Thoughts on long term care insurance?

[prisonchaplain]

Long term care insurance is protection in the case the insured needs long term home health care, or needs to be in a nursing or assisted living center. I'm in my mid-40s and wife is just 40. So, if we get it now, it's affordable, though a definite dent in the budget. Anyone have knowledge or information about the wisdom of this type of coverage?

[pam]

It's one of those things that you have NO idea whether you would actually ever need it or not. Some seniors in their 90's can still live at home and are able to take care of themselves. It's the what if's that get you.

We went through this with my dad in making a decision to put him in a care facility. Medicare would cover up to a certain point and then it would be out of pocket. The care facility was approximately 4,000 a month. My parents didn't have long term care insurance so this would be out of pocket.

Not many retirees could cover the cost of this out of pocket. Unfortunately my dad passed away a week after placing him there. That's another story and a sad one. Two years later we are still waiting on an apology.

Again, I personally from experience, think a good idea.

Edited February 26, 2011 by pam

[prisonchaplain]

I understand that some states have laws in place that guarantee that if one has LCI for three years, that even if medicare has to take over, the value of the insurance covers the estate for that amount, and the level of care cannot be reduced (say from semi-private to dorm-style quarters). My state does not have that yet, but there is some hope it will come to pass. The trends are in that direction. Another factor--such care would be about $9K per month in my county.

[Just_A_Guy]

Long term care insurance is protection in the case the insured needs long term home health care, or needs to be in a nursing or assisted living center. I'm in my mid-40s and wife is just 40. So, if we get it now, it's affordable, though a definite dent in the budget. Anyone have knowledge or information about the wisdom of this type of coverage?

I think my gut reaction (and I'm still in my early 30s and just starting my career, so this may not apply to you) is that it may be better just to self-insure.

Example: Take the rates quoted here. It shows a four-year, $150/day ($4650/month) benefit costing $1297 per month. If you invested that money at 10%, at the end of 30 years you'd have $234,683.62. That would give you the same level of care for a slightly longer period of time-- fifty months as opposed to forty-eight--and if you die before you need long term care, your wife has almost a quarter of a million dollars to play with.

[pam]

I think my gut reaction (and I'm still in my early 30s and just starting my career, so this may not apply to you) is that it may be better just to self-insure.

Example: Take the rates quoted here. It shows a four-year, $150/day ($4650/month) benefit costing $1297 per month. If you invested that money at 10%, at the end of 30 years you'd have $234,683.62. That would give you the same level of care for a slightly longer period of time-- fifty months as opposed to forty-eight--and if you die before you need long term care, your wife has almost a quarter of a million dollars to play with.

I think that is excellent advice if someone can keep from spending it on something else. And should you never need it, you still have the money sitting there to hopefully enjoy for something else.

[Just_A_Guy]

Oops - that should be $1297 per year. The rest of the numbers are still the same; I just typed the wrong thing.

[pam]

Where is bytor when we need him. He's the financial planner/banker.

[bytor2112]

I think my gut reaction (and I'm still in my early 30s and just starting my career, so this may not apply to you) is that it may be better just to self-insure.

Example: Take the rates quoted here. It shows a four-year, $150/day ($4650/month) benefit costing $1297 per month. If you invested that money at 10%, at the end of 30 years you'd have $234,683.62. That would give you the same level of care for a slightly longer period of time-- fifty months as opposed to forty-eight--and if you die before you need long term care, your wife has almost a quarter of a million dollars to play with.

Of course that works out IF you don't become disabled and require long term care or confinement in a home and have adequate retirement assets as well before that all works out.

Personally, I think PC is a bit young to worry with LTC insurance. That being said, 1 out of three will require this type of care during their lifetime and it will absolutely destroy your assets if you self fund.

There are policies out there that offer joint coverage for the price of one, so the benefits can be shared. Genworth I believe offers this type oc care and it is better to purchase a daily benefit rather than monthly.

[pam]

I wonder though if age really has a bearing on the decision as to whether to opt for ltc insurance. One could have a debilitating accident/illness that would require it at a younger age to be put in an assisted living facility. It's not always the very elderly that have to be placed there. Alzheimers is hitting people at younger ages now.

I have a friend who is just over 50 that was diagnosed with dementia and possibly Alzheimers. I say possibly Alzheimers because it is a disease that can't be confirmed until after death. There will come a time that her family will need to put her in some kind of a care facility...and she won't be that old.

Edited February 26, 2011 by pam

[prisonchaplain]

Buying younger means lower premiums that stay the same into old age. We also have a group rate availables, and an open season coming up (much shorter medical inquiry). The last open season for us was 2002, so it's a hot topic. Bytor's counsel seems worthy, but I agree with Pam that self-insuring only works if the incident happens very late in life.

[pam]

Some good advice here. I mentioned the younger age due to Bytor's comment about someone being too young to think about it. You never know when ltc will be needed..young or old. Again it's just one of those what if's that is hard to make a decision on.

[Guest]

I grew up knowing that my parents will live with my sister and she gets to inherit the house. That was the deal. It was cool with all 4 children. My parents spent buckoo money to send my sister to nursing school and my brother to med school all the way to specialty degree - 20 years worth of college schooling. My parents know they won't have to worry about old age. We're their more than willing slaves.

That's my dad's idea of LTC. I kinda like it.

Okay, this really doesn't answer the question. Everything just makes me think of my father these days...

[rameumptom]

There is a greater chance of you needing LTHI than Life insurance. All will die, but unless you are in your 80s, the chances of you dying anytime in the next many years are very low. And the costs for a funeral are generally low, also.

However, the chance of being injured or needing LTHI coverage is rather common. Imagine having small kids in the home, and you become disabled. Social Security Disability Income is not that much, can take years to receive, and you will raise your kids in poverty. With a LTHI supplement you can receive benefits within a few months, and generally receive larger payments than SSDI does.

I do not have it, but then I have Air Force retirement as a supplement. If I didn't have it, I'd definitely consider LTHI.

[Echo2002]

I'm a fan of Dave Ramsey and he advises to start paying into ltc insurance when you are around 62. It's probably more expensive if you start that late but he advises to save and invest as much as you can before retirement age. If you get ltc insurance in your 40s you probably could be investing that amount instead of putting it into insurance you probably won't use until you are in your 70s or 80s.

[prisonchaplain]

Spring...what you say makes sense...unless you need that LTC between 40s and 60s. We ended up getting the ltc, since there was open season, with minimal medical questions. On the other hand, we low-balled the coverage, going for a max of 3-years, and coverage of $150 per day. That covers the most common scenarios, which are death or resolution within 3-years, and the use of home care or assisted living, as opposed to full-blown nursing home care. Should the worst case happen, we'll have to pay some out-of-pocket, but will still likely avoid bankruptcy.

[Echo2002]

Would getting long term disability insurance provide the security in your 40s and 50s? I'm new to all of this, so I'm not sure.

I suppose it's personal preference. If you feel more secure by having LTC just in case something happens when you are younger, then you will be glad you did it.

[skippy740]

Dave Ramsey is an IDIOT... except for finding ways to get out of debt. He is NOT a licensed planner, nor even a life insurance agent. He is a "financial entertainer" who has some good ideas on occasion. Even a broken clock is right twice a day.

From a financial planning perspective, I wouldn't be considering Long Term Care any younger than age 40. From a risk/cost perspective, I would probably consider it as soon as the rest of your financial basis are established: saving 20%+ of your annual income, life insurance & disability insurance is purchased, and saving in your company's 401(k) to maximize any available match offered.

Long Term Care insurance is something that even STATES are getting behind.

California Partnership for Long-Term Care

Because of the foreseen expenses on State medicaid system (have to spend all your assets down to $2,000), there are now incentives for buying Long Term Care insurance that is "State Partnership qualified".

Basically, for the amount of insurance you buy (say you buy a $300,000 total benefit), that amount is the amount you would have to spend down to before being admitted to a medicaid facility.

Long Term care insurance does NOT provide any cash values (unlike life insurance).

Long Term Care is only going to get MORE expensive with LESS benefits over time.

Long Term Care insurance also varies according to the company that issues the policy. Some companies are notorious for raising the rates on ALL policies. Stock insurance companies (like Genworth) typically do this, while Mutual companies (like MassMutual) rarely increase rates on existing policies.

This means that the "good risks" will find new policies and the "bad risks" will keep them, thus the company will eventually price themselves OUT of the Long Term Care market.

If you own a company, and your company pays the premiums for Long Term Care, then the ENTIRE PREMIUM is tax-deductible!

Talk to a Long Term Care life insurance expert in your state for specifics.

http://finsecurity.com/finsecurity/pdfs/2f5-17.pdf

Edited July 4, 2011 by skippy740

[skippy740]

Oh, and another thought:

If you're young, you may want to consider buying LTC insurance on your parents.

Yes, it'll be more expensive than buying it for yourself.

But if your parents need help with the Activities of Daily Living (bathing, toileting, transferring (like from bed to chair), eating, dressing, and walking)... think of the impact that could have on your OWN lifestyle.

Who really has the risk that needs to be insured?

If you have a lot of siblings, you should all meet together and find ways to share in the costs of a LTC policy so your parents can maintain their dignity (not having children care for them) and children can continue to pursue their careers and families.

Long Term Care policies help by paying for in-home custodial care. (Remember that medicaid/medicare NEVER pays for custodial care. They do cover skilled nursing care, but that's different.)

Long Term care policies can also help with some home improvements - like installing a ramp for a wheelchair, shower grip handles and things like that.

Edited July 4, 2011 by skippy740

[LDSJewess]

Spring...what you say makes sense...unless you need that LTC between 40s and 60s. We ended up getting the ltc, since there was open season, with minimal medical questions. On the other hand, we low-balled the coverage, going for a max of 3-years, and coverage of $150 per day. That covers the most common scenarios, which are death or resolution within 3-years, and the use of home care or assisted living, as opposed to full-blown nursing home care. Should the worst case happen, we'll have to pay some out-of-pocket, but will still likely avoid bankruptcy.

It is a good idea if you can buy it when you are younger. Keep in mind Long Term Care insurance is not just for the elderly and many policies allow Long Term in home care for many reasons. Say at age 40 something you have an accident and injure your back and your spouse works and you need basic living care during their absence. LTC insurance allows home health care for such things.

As for elder nursing home type care, I would suggest to think about where you live or plan to live iduring your retirement years.

The reason I suggest this is because if you live in a smaller town where there are only one or two nicer facilities available, the if you go on medicaid, you are not astuch with the less desireable facilities that are available in larger urban areas.

Medicaid (not medicare) makes you sell down assets, but if your assets are family or corporation owned long before you get to that point, that is another option where property can stay in the family and you are still eligible.

Self insuring is always an option, but considering the actual costs of LTC and the growing costs over time. self insuring may not be as good as an option then a younger person buying a LTC policy.

And if you do buy, do so at the youngest age possible. My husband and I are far more healthy and fit than our children, but insurance companies go by the numbers and 60 something pays more than 40 something.

[prisonchaplain]

We had to consider if we could even afford it. The coverage we got (3-years max, $150 per day) will cost about $130/month for the both of us. Neither of us are unhealthy, though there are family history concerns. Our cost of living is pretty high, as nursing home care in our area averages about $230 per day. On the other hand, we have built in a 4% inflation adjustment. So, basically, we're protected from bankruptcy, but not sacrifice, should we need to use our policy.

We may indeed have to consider where we retire. Our state does not have California's provisions YET. However, one reason we purchased, was the very trend California represents. My understanding is that three years is key with that too. So, for us, we found a balance of security and affordability. In car terms, we got a stripped Toyota Coralla. But hey...it's not a Yugo. :-)

[dahlia]

I think mid-50's is the age where long term care insurance is suggested. I know that one is more likely to need LTC than not, that is, you are less likely to just drop dead and more likely to need nursing care, either at home or in a facility. I have it through my job and wouldn't be without it. I only have 1 child and between schooling, his lack of funds, etc., there's no big nest egg to fall back on. I can't depend on anyone else to cover the costs for me, so I have to make sure they are covered on my own.

My step-father died from lung cancer and did hospice at home. He could have used the insurance to spare the estate from bills which practically looted it. I offered to cover my parents years ago when the cost would have been very inexpensive, but was told I was 'looking to put them in an old folks home.' Alrighty then. Take care of your bills yourself and don't look at me.

I guess it's always a crap shoot - you may or may not use it - but that's the chance you take with any insurance. Personally, I'd rather have it than not, especially to spare an only child from crushing expense, to have some choice in my care (instead of having to have government care) or from using what little might be left of my savings.

[Guest adivol]

it’s a very general question among youngster that from when we should take LTC policy. Well from my point of view we should have good knowledge about LTC(long term care insurance) policy for that we should consult with an agent.

[IamMe]

Given what my family is going through right now, I would also suggest having a living will prepared.

My baby brother (not quite so baby anymore - he's 26) was involved in a bad accident 27 days ago, that left him in a coma. The MRI showed extensive brain damage to both sides of the brain. He's now out of the coma.. but by out I mean he's concious. He's not there any more.

We're now trying to deal with his accident, the lagalities of him not having a living will, insurance ... nothing. Of course what 27 year old ever figures that something like this will happen? We're trying to get our heads around it all. A long term care facility is what is expected when he's released from the neuro floor in 6-8 weeks.

As his family, we'll all be chipping in as best we can, but the cost is staggering. You just never know.

[Vort]

I am very sorry to hear this, IamMe.

[Echo2002]

We went through this with my brother in 1999. He was hit by a car and suffered brain damage. By the next morning we were told he was brain dead. For us it was easier to make the decision to discontinue life support since there was no hope of him ever recovering or even waking up. He was 19 at the time, so he did not have a living will. It was up to my parents to make the decision.

Since then we have talked about what are wishes would be if we were in that situation. I told my parents I would not want to live on life support or have to be put on a feeding tube. I need to put that in writing, but even if it's in writing a lot of times the doctors let the family over ride the person's wishes.