Long term care plan

[Anonymous]

I just got a weird letter from my long term care insurance group, saying my rate was going to jump nearly 40%. I think they're trying to get out the market. I was offered an alternate plan for a 33% jump which increased my waiting time from 90 days to 180, or one which drops my daily coverage by 10% but only drops my premium increase by 5% or so
WWYD?
I am thinking of leaving it as is, but hoping I won't see another 40% jump next year, and the year after. The company said they CAN'T drop my policy, I wonder if they're trying to price me out.
I have had this policy almost 16 yrs

[Anonymous]

Anonymous wrote:I just got a weird letter from my long term care insurance group, saying my rate was going to jump nearly 40%. I think they're trying to get out the market. I was offered an alternate plan for a 33% jump which increased my waiting time from 90 days to 180, or one which drops my daily coverage by 10% but only drops my premium increase by 5% or so
WWYD?
I am thinking of leaving it as is, but hoping I won't see another 40% jump next year, and the year after. The company said they CAN'T drop my policy, I wonder if they're trying to price me out.
I have had this policy almost 16 yrs

This is why we haven't gotten LTC insurance. Too many stories like this. I'm not sure what your best option is here. Is the 90% daily coverage workable in your overall financial plan?

[Anonymous]

This happened to my MIL - they kept increasing the premiums by outrageous amounts. They had closed the group and weren't allowing any new policy holders therefore the need to increase premiums. She has been paying for a very long time and is almost 90 years old so felt like she was stuck with premium increases. And she hasn't been keeping up with inflation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I just got a weird letter from my long term care insurance group, saying my rate was going to jump nearly 40%. I think they're trying to get out the market. I was offered an alternate plan for a 33% jump which increased my waiting time from 90 days to 180, or one which drops my daily coverage by 10% but only drops my premium increase by 5% or so
WWYD?
I am thinking of leaving it as is, but hoping I won't see another 40% jump next year, and the year after. The company said they CAN'T drop my policy, I wonder if they're trying to price me out.
I have had this policy almost 16 yrs

This is why we haven't gotten LTC insurance. Too many stories like this. I'm not sure what your best option is here. Is the 90% daily coverage workable in your overall financial plan?

+1. There have been threads on this on this board in the past. I've never seen a LTC policy that didn't have the possibility of basically unlimited fee increases in the fine print somewhere (even the one for Federal employees). Most end up like OP (and PP with the 90-year-old mother). Once you've paid in for decades, they've got you over a barrel.

LTC insurance is less like an auto policy (huge pool and relatively low incidence of accident, so the premiums can be low) and more like dental insurance (almost everyone is going to use it at some point, so the premiums are high and it's really more like a pre-payment plan).

Sorry -- I really don't have any advice, other than do a cost-benefit analysis of how old you are and how likely it is that you will need LTC. Also, look very carefully at the plans limitations; most LTC plans don't cover care indefinitely. Many (most?) have time limit, which makes it easier to judge whether you're just better off investing the premium and self-insuring. LTC worked well for my MIL, because she had limited resources and developed Alzheimers before she was too old for her premiums to have skyrocketed. However, when she died, she had just passed the end of her benefit (but she didn't live long enough to exhaust her other resources). My view, as well as that of my financial advisor, is that if you have significant assets in retirement, you're better off "self insuring."

[Anonymous]

Unfortunately there are systemic errors with how actuaries priced out LTC plans. Long story short, costs are significantly higher than expected as people are living much longer than planned and needing LTC for longer periods if they do need it. So these massive increases are the only way to keep the programs solvent. Just my gut feeling, but I think LTC is in a death spiral

[Anonymous]

Anonymous wrote:Unfortunately there are systemic errors with how actuaries priced out LTC plans. Long story short, costs are significantly higher than expected as people are living much longer than planned and needing LTC for longer periods if they do need it. So these massive increases are the only way to keep the programs solvent. Just my gut feeling, but I think LTC is in a death spiral

This. I think there are options to pay a lot more upfront (in lieu of unpredictable premium increases) but I think it’s on the order of 10s of 1000s of dollars and how do you know those companies will stay solvent?

It’s scary because LTC is a huge part of many retirement plans.

[Anonymous]

Anonymous wrote:

LTC insurance is less like an auto policy (huge pool and relatively low incidence of accident, so the premiums can be low) and more like dental insurance (almost everyone is going to use it at some point, so the premiums are high and it's really more like a pre-payment plan).

I don’t know- the real tail risk is surviving a very long time in LTC. I think something like 80 or 90 percent of people will need less than a year.

For this reason, I would take the option with the longer delay before the benefit kicks in.

[Anonymous]

I'm sorry OP about your LTC insurance woes! I think you might need to do a "sunk cost" analysis. Is it worth it to keep paying into this or is it better to cut your losses now and self-insure with some assets and the amount you would likely spend on premiums going forward?

I'm hoping that the vast number of Baby Boomers going through this process in the coming years is going to pave the way (and leave a lot of facilities angling to fill open spaces) for me (in "Gen X"). I'm in that "in-between category" where I have too many assets to want to just spend them down and live on Medicaid, but not enough not to worry about the costs. I have mentally set aside 200k in my assets to be for 'end of life' needs instead of having LTC insurance. I have also toyed with using a small amount of money for a deferred low-cost annuity that would kick in during old age as part tax shelter, part "longevity insurance." That way if I did have to spend down my assets, I'd still have a little something trickling in besides SS. Haven't fully decided yet, but I think 200k in today's dollars is the "right" amount--3 years in a LTC facility would run on average 240k (80k/yr) so between assets and SS, it could handle that.

[Anonymous]

How much have you already paid into it?

[Anonymous]

How much are your payments now and what are the guaranteed benefits? How old are you?

Ignore what you have already paid into it so far. That's sunk cost. Gone.

Estimate your payments for the future and determine if you are better off just saving and investing that.

[Anonymous]

Anonymous wrote:How much are your payments now and what are the guaranteed benefits? How old are you?

Ignore what you have already paid into it so far. That's sunk cost. Gone.

Estimate your payments for the future and determine if you are better off just saving and investing that.

+1 It paid for 16 years peace of mind re long term care coverage. You need a fresh look at whether it is your best option going forward. It may or may not be.

[Anonymous]

You may be better off investing in a good eldercare attorney and retiring to a state with good long term care benefits in their Medicaid program (including paying someone to take care of you in your home).

[Anonymous]

OP here
I am 55, single, 2 kids in college. I got the policy at 39, back when I was in way better physical shape than now
I don't think I have enough saved to self insure; when my ex FIL passed last year, he was spending 18/hr for care at home, which is more than the policy would pay me if I needed to use it now

[Anonymous]

And this is why I'm self funding my LTC. Not worth it. Some people would consider my 401k and mega roth over funded, but at least well be able to afford in tomorrow's dollars 8k/mo in LTC nursing care for 3 years. Statistics say that I'd we even make it there, our stay will be 2yrs 3 months before we kick the bucket.

[Anonymous]

Another thing you can do is go into one of those places with levels of care. You give them a large sum upfront (usually selling your house gets you the sum) and then you pay per month a reasonable amount for the rest of your life. I believe they invest your house money and then some of it is returned upon your demise.