Long Term Care Insurance
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EdFred
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Smith and Wesson. Though that's really more of a short-term care than long-term care. With my grandmother we found that the long-term care was a crock and didn't cover what they said it would cover. So it just ended up being a waste of money.
What you will likely need won't be covered. Things like taxi, Iive in companion etc. It is supposed to pay institutional housing. If that's what you need. But you will,likely need noncovvered things.
EppyGA
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Yeah I tend to agree. Seems like a lot of times the individuals end up getting depressed living in places like that and begin deteriorating even quicker.
wsuffa
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Seems that most of the insurers underestimated the costs. The result is that premiums have climbed A LOT over the last 3-4 years to the point where some folks are avoiding it. And some have dropped it. Ask a lot of questions.
denverpilot
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The sickening part is that the premiums match the reality of the prices and the prices are so high if you do hit the unlucky “jackpot” to use LTC insurance, that you’d probably be filing bankruptcy if you had to pay out of pocket.
Have to do the math on the premiums and decide if they’re still cheap compared to wiping out every dollar of assets, maybe including retirement and paying early withdrawal penalties and additional taxes, if one needs the stuff.
Ugly with a capital U either way.
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Drake the Outlaw
The other issue becomes your non-LTC spouse. It is fairly easy to burn through $200k/yr with the expense of personal care and an assisted living center. You can chew up all the family assets in a hurry that way and leave your spouse destitute if things take that turn.
Chip Sylverne
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Quit with the negative waves, man.
Ask how long the average beneficiary receives benefits. At the time I was in the insurance biz, it was +- 8 months.
Rushie
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Rushie
This is exactly the issue. Even if you don't mind leaving your children nothing, what tends to happen is one spouse will wipe out your assets, then die, leaving the other spouse to live another decade or more poor.
Uncontested divorce the moment things go downhill. Also speeds up the process to get on medicaid.
Rushie
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Rushie
I found a very informative report in the .pdf in this link:
https://www.aarp.org/health/medicare-insurance/info-2006/2006_13_ltci.html
While I don't necessarily agree with its recommendations for government solutions, it has great information answering many of the questions you guys have raised.
And it hit the nail about being bewildering. This is exactly why we haven't bought any yet. We've got quotes in the past but didn't understand how to evaluate them so did nothing. But now we are in our early 60s and Dave Ramsey says that's the right time to buy it, so we're trying again to understand this maze.
This report points out that it's difficult to find objective help deciding.
https://www.aarp.org/health/medicare-insurance/info-2006/2006_13_ltci.html
While I don't necessarily agree with its recommendations for government solutions, it has great information answering many of the questions you guys have raised.
And it hit the nail about being bewildering. This is exactly why we haven't bought any yet. We've got quotes in the past but didn't understand how to evaluate them so did nothing. But now we are in our early 60s and Dave Ramsey says that's the right time to buy it, so we're trying again to understand this maze.
This report points out that it's difficult to find objective help deciding.
Rushie
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Rushie
That is excellent. Thanks!
Rushie
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Rushie
Sorry, I posted the same thing before I saw this.
Rushie
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Rushie
Last resort. I had a friend who spent down to qualify for Medicaid (he didn't have far to spend) and the nursing home he ended up in was literally hell on earth. That's an option I want to avoid. In fact, I'm pretty adamant I want in-home care, but if I or hubby ends up in a home, I want it to be a better quality one.
Edit: Just read on that Clark Howard link that Medicaid only covers facility. My personal position is I would take the Smith and Wesson way out before going to a facility (although I'd do the Final Exit route instead of harming the 2nd Amendment).
We had two aunts that got in-home care, and both had to fight for it, and it was very expensive, but both were much happier there. Of all the people I've known in a facility, there was only one who was actually happier there than he was at home. He was a famous Senator who had tons of visitors looking out for him, and it was in a great facility, and his wife soon moved into the same facility with him.
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My mother-in-law who was in the habit of randomly purchasing things late in life (she ended up having alzheimers) managed to get a (GE, I think) long term care policy.
The major problem is that "Long" isn't all that long in many of these policies, but it's better than nothing.
The other thing I'll tell you from a friend who got into this situation is don't "hold back" on using the policy. Sure it has a ceiling, but you don't want to use up other resources when you have the policy (and unfortunately, the person may die before they use it up). Then you start getting into what allowable medicaid spenddowns are (prepaid funeral expenses) and maybe even shopping for a state (some states are better than others). We ended up moving the mother-in-law to NY (one of the other daughters lives there) when the rest of the resources ran out. She was too far gone at that point to care.
In addition to LTC and basic estate (will/trust) planning. It's time to also get your Living Will (Advance medical directive) and various powers of attorney (medical and general) in place. We were fortunate that we got this done on the mother-in-law while she was still (periodically) competent.
The major problem is that "Long" isn't all that long in many of these policies, but it's better than nothing.
The other thing I'll tell you from a friend who got into this situation is don't "hold back" on using the policy. Sure it has a ceiling, but you don't want to use up other resources when you have the policy (and unfortunately, the person may die before they use it up). Then you start getting into what allowable medicaid spenddowns are (prepaid funeral expenses) and maybe even shopping for a state (some states are better than others). We ended up moving the mother-in-law to NY (one of the other daughters lives there) when the rest of the resources ran out. She was too far gone at that point to care.
In addition to LTC and basic estate (will/trust) planning. It's time to also get your Living Will (Advance medical directive) and various powers of attorney (medical and general) in place. We were fortunate that we got this done on the mother-in-law while she was still (periodically) competent.
Matthew
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My wife is dealing with her mom being in a LTC facility. That's what pushed us into getting that insurance. When we did the numbers, it basically works out to:
LTC averages $x/year. LTC expenses rise on average of $y/year, and the average usage time of LTC is z years.
Do the math and you'll figure out the ESTIMATED cost of your long term care.
Take your age and figure out when your LTC stops requiring premiums, calculate the difference. Some quit at a certain age, some at other times.
Take that estimated cost and divide by that number of years. The result is going to be very close to your premium.
If you can save that much each year you can pretty much self insure.
We got our policy maybe 10(?) years ago, I don't even want to know what that would have cost us now.
Matthew
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Good advice.
Rushie
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Rushie
One of the things I read in that .pdf is that it matters which state sold you the policy and which state you want to have the care. States have different definitions of words, and different requirements. One example they gave, you buy a policy and it only covers licensed care facilities. But you move to a state that does not require facilities to be licensed. Your policy declines to pay.
I can't imagine the hassle of moving an old lady to another state. We are facing in the near future moving my MIL just from the duplex apartment to the assisted living apartment and/or the "memory ward", right in the same retirement community and we are dreading that. But at least she did good planning for her own care. After her husband died, she bought into this continuing care retirement community that provides a stepwise transition from duplex apartment, to intermediate assisted living apartment, to the final full time care locked ward. In addition she has a LTC policy that covers whatever the community doesn't cover in the last two locations.
Rushie
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It is good advice, but it's good advice for anyone. I was horrified to find out that our daughter and her husband haven't done their estate planning yet, and they have a child now. I beat her over the head with it the other day, "You want the government deciding who that baby goes to if you two are killed in a crash???" I think she got the message and they're going to take action. Sheesh. Young people.
Matthew
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We had to move our MIL from one state to another. That was a rough trip, and required a lot of advance work to get her house sold. She was in pretty bad mental shape from her stroke and a mis-diagnosis. I had forgotten until just now how much time and effort my wife put into getting all that worked out.
She's in one of those continuing care facilities in the assisted living section. Now my own folks have moved into the same place and have a duplex.
One of the good things about places like that is they want to be paid. Their self-interests will line up with yours when it comes to getting onto the LTC insurance company to pay out, and they have whole departments that will get on it.
steingar
Taxi to Parking
I got ahead of the curve on this one and have policy. It is spendy, and yeah it really doesn't cover much. But it does give me some piece of mind.
wsuffa
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In the end, there is no free lunch. The insurance companies are out to make a profit, and virtually everyone that has a LTC policy will draw on it, so the premiums need to make, over time, the amount paid out plus a profit. Sorta like Social Security.
Actually, a good percentage of LTC customers never make a claim as they pass away after a brief illness. Thats how the LTC insurance industry makes their money.
The only insurance product that is 100% likely to pay out is 'whole life'.
Rushie
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Rushie
At risk of getting off the topic of LTC insurance, social security does do this. They calculate that the "average" person will die in their early 80s. So one of the decisions we face is when to begin the draw down? Begin at "full retirement age" (from 66 to 67 I think depending on your birthday) and receive 100%, or retire early and receive a lower amount, or wait until age 70 and receive about 130% of your "full retirement" amount.
If you do a spreadsheet and calculate how much money total you'll get out of the government by the time you die, you will find that the breakeven point is around 80 or 82. In other words, if you die BEFORE that age, you will have taken out more total money by beginning the draw at 66 than if you wait til age 70. If you die AFTER that age, you will end up taking out more total money by waiting until age 70 to start receiving benefits.
So the government has fixed it so no matter which you choose, you won't get "more" overall, if you are the average person dying at the right time.
Zeldman
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Sad, but a lot of truth there.
denverpilot
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And then you have to decide what inflation will do over the retirement years to figure out the purchasing power of that payout, as well as whether or not “cost of living increases” are included or will be voted upon during that period as well.
Rushie
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Rushie
Exactly, or if the whole ponzi scheme will collapse during your lifetime.
Busflyer
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Fortunately Dad purchased this for him and Mom. Long story short, after progressively worsening Parkinsons and a fall at home, Mom ended up in LTC. She was to the point Dad couldn’t care for her.
She spent 15 months there. Insurance paid 90% so the bill went from$7000/month to $700. It would have wiped out the remainder of Dad’s savings. Yes it’s a gamble, all insurance is, but it was a lifesaver for us.
She spent 15 months there. Insurance paid 90% so the bill went from$7000/month to $700. It would have wiped out the remainder of Dad’s savings. Yes it’s a gamble, all insurance is, but it was a lifesaver for us.