spouse and most of my other expenses would go to zero. I want to have decent choices and not have my son and DIL fight insurance companies if I need LTC.

 

[Spock]

Like so many recent unexpected major malfunctions (specifically a massive personal inflation rate that makes official CPI numbers almost worthless) throwing well thought out plans into the dumpster, I was planning to self-insure LTC.
Well... now DW is developing Parkinson's tremors and macular degeneration at age 65. So... LTCI shopping I go... but I'm finding coverage maxes to be so low that LTCI coverage is about as worthwhile as Dental insurance with a $500 annual max benefit.

 

[kilgore]

There is no such thing as "self insure." Insurance involves pooling--spreading the risk within a pool. Self fund is what you are talking about. DW is likely uninsurable--all the more so, sadly, because she is a woman and likely to live longer than a male..

Kilgore

 

[meleana]

I wouldn't. I don't have that insurance but I remember having it on my disability policy years ago and then realized how expensive it was getting so I cancelled it.

 

[big-papa]

MIL, her twin sister, her brother, and an aunt all succumbed to Alzheimers. We felt it imperative that, at the very least, we get coverage for my DW.

About the time we turned 50, we purchased our LTCi policies with NYL, after watching what my MIL went through. Close to 8 years in a nursing facility starting off in memory care. FIL had cancelled their LTCi policy about 2 years before MIL was diagnosed with Alzheimers. I would have much rather they had to deal with any red tape with claims on the policy they have than watch what they had to go through without any LTCi. It was financially devastating and cause serious relationship issues within their family.

We did include a fixed percentage annual increase on our policies. Over the years we had a couple of significant premium increases. In both instances, we made some adjustments to our policies (mainly mine) and stayed the course. With the last increase, just a year before inflation raised its ugly head again, NYL added a "no more increases" rider to our policy.

I hope we never have to use either of our policies.

Cheers.

 

[Koolau]

If you think you might need long-term-care insurance, you need the 5% increase rider. LTC costs are going up faster than 5%. It's just one of those unpleasant facts of life.

We bought such policies at 51 and the premiums are manageable though they've almost doubled since we took out the policies over 25 years ago. I'm a proponent (I guess you would say) of LTCi though many folks can self pay. Very much a YMMV situation.

 

[G-Man]

What LTCi companies are out there today in which the premiums are reasonable? I'm considering self-insuring but curious about the premiums for someone that is 58- and 61-years old today.

 

[RetiredHappy]

What LTCi companies are out there today in which the premiums are reasonable? I'm considering self-insuring but curious about the premiums for someone that is 58- and 61-years old today.

Group insurance is cheaper than individual insurance. AARP used to have group insurance. I got it through them and that year they had Genworth. I spoke to a broker who told me that and he should me a bunch of individual LTCI and the premiums were at least twice of group rates. After a few years, AARP had MetLife and I don't know if they still have any. Best to check AARP and any other associations that you may belong to.

 

[zippy2020]

OP, is your LTCi policy tax-qualified? If it isn't, then any benefits you receive will be taxable. Virtually all policies sold prior to passage of HIPAA were not tax qualified; but some were grandfathered in (see details below).

Per Google AI:
"While some forms of LTC insurance were sold in the 1980s, the concept of a formally "tax-qualified" long-term care insurance policy with established tax benefits, as it is understood today, was created by HIPAA in 1996.

• Grandfathered Policies. However, LTC insurance policies issued before January 1, 1997, that met the requirements of the state in which they were issued are generally grandfathered in for tax qualification purposes, as long as no material changes were made to the policy.
• Tax advantages of tax-qualified policies. Today, tax-qualified policies offer advantages like potentially tax-deductible premiums (as a medical expense) and tax-free benefits. "

If you decide to keep the policy, then I'd vote for the inflation rider. It won't keep up with real inflation - healthcare costs have outpaced inflation for over 30 yrs - but getting tax-free benefits are worth it.

You also should go visit Skilled Care Nursing facilities in your area - both profit and non-profit, regular AL/SCN and Medicaid facilities. There is no substitute for knowing exactly what healthcare costs in your area.

Also remember that facility costs increase annually. Many seniors don't realize this. Where I live, every single facility, profit and non-profit, raises their prices July 1st, every year, by an inflation factor of 2-5%.

In the San Francisco Bay Area, Skilled Care Nursing/Memory Care costs are between $12K-18K/monthly. Also, do remember that unless you have preplanned for taxes, pulling that much $$$$ from a portfolio over a multi-year basis can become an IRS/IRMAA issue.

If you choose to self-fund, be aware you MIGHT be able to live/die with minimal assistance, or you might not be so lucky. Many people talk about 24/7 care as a 'stay at home' alternative, but ignore the fact if there is ANY kind of nursing shortage in your area, it may be financially impossible to hire 3 RNs on daily 8-hr shifts, plus additional RNs for weekends/days off.

The average home healthcare aide, licensed/bonded or not, is not legally allowed to perform medical assistance. Depending upon state laws, if a patient falls down at home, the aide might not even be allowed to to do anything except call 911.

In CO last year (2024) this happened to our best friend. Her mother was determined to die at home but it became impossible to medically take care of her without going into a facility. The caretaker wasn't allowed to pick her up or help her up, so it became a revolving door of EMTs getting called, taking her to the hospital to be checked out, then taking her back home....only for her to eventually fall again, caretaker calls 911, etc. etc. (CO and federal tax dollars at work!). It was so bad, the mother and caretaker eventually knew half a dozen EMTs by sight and their first names.

Lastly, most people are not very good at evaluating their longevity risks. As you age a lot of niggling issues arise, and if you're not lucky - and we personally know a few people who are struggling because they were not - some of them become very big issues that do affect mortality.