No. of Recommendations: 6
Interesting article on the demise of Long Term Care Insurance. Some policyholders are getting huge premium increases coupled with benefit cuts. Most troubling are the companies offering low-ball initial premiums with the expectation that they can greatly increase premiums after a few years and get many policyholders to drop coverage without ever filing a claim (while pocketing the premiums paid to date.)

LTC is another scam I'm glad I avoided.

http://finance.yahoo.com/news/long-term-care-insurance-leave...


intercst
Print the post Back To Top
No. of Recommendations: 1
LTC is another scam I'm glad I avoided.

http://finance.yahoo.com/news/long-term-care-insurance-leave......


intercst

--------------


It's interesting that almost every investing website/company encourages people to get long-term care insurance. Even when they don't, themselves, sell it. I'm not sure why.

Insurance is one of the most costly rip-offs in this country.
It's a bet you make against yourself. Either way, the insurance company wins. If you just paid all those premiums to yourself over the years, you'd probably be way ahead - with the exception of catastrophic healthcare insurance.

Or so it seems to me.

AM
Print the post Back To Top
No. of Recommendations: 7
I have been receiving a steady stream of articles on the changes in the LTCI arena, which have largely confirmed my long held view of this unique insurance product. I'd say, generally, from the tone of these, the following:

1. When qualified LTCI came into the market in 1998 (from HIPAA), the policies were underpriced. Most, deeply underpriced. This was most likely to achieve market share and to serve as the performance criteria for executive bonuses.

2. The industry has promoted LTCI not as true insurance, but as a kind of cost-sharing plan, where the majority of Americans will spend time in assisted living and nursing homes, thus all baby-boomers should start "preparing" for this through LTCI. Note: with true insurance there is very little chance you will ever make a claim either because you don't hold the policy that long or you die before realizing a loss. This is a fundamental principal of insurance.

3. The industry claims that they could not anticipate the growth in medical costs, the lower than expected lapse rates and the sustained low interest rate on the bonds it holds in its long term capital accounts....as the reasons for suspending LTCI product lines and the premium increases. These published reasons are completely bogus and, at least to me, clearly show the deception the industry has used in initiating and marketing this product.

- LTCI does not cover medical costs...it covers custodial costs, which are made up primarily of room and board with some unskilled and in the late stages, skilled labor.
- People don't abandon savings plans, as they consider they have 'skin in the game'. Maybe LTCI wasn't marketed as a savings plan, maybe it was. But the perception is that it is a savings plan. Hence, low surrenders should be an expectation, not a surprise.
- Quality long bonds (representing most of the insurance industry's capital reserve) have been one of the higher performing sectors over the past 10 years, not the lowest. Bond interest rates have been low, but this becomes important when the insurer starts paying claims....something that hasn't yet happened to any significant degree from the baby-boomers who hold most of the qualified LTC policies....and won't for another 15-20 years.

The underlying pathology with LTCI is it is a long term contract where the insurer holds all the money, most claims will not occur for 20 to 30 years from initial issue, the insured cannot transfer the contract (as can be done via a 1035 transfer for life insurance or annuities) and the industry can claim new-product ignorance and misfortune when the policyholders are billed for the huge underfunding that was inevitable. In short, the incentives with this product are all wrong for the consumer....which is why I said "NO THANK YOU" back when it was initially heavily marketed in the early 2000s.

BruceM
Print the post Back To Top
No. of Recommendations: 1
It's interesting that almost every investing website/company encourages people to get long-term care insurance. Even when they don't, themselves, sell it. I'm not sure why.

First, many borkerage houses and investment companies are either owned by or themselves own insruance companies. Second, if they don't, then they almost certainly get a percentage of the upfront and continuing commissions/fees as their fee for referring the business. I hate to say it, but it's not easy to find an honest person in the financial services and/or products business. Where there's big money to be made, you can bet that big money will be there to make it.
Print the post Back To Top
No. of Recommendations: 5
If you just paid all those premiums to yourself over the years, you'd probably be way ahead - with the exception of catastrophic healthcare insurance.

It all depends on what you are insuring against and why you have the insurance.

House insurance. When I was 30, if my house burned down, I couldn't rebuild it. Now that I'm almost 50, I could but it would take most of my retirement savings and set back my retirement date a few years. Sure over the past 20 years that policy cost a nice sum, but still not enough to replace the house.

When used properly, insurance protects you against catastrophe. LTCI, I'm still kind of iffy on.

I wonder how many of those companies selling it are publicly traded companies that have to worry about share holders?

JLC
Print the post Back To Top
No. of Recommendations: 11
My company (Motorola) had a decently priced LTC policy available, and the insurance company occasionally held on-site meetings to discuss it. Since 75% of us were engineers of one kind or another, they got a lot of detailed, well thought out, and sharp questions.

The one thing I remember is they said that if you were (relatively) poor, you needed the policy. If you were (relatively) rich, you didn't need the policy because you could easily pay for the care out of pocket.

He said the cross-over point was right around $1,000,000 in net worth.

They like to scare you with talk about the huge monthly costs of a LTC facility, but really once you divide it out it's not so bad. My Mom's (Alzheimer's) nursing home care cost $5000/mo. I explained to her (in a lucid moment) that her $1M would last for 15 years even with no growth, so she didn't need to worry.
Print the post Back To Top
No. of Recommendations: 3
Well my take on this subject is a bit different. While nobody wants to pay too much for anything, people whose purchase decisions are dominated by price are often disappointed. We have been dealing with a single LTC company for over 20 years and had none of the horror stories Intercst and the media report. That company was originally GE Financial which was spun off and now is known as Genworth Financial.

In my experience the same situation exists with auto insurance. Over the years we have had two major claims -- uninsured motorists hit us. The GEICO folks made the repair like a root canal without Novocain. But when my wife's car was totaled, the State Farm people were straight up and gave us fair value. That is not to say I was perfectly pleased with State Farm, but they did not low ball everything and force the repair shop to jump through hoops to prove an obviously bend frame was bent.

That said, I guess Warren Buffet and the other Berkshire owners were happy with GEICO's approach.

Gordon
Atlanta
Print the post Back To Top
No. of Recommendations: 10
Well my take on this subject is a bit different. While nobody wants to pay too much for anything, people whose purchase decisions are dominated by price are often disappointed. We have been dealing with a single LTC company for over 20 years and had none of the horror stories Intercst and the media report. That company was originally GE Financial which was spun off and now is known as Genworth Financial.

I'm with you, and we have our LTC policy with Genworth as well.

Insurance is something you buy hoping that you never need it, and that doesn't matter if it is LTC and I hope that I never need a nursing home, or auto insurance and I hope I never get in an accident, or homeowner's insurance and I hope the house doesn't burn down (have some friends currently dealing with that one and having the insurance company pay to build the new house).

I read the linked article, and although the percentage increase is high, I didn't think the actual premiums were awful. The premium rose to $6400 per year, but even if you pay that for 10 years, that's $64,000 and just barely enough to cover one year of nursing home care if you opted to not pay the insurance. As someone who is now dealing with 2 estates where each of the deceased people had spent their final years in a nursing home, I can see how expensive that is as Medicaid is now owed just under $500k for both of them.

I see the arguments for how long $1 million will last if you have to pay for your own nursing home care, but what about if there is a spouse? I don't want to leave DH destitute because we had to use all our assets to pay for my LTC, and that is why I have LTC insurance.

As has been mentioned, very poor people cannot afford LTC, but they don't need it because there are no assets to protect and Medicaid will provide the nursing home care. Very rich people have plenty of assets and so don't need LTC because they can afford to pay for their own care and have their spouse be able to live after they are gone. It is mostly those of us in the middle who have just enough for our retirement that need to protect assets so that the surviving spouse has enough to live on after the first spouse passes if that first spouse needs nursing home care.

My stepmother's first husband had Alzheimer's which he got at a very young age, and so he spent years in a nursing home before he died. That left her with nothing and just her social security to survive on. That is not a position I with to leave either DH or me in once the first of us passes, and for that, I have decided to get LTC.

As with all things, YMMV, and there is no one-size-fits-all, so you have to look at your own situation, understand your own goals and risk tolerance, and plan accordingly. We've done that, and I am happy with the plan we have put into place.
Print the post Back To Top
No. of Recommendations: 1
<i.They like to scare you with talk about the huge monthly costs of a LTC facility, but really once you divide it out it's not so bad. My Mom's (Alzheimer's) nursing home care cost $5000/mo.

Experiences vary. I know a person that just liquidated her husband's IRA, paid penalties and everything (He bought some lousy fix annuity - not from me - that had no provisions for free withdrawal in case of nursing home). His care cost over $100,000 a year and it has already cost her/them nearly $300,000. She has about $200,000 left.

If he lives too long (her words), she will be broke by the time he dies.

If he had an expensive but partnership program plan, she would have been protected from having to spend down all their assets.

She is currently working with an atty to try and protect what is left of the IRA money now that it has been taxed at 35%.
Print the post Back To Top
No. of Recommendations: 11
I don't understand how folks come to the conclusion that the government should somehow protect people from having to use their own money for nursing home stays. Before the taxpayer picks up the tab, the person in need of nursing home care should be forced to exhaust all of their personal funds. I think a strong argument can be made that the same person's immediate family (adult kids) should pay too, at least before the taxpayers are called to pick up the tab.
Print the post Back To Top
No. of Recommendations: 36
I don't understand how folks come to the conclusion that the government should somehow protect people from having to use their own money for nursing home stays. Before the taxpayer picks up the tab, the person in need of nursing home care should be forced to exhaust all of their personal funds. I think a strong argument can be made that the same person's immediate family (adult kids) should pay too, at least before the taxpayers are called to pick up the tab.

I'm with you on the part about people having to use their own assets prior to the government stepping in to provide assistance. But I cannot possibly disagree more with the thinking that someone's adult children should then be held responsible for their long term care. The adult children have no say in how their parents saved or spent throughout their lives. The adult children have no say in how their parents did or did not take care of themselves. In fact, some parents did not even raise their children (DH was the only one of his siblings to be raised in foster care), and so I would not expect those children to now be held accountable for their parents' expenses, medical or otherwise.

I don't see nursing home care any differently than any other expense where Person A cannot make Person B responsible for their debts without Person B explicitly signing and agreeing to that. I don't see why nursing home expenses should be any different.
Print the post Back To Top
No. of Recommendations: 1
I don't understand how folks come to the conclusion that the government should somehow protect people from having to use their own money for nursing home stays. Before the taxpayer picks up the tab, the person in need of nursing home care should be forced to exhaust all of their personal funds. I think a strong argument can be made that the same person's immediate family (adult kids) should pay too, at least before the taxpayers are called to pick up the tab.

Do you feel the same way about education?

We subsidize education through taxes. Heck, public education is largely free regardless of income. Everyone pays regardless if you have kids in school or not.

The idea behind providing incentives for people to protect their assets is so that they actually spend of their money insuring against this expense, instead of solely depending on the state to provide care. This is the same idea behind financial incentives in college savings (529) plans. The state wants you to take care of this on your own so that they don't have to - and they are willing to provide you some financial incentive to do so.

Just like your 401k and IRA. Those tax benefits are the government's way of encouraging you to save so you are less of a burden on the state and fed when you retire.

If there was no way to protect assets from medicaid, a lot of people would simply spend down all their money as soon as they have a qualifying event - regardless of how long their stay might be.
Print the post Back To Top
No. of Recommendations: 4
If there was no way to protect assets from medicaid, a lot of people would simply spend down all their money as soon as they have a qualifying event - regardless of how long their stay might be.

I would guess that you might not ever have been in a Medicaid only nursing home...i.e., a nursing home that accepts Medicaid in full payment for the stay. They frequently aren't the nicest places to be, or for family to visit.
Print the post Back To Top
No. of Recommendations: 3
I would guess that you might not ever have been in a Medicaid only nursing home...i.e., a nursing home that accepts Medicaid in full payment for the stay. They frequently aren't the nicest places to be, or for family to visit.

My mother initially went to a Medicaid-paid nursing home, which she thought was great since it was free for her, and she was a tight-wad.

In less than a week, she called me EVERY DAY to beg me to get her out of there. Being deeply in Alzheimer's, she didn't remember our phone number, but she read it off the label we'd put on her walker, and she figured out that since the last name was the same as hers that the phone # probably belonged to someone in the family. Now *that's* dedication!
Print the post Back To Top
No. of Recommendations: 2
I would guess that you might not ever have been in a Medicaid only nursing home...i.e., a nursing home that accepts Medicaid in full payment for the stay. They frequently aren't the nicest places to be, or for family to visit.

What does your (incorrect) opinion about my experience have to do with my point?

Hawkwin
Had a relative in such a facility for 8 years - which is why he is rather passionate about avoiding such if possible.
Print the post Back To Top
No. of Recommendations: 0
As has been mentioned, very poor people cannot afford LTC, but they don't need it because there are no assets to protect and Medicaid will provide the nursing home care. Very rich people have plenty of assets and so don't need LTC because they can afford to pay for their own care and have their spouse be able to live after they are gone. It is mostly those of us in the middle who have just enough for our retirement that need to protect assets so that the surviving spouse has enough to live on after the first spouse passes if that first spouse needs nursing home care.

This is the main reason why we'll be getting LTCi when I retire. While I have no desire to ever need LTC, circumstances may dictate that I can't do anything about it beforehand. I wouldn't want my spouse to live in poverty because of the LTC cost, just as I wouldn't want to either.

Once single for whatever reason, a determination will need to be made to continue coverage. Then it become a matter if protecting assets for an inheritance.
Print the post Back To Top
No. of Recommendations: 2
When you hear that long term care costs $50,000 a year, or whatever it costs in your area, you need to compare that to what a healthy person that age would spend in a normal year since many of their other expenses will stop when they go into long term care.

Personally I live in a moderate cost area and I expect to be spending more than $50K a year in retirement so long term care should not be terribly more expensive than my normal retirement budget.

For a couple it is more complicated since there are lots of permutations but you still need to compare it to their normal costs.
Print the post Back To Top
No. of Recommendations: 1
ResN posts,

I would guess that you might not ever have been in a Medicaid only nursing home...i.e., a nursing home that accepts Medicaid in full payment for the stay. They frequently aren't the nicest places to be, or for family to visit.

</snip>


I think that varies by state. In places like Connecticut and New York where they have strict regulations even the facilities that accept Medicare are in good shape. (That's why nursing home care is so expensive in those states.)

Heck, I even had an aunt in Oregon that lived to 100 and spent 15 years in a nursing home on Medicaid. Facility was in fantastic shape and well-staffed.

I don't doubt that there are horror stories out there, but I haven't observed it based on the four family members I seen in nursing facilities paid by Medicare.

intercst
Print the post Back To Top
No. of Recommendations: 1
Hi ResN,

I don't understand how folks come to the conclusion that the government should somehow protect people from having to use their own money for nursing home stays. Before the taxpayer picks up the tab, the person in need of nursing home care should be forced to exhaust all of their personal funds.

There is *THAT* extreme argument; That everyone should experience purely and exactly what they can personally afford, regardless how plush or brutal it may be. In many ways, I lean in support of that "pure accountability" perspective, at least in principal. Beyond basic principal though, that's a pretty hardline approach.

Then there is "how the real world actually is, today."

I propose that directly collected tax-paid benefits (stuff an individual receives directly and disproportionately from anyone else... i.e. such as individual health care) is functionally a refund of directly paid taxes, which are taken from that individual disproportionately from anyone else (i.e. income, or sales, or activity taxes... versus monetary inflation which is a tax on all cash holders.) They are not a "gift" from the government, nor a reduction from society's purse-bank... but your own money, in refund.

In essence, then... using all legal and structural means to both pay as little taxes as possible, and recover as much tax refunds as possible, is ethical, moral, just and right.

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike, and all do right, for nobody owes any public duty to pay more than the law demands.”
Learned Hand (1872-1961), Judge, U. S. Court of Appeals


Because of this, I believe it is appropriate and wise to use every strategy provided in the tax code (after all, the exemptions & provisions are written into the code intentionally... attorneys *NEVER* add words they don't fully intend) to get as much tax refund to cover any expenses possible.

That's just my 2 cents... and if I can get it matched by tax refunds, I will!

Dave
Print the post Back To Top
No. of Recommendations: 3
When you hear that long term care costs $50,000 a year, or whatever it costs in your area, you need to compare that to what a healthy person that age would spend in a normal year since many of their other expenses will stop when they go into long term care.

The insurance industry does not want you thinking that way. The numbers provided in their marketing "white papers" will carefully pick the highest cost areas. They never reflect the price you can shop for in less costly areas and without all of the expensive bells and whistles. And I've NEVER seen an insurance-sponsored study on the cost of LTC that subtracts out the monthly expenses the elderperson will no longer have.

I helped the family of a client a few years ago with household finances in the transition from a small single family home in a modest but well kept neighborhood in Northeast Portland, to a very nice assisted living facility in Vancouver. When I did the calcs, she was actually paying less per month in the ALF than she was in her own home, when all relevant expenses were taken into account.

And to those who, like their homeowners and auto casualty insurance, hope they never have to use their LTC policy....do you also hope to never use your dental insurance policy? Today's LTCI is not about insurance....its about a form of cost sharing. I haven't looked at all of them, but most of the major insurers are getting out of the true insurance part of LTC by either capping annual benefits or capping payout periods...again like dental insurance. And LTCi does not translate well to other forms of personal property and casualty insurance, as these go year to year with full portability between carriers. IOW, for my auto liability coverage, I'm not making mandatory annual premium payments to an insurer who I'm locked-in to, for automobile liability claims that have a high probability of happening in 20 to 30 years.

BruceM
Print the post Back To Top
No. of Recommendations: 1
While I have no desire to ever need LTC, circumstances may dictate that I can't do anything about it beforehand. I wouldn't want my spouse to live in poverty because of the LTC cost

One of the things us engineers did was to multiply the LTC premium by the number of (estimated) years until the claim, and then compared that total to the coverage cap.

To lots of us, it was looking like the LTC wasn't so much insurance as pre-paying for the benefits.

I'm retired now. State Farm is quoting me $928/mo for a LTC policy with $300/day max benefit, 90 day elimination period, max 5 years of benefits.

So I'd have to pay the first $27,000 (300 * 90). Each month of premium is equal to about 3 days of care. They'll pay lifetime maximum of $547K (300 * 365 * 5).

I think I'd rather retire with $1M or $2M, and then invest that $928/mo rather than give it to an insurance company.

FWIW, the average Social Security benefit is $1200/mo (minus $100 Medicare premium), so you'd essentially be turning over almost all your SS check to the insurance company.
Print the post Back To Top
No. of Recommendations: 2
Rayvt writes,

FWIW, the average Social Security benefit is $1200/mo (minus $100 Medicare premium), so you'd essentially be turning over almost all your SS check to the insurance company.

Not only that, but most forms of private insurance seem to have a 20% to 30% skim rate (i.e., the overhead required to fund fancy office buildings, generous sales commissions, top flight legal help when executives are charged with crimes, etc.)

Does it really make sense to pay an extra 30% for your custodial care just to keep an insurance company CEO in jet fuel?

intercst
Print the post Back To Top
No. of Recommendations: 2
Personally I live in a moderate cost area and I expect to be spending more than $50K a year in retirement so long term care should not be terribly more expensive than my normal retirement budget.

I don't know where you live but even in the moderately priced midwest, such a facility will often cost a lot more than 50k a year - and significantly more for facilities that provide for mental health issues.

I am not telling you to go out and buy a policy. I am encouraging you to research what you might pay otherwise.

http://longtermcare.gov/costs-how-to-pay/costs-of-care/

http://www.completelongtermcare.com/States/

The second link also has some very good information on the Partnership Policy program - now available in all states with reciprocity (that was news to me).
Print the post Back To Top
No. of Recommendations: 3
And I've NEVER seen an insurance-sponsored study on the cost of LTC that subtracts out the monthly expenses the elderperson will no longer have.

And for a single person, that is very relevant. For a couple, not as much since the other spouse will still have their same expenses which include utilities, insurance, food, clothing, etc. on top of the new expenses for the room and board of their nursing home spouse.

I haven't looked at all of them, but most of the major insurers are getting out of the true insurance part of LTC by either capping annual benefits or capping payout periods...again like dental insurance.

Back when I was in this industry, circa 2002 - 2003, all the policies I worked with had such caps. I don't see that as anything new. Perhaps there were some with no limits and no caps but I never saw any.

I also don't see how this is any different than a car or home policy, which both also have caps.

as these go year to year with full portability between carriers.

How so? If you get cancer, you are not likely going to be able to apply to a new LTC carrier. If you get a DUI, your are also not likely going to be able to move your car insurance to another carrier as cheaply or easily - if at all.
Print the post Back To Top
No. of Recommendations: 1
So I'd have to pay the first $27,000 (300 * 90). Each month of premium is equal to about 3 days of care. They'll pay lifetime maximum of $547K (300 * 365 * 5).

No, the 90 day exclusion is because Medicare pays for your first 90 days regardless. You would not pay that $27,000.

FWIW, the average Social Security benefit is $1200/mo (minus $100 Medicare premium), so you'd essentially be turning over almost all your SS check to the insurance company.

Yes, but depending on the specifics of that policy, you would also be protecting anywhere from $547,000 to infinity from medicaid spenddown. And, if you are really retiring with $1-2 mil, how significant is SS to your retirement needs?

Shop around, I bet you can get the same policy cheaper than State Farm - who likely is paying an agent a significant portion of that monthly premium.
Print the post Back To Top
No. of Recommendations: 8
No, the 90 day exclusion is because Medicare pays for your first 90 days regardless.
Not even close.

"Under certain limited conditions, Medicare will pay some nursing home costs for Medicare beneficiaries who require skilled nursing or rehabilitation services. To be covered, you must receive the services from a Medicare certified skilled nursing home after a qualifying (3-day) hospital stay."

"However, the conditions for obtaining Medicare coverage of a nursing home stay are quite stringent.
...
•The care provided in the nursing home must be for the same condition that caused the hospitalization.
•The patient must receive a "skilled" level of care in the nursing facility that cannot be provided at home or on an outpatient basis. In order to be considered "skilled," nursing care must be ordered by a physician and delivered by, or under the supervision of, a professional such as a physical therapist, registered nurse or licensed practical nurse. Moreover, such care must be delivered on a daily basis. (Few nursing home residents receive this level of care.)
* As soon as the nursing facility determines that a patient is no longer receiving a skilled level of care, the Medicare coverage ends. And, beginning on day 21 of the nursing home stay, there is a significant copayment equal to one-eighth of the initial hospital deductible ($148 a day in 2013)."

Medicare specifically does NOT cover nursing home care for just being in poor health.

I've been through this with 2 family members. Everyone in that field is well aware of the Medicare rules, and knows just how far they can stretch them -- and it's not very far.

depending on the specifics of that policy, you would also be protecting anywhere from $547,000 to infinity from medicaid spenddown.
Again, wrong. In this cae, the MAXIMUM that would be protected is $547K, because that's the most the policy will pay. Everything above that is on your dime.

if you are really retiring with $1-2 mil, how significant is SS to your retirement needs?
Insignificant. But that wasn't my point. I was noting that the premium would consume most of your SS benefit.

If you have $1M-$2M, then you don't have much need for an expensive insurance policy that'll only give you ~$500K of benefit. IMHO.
Print the post Back To Top
No. of Recommendations: 0
No, the 90 day exclusion is because Medicare pays for your first 90 days regardless. You would not pay that $27,000

Medicare only pays for those 90 days if you are discharged from a qualifying hospitalization directly to the nursing home. Among other things, a qualifying hospitalization must be for a minimum of 3 days, and beware that many days in the hospital for Medicare patients are actually listed as observational days, and those days don't count towards the 3-day minimum. Just saying.
Print the post Back To Top
No. of Recommendations: 1
A friend of mine had a father with dementia. And a long-term care policy. When the time came to take advantage of that policy, the insurance company refused. The friend had to keep his father at his house for 5+ years until his father died.

http://www.santacruzsentinel.com/localnews/ci_22626721/pebbl...

http://www.nytimes.com/2013/06/08/your-money/fine-print-and-...
Print the post Back To Top
No. of Recommendations: 1
There's a reason why Consumer Reports has written for years that LTCI isn't a good value most of the time.
Print the post Back To Top
No. of Recommendations: 0
A friend of mine had a father with dementia. And a long-term care policy. When the time came to take advantage of that policy, the insurance company refused. The friend had to keep his father at his house for 5+ years until his father died.

This brings up the 3rd leg of why LTCI is truly high risk.

Lets say you have reached a point where you cannot perform two ADLs. You or your spouse contacts the insurer, who sends out one of their own evaluators, who takes his measurements and then two weeks later, a letter arrives denying the claim. What are you going to do? Assuming you are not mentally compromised, you will most likely be physically frail. Will you be able to pick up the phone and begin the battle with the insurance company, by going through the company's appeals process, complaints to the state's insurance commissioner and ultimately, find your own attorney to press your case? Now, I'm not saying that this will necessarily happen, and perhaps the claims process will go smoothly. Uh huh.

But to me, this means all those who elect to carry LTCI, you need to make sure you have a trusted family member, usually the eldest child, who knows exactly the policy you have, what its provisions are and make sure the insurer notifies them with a CC of everything sent to you (most states have this as a requirement).

BruceM
Print the post Back To Top
No. of Recommendations: 2
karenlj wrote A friend of mine had a father with dementia. . . . When the time came to take advantage of that policy, the insurance company refused.

Clearly whoever purchased the policy did a poor job of shopping or else you are not getting the full story.

Gordon
Print the post Back To Top
No. of Recommendations: 9
LTC coverage is a flawed product, yet there is a real need. The problem is that most of the policies don't really give help in the situation where people often need help.

That is, a typical policy has a relatively short elimination period then provides coverage up to a specified amount for some 3 to 5 years.

What I really want is a policy that is cheaper in premiums but provides catastrophic care. That is - I'll pay the cost of LTC for 3 years - I want insurance to cover the cost beyond that. But, that is just the opposite of what policies provide. Instead the premiums are high because what is being covered is the first few years of care.

DH and I fit within that group of people who have enough assets to need to worry about the cost but not so much money to be able to easily handle the cost.

I basically agree with all of the points made by 2gifts. The real risk for a married couple is impoverishing the spouse who isn't in the nursing home.

What scares me is not my spouse needing to go to a nursing home for 3 years. DH's mother was in a nursing for 8 years before her death. We could afford to self-fund a 3 year nursing home stay. An 8 year stay would impoverish the spouse not in the nursing home.
Print the post Back To Top
No. of Recommendations: 3
determinedmom writes,

What I really want is a policy that is cheaper in premiums but provides catastrophic care. That is - I'll pay the cost of LTC for 3 years - I want insurance to cover the cost beyond that.

Actually a product like that would be more like real insurance rather than a "pre-pay plan".

According to the CDC, there are 1.5 million people in nursing homes and only 25% (about 400,000 people) spend more than 3 years there, and 12% (less than 200,000 people) spend more than 5 years. See Table 12 in the report below.

http://www.cdc.gov/nchs/data/nnhsd/Estimates/nnhs/Estimates_...

There are about 50 million people on Medicare, so less than 1% (i.e., 0.80%) spend more than 3 years in a nursing home and only 0.40% spend more than 5 years.

intercst
Print the post Back To Top
No. of Recommendations: 0
I think a strong argument can be made that the same person's immediate family (adult kids) should pay too, at least before the taxpayers are called to pick up the tab.

And once the adult kids have spent down their savings to support their parent's care, where do they find the money to fund their own care? Or even their own retirement?


Jim
Print the post Back To Top
No. of Recommendations: 0
"Under certain limited conditions, Medicare will pay some nursing home costs for Medicare beneficiaries who require skilled nursing or rehabilitation services. To be covered, you must receive the services from a Medicare certified skilled nursing home after a qualifying (3-day) hospital stay."

Thank you for this clarification.

Again, wrong. In this cae, the MAXIMUM that would be protected is $547K, because that's the most the policy will pay. Everything above that is on your dime.

Then the policy you are looking at is not a fully covered partnership policy. That does not make me wrong, that makes your policy wrong. I stated that it could be unlimited. Partnership policies can be unlimited.

http://www.completelongtermcare.com/resources/partnership-lt...

•1. Dollar-for-dollar Asset Protection - For every $1 of insurance benefits paid by a Partnership policy, a minimum of $1 worth of asset is protected. A chart showing effective date of policies with their corresponding State-set dollar amount is used to determine whether the policy you purchased has this type of asset protection.If the maximum benefit of your policy is less than the corresponding State-set dollar amount based on your policy's effective date, you may earn Dollar-for-dollar Asset Protection.
•2. Total Asset Protection - All assets will not be considered in determining Medicaid eligibility. Again, using the chart, if the maximum benefit of your policy is equal or greater than the corresponding State-set dollar amount based on your policy's effective date, you may earn Total Asset Protection. Policies that do not qualify for this type of asset protection will automatically earn dollar-for-dollar asset protection.

---------

Check with your state and see if that policy qualifies for Total Asset Protection.
Print the post Back To Top
No. of Recommendations: 1
Then the policy you are looking at is not a fully covered partnership policy.

Followed that link and it appears to say something different than what you said.
"A partnership long term care insurance program allows individuals who have purchased an LTCi policy and have exhausted the policy benefits, to protect some of their assets from Medicaid/Medical spend down requirements (i.e., the requirement that Medicaid recipients be legally destitute before receiving benefits)."

It appears to be a plan that must be initiated (and funded?) by the state you live in.
"all states are permitted to provide partnership policies"


And it doesn't actually provide any money for nursing home care. It just lets you go on Medicare while you still have some assets left.

No offense, but you appear to be either confused, uninformed, or disingenuous.

===================
I will re-emphasize .... you do NOT want to go into a Medicare-only nursing home. I've seen both kinds (Medicare-only and private pay). It's like the difference between living in the homeless shelter vs. your own apartment.
Print the post Back To Top
No. of Recommendations: 3
No offense, but you appear to be either confused, uninformed, or disingenuous.

Really? No offense?

No offense (I am being sarcastic) your reading comprehension is lacking. I quoted you the specific text that states otherwise. Don't blame me if you don't take time to read it.

You should instead simply thank me for the clarification, as I did you.

I have stated repeatedly that you should look more into what your state provides. Hell, tell me your state and I will even do it for you.

Here is it for Indiana:

http://www.in.gov/iltcp/files/What_You_Should_Know_About_Lon...

How does the Medicaid Asset Protection feature work?
If you initially purchase a Partnership policy with less than the State-set dollar
amount* in benefits, one dollar of assets (dollar-for-dollar) is protected for
each dollar of Partnership policy benefits paid out. If you initially purchase
a Partnership policy with at least the State-set dollar amount* and have a 5%
compound inflation factor, all of your assets (total asset) are protected once
the policy has paid out all benefits.

Can I rely on this asset protection from Medicaid to protect my
assets?
In a word, YES! For example, if you bought a Partnership policy with a
maximum benefit pay-out of $150,800, you could protect $150,800 of your
assets. If you want to protect more or less of your assets, you may select a
policy with a higher or lower benefit pay-out. If you want to protect all
of your assets, you would need to purchase, at a minimum, the State-set
dollar amount of Partnership policy benefits.
For married couples, each
spouse would need to purchase his/her own policy for the greatest overall
protection.

---------------


And it doesn't actually provide any money for nursing home care. It just lets you go on Medicare while you still have some assets left.

I think you mean Medicaid, but yes, that is correct. Some or all.
Print the post Back To Top
No. of Recommendations: 0
One of the things us engineers did was to multiply the LTC premium by the number of (estimated) years until the claim, and then compared that total to the coverage cap.

To lots of us, it was looking like the LTC wasn't so much insurance as pre-paying for the benefits.

I'm retired now. State Farm is quoting me $928/mo for a LTC policy with $300/day max benefit, 90 day elimination period, max 5 years of benefits.

So I'd have to pay the first $27,000 (300 * 90). Each month of premium is equal to about 3 days of care. They'll pay lifetime maximum of $547K (300 * 365 * 5).

I think I'd rather retire with $1M or $2M, and then invest that $928/mo rather than give it to an insurance company.


If I was facing $928/mo for each of us, I'd forgo it too. In my case, the premium starts out at $168/mo for me and $131/mo for my wife (age based). It's a dollar limited policy that amounts to just over 4 years at the maximum daily payout and increases coverage by 5% of the original benefit per year. So at 10 years, we'll be at $300/day.

It's a retirement group policy managed by the state, so there is no overhead for profit in the rates. I've reviewed the actuarial reports on the fund and the plan was solvent in 2009. The 2012 draft report projects it to be underwater. I figure that at most, rates could double. Even if they do, I'd still consider getting it.
Print the post Back To Top
No. of Recommendations: 1
Hi D-Mom,

What I really want is a policy that is cheaper in premiums but provides catastrophic care. That is - I'll pay the cost of LTC for 3 years - I want insurance to cover the cost beyond that. But, that is just the opposite of what policies provide. Instead the premiums are high because what is being covered is the first few years of care.

What you have just described is actually Medicaid coverage (or very close to it. 5 years rather than 3.)

Medicaid has a 5 year look-back for financial qualification, so 5 years after your spendable assets are transferred out of your name you are then covered by Medicaid.

Medicaid will pay for about 16 hours of daily in-home care... so if your asset gift beneficiaries (*trustees of the funds you gifted out of your name) will use those funds to pay for the other 8 daily hours, you can spend your last phase in the comfort of your own home on your Medicaid benefits... rather than with nurse Ratchet at the puke & crap nursing home.

If you want to restrict your personally-paid LTC outlay to just 3 years (rather than the full 5,) there are a variety of ways to accomplish that. The simplest 2 ways are with traditional LTC coverage, or asset-based Critical Care coverage.

With traditional LTC, you can buy only benefit caps sufficient for 1st 2 years (leaving the final 3 of the 5 lookback period to your own pocket.)

With asset-based LTC, you can pay the 1st 3 years out of pocket, and take the benefits only the final 2 years. Since asset-based Critical Care is basically a single-premium whole life contract, you can surrender it when Medicaid kicks in and get your full cash value refunded, minus the outlays for the 2 year's expenses booked, and your tax liability on the interest credits on your cash value.

Helpful?
Dave
Print the post Back To Top
No. of Recommendations: 0
Either one (or both!) of us is confused, or we are talking about different things.

These policies don't provide any money, they just raise the floor on the amount of assets you have before you are allowed to go onto Medicaid.

I'm trying to see how this would work out, and while it's better than nothing, it doesn't seem to provide a whole lot of actual value.

A family with $2M+ doesn't even need LTCi, since they can afford to pay for it out of pocket.

So let's say they have $1M, and one spouse has an ongoing need for LTC. At $300/day for 5 years, their ~$500,000 policy is exhausted, so they have to pay themselves.
They use 500K of their 1M for the next 5 years, leaving them with 500K.
Now the Partnership policy kicks in and that spouse is allowed to go on Medicaid. They get moved from their $300/day care facility to one a lot worse. "you would only receive those services provided by Medicaid in Medicaid approved facilities."

To me, that's a big kicker. Even though your assets are "protected" the ill spouse doesn't get to stay in the nice full-service facility. They must go into a (low level of service) Medicaid facility.
Perhaps they aren't all hell-holes, but the ones I've personally seen are pretty close.

So, the well spouse gets to keep the $500K or $1M of assets (Ind says any policy over $300K protects unlimited assets). But the ill spouse gets dumped into a Medicaid facility.

Your link says, "The average cost of nursing home care in Indiana is more than $70,000 a year". Expensive, yes. But $1,000,000 at $70,000/yr will last for 15 years. Again from the link, "The average length of stay in a nursing home is 2.6 years."

It looks to me like the only group of people where a Partnership policy has any meaningful benefit is people who are have some assets but not a lot. Maybe around $200K-$500k. Their only option is to end up in a Medicaid home. No matter what, they are going to be in a Medicaid in short order. The Partnership policy lets the well spouse keep enough assets to keep them out of poverty.
Poor people, of course, don't enter into the picture. They can't afford LTCi and they don't have any assets to protect from Medicaid.

-the end-
Print the post Back To Top
No. of Recommendations: 1
Medicaid has a 5 year look-back for financial qualification, so 5 years after your spendable assets are transferred out of your name you are then covered by Medicaid.

Medicaid will pay for about 16 hours of daily in-home care... so if your asset gift beneficiaries (*trustees of the funds you gifted out of your name) will use those funds to pay for the other 8 daily hours, you can spend your last phase in the comfort of your own home on your Medicaid benefits... rather than with nurse Ratchet at the puke & crap nursing home.


(*) Provided that those giftee's actually use the funds you gave them for you instead of for themselves. "What do you think, honey? Should we pay for Dad's comfort, even though he is so out-of-it than he doesn't even know his name anymore, or should be buy his-n-hers convertibles?"

Personally, this whole LTCi discussion strikes me as similar to discussions about having Alpo or Beneful for dinner. I don't want to go there, I don't want to figure the best way to manage failure.

I want to grow my assets large enough so that we can afford a pair of 24/7 nubile candy-stipers for me, and Chippendale aides for her, in the comfort of our own house.

I figure with $2M+, we won't ever need to investigate Medicaid homes.
Print the post Back To Top
No. of Recommendations: 2
I wish I lived in Sweden.

AM
Print the post Back To Top
No. of Recommendations: 4
So let's say they have $1M, and one spouse has an ongoing need for LTC. At $300/day for 5 years, their ~$500,000 policy is exhausted, so they have to pay themselves.
They use 500K of their 1M for the next 5 years, leaving them with 500K.


This is the confusion.

Partnership allows you to either protect a specific amount, in this case 500k, from spend down or the entire amount. In your example, the policy would pay out 500k, then you would have to spend down to 500k left in assets before Medicaid would step in.

If you had the state min for Total Protection, once the policy lapsed, all assets would be protected.

To me, that's a big kicker. Even though your assets are "protected" the ill spouse doesn't get to stay in the nice full-service facility. They must go into a (low level of service) Medicaid facility.
Perhaps they aren't all hell-holes, but the ones I've personally seen are pretty close.


I'm not championing Medicaid facilities. I am also not as concerned about the person in the facility (who may not have their full mental capacity) as I am about the person that remains at home and otherwise might have to significantly sacrifice their standard of living.

In otherwords, I see LTC as a means to insure the standard of living for the healthy spouse, not for the sick spouse. There is very little reason for an individual (vs. a couple) to get LTC unless they have dependants or they are determined to pass assets to heirs (and there are likely better ways to do that).
Print the post Back To Top
No. of Recommendations: 0
Ray,

I want to grow my assets large enough so that we can afford a pair of 24/7 nubile candy-stipers for me, and Chippendale aides for her, in the comfort of our own house.
I figure with $2M+, we won't ever need to investigate Medicaid homes.

I'm so with you on this, and can't believe I'm the only rec (so far.) FORTUNATELY, I'm just about there for myself & DW... with plenty of time (knock on wood) to add wood to that fire & put the shortfall risks deep into the rearview mirror entirely.

Unfortunately... that's not the case for my Mom, or the parents of lots of my clients... so 'going there' with the sharp planning is a good thing to know how to navigate.

Dave
Print the post Back To Top
No. of Recommendations: 2
Thought this CBO might be of interest on this subject.
Rising Demand for Long-Term Services and Supports for Elderly People
http://www.cbo.gov/sites/default/files/cbofiles/attachments/...

First, I direct to page 8-exhibit 2[% of adult population that is elderly]

2010:17%
2030:25.2%
2050:26.4%

Then page 19-exhibit 11[current rate of institutionalization-2010]
age 65 to 74: 1.3%
age 75 to 84: 3.5%
age 85 & up: 13%

And finally page 25-exhibit 16[medicare/medicaid spending for long term care]
Not surprising the spending doubles over the next decade due to the size of the boomer generation.

http://www.reuters.com/article/2011/11/03/us-usa-retirement-...

John Bogle, the 82-year-old founder of Vanguard Group, a mutual fund powerhouse, called the U.S. retirement security system a "real mess," saying it was in need of deep-rooted reforms.

He also said the current average balance in Vanguard's 401(k) retirement savings plans was
only about $26,000, and that rose to only about $60,000 for the median account of older people, far too little for anyone to build a retirement on.

I think it would behoove anyone to consider that medicaid may no longer have the financial resources to fund long term care and that everyone is on their own to fund their long term care.
Print the post Back To Top
No. of Recommendations: 2
tjscott0 writes,

I think it would behoove anyone to consider that medicaid may no longer have the financial resources to fund long term care and that everyone is on their own to fund their long term care.

By 2030 I suspect we'll have a lot of cheap, Chinese-made home-care robots that will allow many elderly people to remain in their homes.

intercst
Print the post Back To Top
No. of Recommendations: 1
This is in response to D-Mom and the Fools who have already replied to her statement:

"What I really want is a policy that is cheaper in premiums but provides catastrophic care. That is - I'll pay the cost of LTC for 3 years - I want insurance to cover the cost beyond that. But, that is just the opposite of what policies provide. Instead the premiums are high because what is being covered is the first few years of care."

You may be able to find a LTC policy with a 3-year exclusion period. We bought one last year from Mutual of Omaha with a 365-day exclusion period (benefits would start on 366th day).

That said, we're not renewing because it's just too expensive and not our best option. If worse comes to worst, we will be able to cover a good 5 years with a reverse mortgage. Is anyone else here using that as LTC insurance?

Ms C
Print the post Back To Top
No. of Recommendations: 2
"That said, we're not renewing because it's just too expensive and not our best option. If worse comes to worst, we will be able to cover a good 5 years with a reverse mortgage. Is anyone else here using that as LTC insurance?"



My Mom always said that her paid off house was her long term care policy. We had been instructed to sell it if she had to go into long term care and she made sure that we had all the right paperwork to sell it if we needed to.

My dad had passed away before her and even though her house was not real expensive, the numbers worked out so that her home equity, and social security, could have provided for her care for many years without depleting her other resources if it had been needed.

It is less liquid than stocks or bonds but home equity is really just part of someone's net worth that can be used for LTC.

This does not work quit as well if a spouse is still alive that might need the assets to live on for a long time.

Some people that are moderately well off know that they can afford long term care under the most probable circumstances, and if they go broke paying for LTC then they would have Medicaid (with all its issues) so the real reason to buy LTC insurance are;

1) To not impoverish a surviving spouse.

2) To ensure a better quality of care

3) To not deplete the estate so a large inheritance can be left.

If you are not concerned about leaving a large estate, which I agree with, and if you don't have a surviving spouse then using home equity to pay for LTC would help to be able to afford better care so there would be less need to buy insurance for that.
Print the post Back To Top
Advertisement