Long Term Care Questions
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Anonymous
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I've been studying this for several weeks, so I've learned a bit but I would benefit from some input. We're facing the following choices:
1. Self-insure (not "rich" but the LTC policies all have limits too) 2. Traditional LTC (the kind where the premiums can increase over time) 3. Traditional LTC like #2 but "shared" between the spouses (so the ill or surviving spouse can get more coverage than on a "single" policy. 4. Hybrid Life insurance/LTC (If you don't use it, there is a death benefit that goes to a beneficiary when you die; also you normally have the opportunity to get the premium or part of it returned). This can be "single premium" up front or over a number of years (10/20/lifetime), but the total premium is fixed so they can't jack it up later. The single premium is huge and you risk the insolvency of the insurer, but there are state guaranty associations that protect the insured up to a certain amount. 5. Same as #4 but with the shared care between spouses, so the death benefit isn't paid out until you are both dead. ******************************************************** a. Do you personally know people who had to tap into this for nursing homes, etc? My sample is very small. I only know people who paid into it and died before collecting on it because a spouse or relative took care of them OR because they were so ill they were hospitalized and died after short to medium illnesses. In the case of my father, he got tired of paying the ever higher premiums and dropped it, but luckily my mother was able to care for him at home until he passed away. (She continued her policy and it is more likely that she will need it as the surviving spouse. b. I'm leaning toward #5 with the payments spread out over at least 10 years, but it is still expensive and the coverage is not fully adequate (we'd still have to self-insure part of it). But by then we might not have all of our normal living expenses since we would be in an institution. (More likely one of us, but there would still be fewer normal living expenses.) I would appreciate any personal insights. It is the most depressing and complex topic so far in our estate planning! |
Anonymous
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My experience with LTC Insurance: My parents had a Traditional LTC insurance policy through the Federal Government (Fed employee rate). My mom went into a nursing home and stayed there less than a week before she died. My father canceled his policy after that experience. The monthly payments were really high and it would have been better if they had just put that money into a targeted bank account instead of making premium payments.
So I'd say NO to a traditional plan. However I've not heard of the other options you've listed. They *seem* like a better deal, but I don't have any experience with them. |
Anonymous
| Many don't ever need it, and for those who do need it, it usually isn't for nearly as long as the salesmen try to convince you that it will be. Self-insure. |
Anonymous
This, if you have the money. |
Anonymous
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Personally I think all hybrid insurance products are a rip-off. They more complex the product the less transparent it is, and the more they make in fees.
Personally I plan to self-insure. It gives you the maximum flexibility, and you don't end up in a fight with insurance companies trying to renege on their obligations. |
Anonymous
My mom has been in LTC for over 5 years. Cost roughly $375,000 so far. She has more than gotten back her premiums on her traditional policy. So you never know. Like all insurance, it is much, much better to have it and not need it than to need it and not have it. |
Anonymous
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My parents have your #3, and my dad got Parkinsons. I don't know how much they paid for it, but over time the benefit actually grew (somehow it was invested, so they bought $700,000 worth of coverage but as the market strengthened they ended up with closer to a million) and they will need every penny. My dad has been sick for 15 years, tapping into LTC for about 5 of those years. Each year he needs more and more care, and it is now almost 24/7 home care. My mom is pretty worried she'll get sick after he dies and there will be no more money left for her care, so after tenderly caring for him at home she'll end up in a nursing home. My sib and I will do our best to make sure that doesn't happen.
Anyway, if they didn't have that policy my mom and dad would not only be destitute and on medicaid, but my dad would be dead because nursing homes can't provide the care he needs to survive. We know that because when he goes into a nursing home post hospitalization everything goes to heck. |
Anonymous
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OP here...
Thanks for all the responses so far. 1. If you or someone you know "self-insured," how much did you set aside per person and in what sort of instrument did you invest it? Obviously, it would have to be something low risk to guarantee it will be there. 2. Forgot to mention, but for the PP whose parents' policy's coverage increased, there are options for "inflation" protection, usually from none to 5% compounded. Of course, all that protection comes in the form of a rider with additional cost. 3. Another twist: in theory, traditional policy premiums can be deductible, but because of the new tax law, we didn't take the itemized deduction in 2018 and probably won't in the future unless the tax law gets changed again. I'm sitting here with a spreadsheet of more than a dozen policy options. Naturally, many use different terminology, making it difficult to compare them. I asked the rep/sales person what he would recommend and he said "traditional" because it's less money up front. But that may say more about the commission structure than what's actually best for us. |
Anonymous
We don't have a separate pot of money for this purpose. We have retirement savings that we hope will address our needs adequately whether we are living it up in a condo in Florida or drooling apple sauce down our shirts in a nursing home somewhere. This, along with health care costs in general, is of course the big wild card in any retirement savings strategy. That, and when you die. |
Anonymous
Here is something to ponder. https://www.ahcancal.org/advocacy/issue_briefs/Issue%20Briefs/NCAL_Factsheet_2019.pdf Median length of stay = 22 months Average yearly cost = $48,000 per year But then you might need a nursing home after that. (A much higher level of care than assisted living.) https://www.longtermcarelink.net/eldercare/nursing_home.htm https://www.seniorliving.org/nursing-homes/costs/ Average length of stay (current resident): 835 days Average cost: $275 a month So that adds up, on average, to $96,000 for the assisted living and $229,625 for the nursing home for a total of $325,625. |
Anonymous
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LTC plans are nowhere near the good deal they were a number of years ago.
I'm planning to self-insure, though being a rich widow helps.  TBH, at this point, the large amount of equity in my house is my long-term care pot of money.
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Anonymous
That's a good plan, and why it makes sense to get out from under the house at some point in your later years. It is tough if you (or your kids) are trying to sell a house at the same time as your need for care is escalating. The challenge for couples of course is if one needs escalated care while the other still needs to maintain a home. |
Anonymous
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For couples planning to self fund, how much do you estimate you will need to "reserve" in case you both need care? $500,000, $1,000,000? While I think we have an adequate amount to fund our lifestyle in retirement, setting aside a $1,000,000 or more for a contingency like LTC would put a significant dent in what we could spend while we're healthy.
We do have a paid off home worth currently about $750,000 but because of the cost of buying even a smaller home here (DMV), and children/grandchildren in the area, it's unlikely we will move from the colonial we've owned for decades until we are unable to manage the stairs. So far, I haven't considered this as a pot of money for LTC because there will be taxes on a good portion of the sales proceeds plus one of us may need to live in it while the other is in care. However, even if LTC is not necessary, it is not well suited to aging in place once we are in our 80's. So I suppose the day will come that we will need to consider a condo or other one level home or renting, possibly in one of those continuing care communities. |
Anonymous
Yes, and I meant to add in that original comment that there is a case to be made for LTCI for the couples, but, as a PP said her father did, it's less necessary to be planning on it for the survivor. It really is about protecting assets for the one left behind. |
Anonymous
At what age did your Dad get Parkinson’s? Can the premiums go up once the policy is needed? |