Quotes from:The Spectre of Long Term Care By TMF Pixy"One person in three who turned 65 in 1990 will stay a year in a nursing home. One person in 10 will stay five years or more." (National Association of Insurance Commissioners)"In 1994, 7.3 million Americans needed long term care (LTC) services at an average cost of nearly $43,800 per year. By 2000, this number will rise to 9 million Americans at nearly $55,750 per year, and due to inflation, by 2060 it will skyrocket to 24 million Americans paying over $250,000 per year to receive long term care." (Long Term Care Insurance National Advisory Council)"Recent studies report that two of every five people age 65 and over will enter a nursing home and stay an average of 2.5 years." (Life Insurance Selling, December 1995)If I understand the above statements correctly, I have at least 2 in 3 chance of saving at least $55,750 for no LTC after I reach 65 and a 9 in 10 chance of not staying 5 years or more and saving $278,750 plus. If I don't enter into LTC after 65 my average saving of no LTC is $139,275. I believe that the real question should be, “Can my portfolio afford this expense and probably my last expense?” Mine can. I believe I'll keep my money fully invested and self insured.Vagabond
The Spectre of Long Term Care By TMF Pixy"One person in three who turned 65 in 1990 will stay a year in a nursing home. One person in 10 will stay five years or more." (National Association of Insurance Commissioners)Recently I had reason to discuss long term care with an attorney specializing in Elder Law and he quoted very different sounding statistics. There was some figure like 1 person in 3 or 4 would go into a nursing home at some time. But that something like 90% of those entering the facility would leave before 90 days. The two largest "reasons" for leaving the nursing home were death and sufficent recovery to return to the patient's previous living arrangement.On the surface these two sets of "facts" seem in conflict. I am wondering how the projections were made for the current 65 years olds. For example, was there a factor for increased life expectancy? Certainly 90 year olds are more likely to have medical problems them 70 year olds.
TwoCybers....I believe that the most significant factor in your post is: "But that something like 90% of those entering the facility would leave before 90 days. The two largest "reasons" for leaving the nursing home were death and sufficent recovery to return to the patient's previous living arrangement." I have read these same statistics on one of the boards on the Fool.I'm having difficulty justifing the cost of the LTC insurance. I like to change your stats just a bit. You have only a 10% chance of spending 91 days or more in a LTC facility. I just think that with those kinds of odds the insurance companies are going to make a killing.Leaning toward no LTC insuranceVagabond
Vagabond, I think you should do a little more research before making a final decision. Both of my parents ended up in nurseing homes which covered a span of 7 years. The annual cost rose from $30,000/yr. to just over $37,000/yr, during that time. Of course, you know your financial situation better than anyone else; but, what if something happened to you were you were unable to manage your portfolio as you do now, or the Bear shows up in the market place. Just look into it more and get some LTC quotes. You might just be that 1 in 10 thats in a home 5 years or more.
Vagabond -- the reason for my post was not to suggest you get or not get LTC insurance. Rather I am thinking of that old sage -- figures never lie, but liars figure. So what is the truth? It is very difficult on the surface to reconcil the two statements. Clearly if my lawyer is correct, I don't want it. If on the other hand the insurance commisioners are not twisting figures, then I probably will take a different viewpoint.Insurance is just insurance. Since the sales people and the company get money, clearly the amount of the premiums must exceed the collective cost of care. The real issue is if I am one of those people who is 100% in a nursing home for 2000 days at $200/day, can I handle the costs without insurance or medicade? If yes, then the insurance is not so good. If all the assets are gone, my wife might not have such a nice retirement.
Two things,You need to read the study by the New England Journal of Medicine on their long-term study. The other thing that you have done, like most clients I have helped, is to initially justify not needing long-term care because "its not going to happen to you". Then you can say you do not need it. The second thing to keep in mind is that you have not made this concious decision with your health insurance, which you probably use only once or twice a year, nor your auto insurance, nor your homeowners insurance. Even if it was not the law to have these coverages you would still keep them, because you see car accidents all the time and house fires on the news daily. If this is your way of dealing with it, albeit, expensive then that is good for you. Just keep in mind that nursing facilities are like insurance companies, they are in business to make money. Once you get past that fact, or statistic, all you have to decide is who do you want to pay for your care.
Vagabond,Wow, interesting post (facts?). This sounds like a very good sales pitch from an official "Insurance Council" (read Insurance salesperson) to me. "In 1994, 7.3 million Americans needed long term care (LTC) services at an average cost of nearly $43,800 per year. By 2000, this number will rise to 9 million Americans at nearly $55,750 per year, and due to inflation, by 2060 it will skyrocket to 24 million Americans paying over $250,000 per year to receive long term care." (Long Term Care Insurance National Advisory Council) First, this is 2000 not 1994 and my mother, who is at miximum care rate, is paying $49,000 a year, not $55,750. Second, I am 50 and just retired. If, I make 2060 I would be 110 years old. I don't think I will make it or will have to worry about paying "over $250,000 a year" in LTC. If I did make it, my current annual calculated retirement needs of $50,000 today, due to inflation , would be about $700,000. If I don't intend to die broke (Iknow, many people do) I would probably commit myseof early just for the cheap rent and good maid service. Seriously, I could easlily afford the cost. Remember I would not have housing, auto, meal, travel, etc. costs to worry about anymore. I believe that any Foolish investor, with a reasonable retirement plan, can self insure this situation. Second, get real, nobody knows what this world will be like in 2060. Think back. In 1940 we didn't even have nursing homes, medicare insurance. SS was brand new. A trip to Minneapolis for my parents and grandparents (150 miles) was a 3 day trip. There is no way these people have a crystal ball that can predict what life will be like in 2060. I believe that the real question should be, “Can my portfolio afford this expense and probably my last expense?” Mine can. I believe I'll keep my money fully invested and self insured. I agree and if you can't and still have time, work longer, expend your portfolio, and self insure.Regards,Paul
Just a note about LTC from one who is on that road. I'm 56 and have been paying a nursing home $4,000 a month for the past 1.5 years for my 59 year old husband. I will never qualify for Medicaid. Most residents are on Medicaid but the level of care is the same for all. It is an excellent facility. After an early retirement at 52, I went back to work to keep from touching the investments and from boredom. And a bit of unsolicited advice, looking back, I should have purchased LTC insurance because Parkinson's and Alzheimer's was prevalent in his family. By the time he was diagnosed with PD, we couldn't get insurance. Thus, I would suggest if PD or AD is historical (mother, father, grandparents) in the family, get the insurance for sure. Or if either disease is suspected, get the insurance before diagnosis is made by a medial doctor.
Thank you so much for sharing this information with us I appreciate your honesty and being forthright with this experience, unfortunately, many people reading this will feel exactly how many people do who end up in this situation, they thing it will never happen to them. Unfortunately, to half of those reading this it will. You cannot hide from this issue. I have printed your story to share with my clients and I appreciate what you have done to help people THINK. As for you it is not too late to have a policy I hope, I do hope that you have taken one out. At your age the premium as well as the level of coverage should be quite attractive and will guarantee against draining any assets should you need care. Please let me know how things turn out and thank you again.Jim Adams
The most commenly used feature of LTC insurance is the provision for "Home Care". Most people as they age will have several instances where they do need nursing care and with LTC insurance they can be at HOME rather than hospital or Nursing home, after a stroke, By-pas or broken bones.The liklyhood of nursing home is as you said about 10%
I have read the postings on LTC with a great deal of interest, not only for what I should do myself (I'm 55)but mostly for my mother who is 85 but in good health. She doesn't need a nursing home but she will probably need independent or assisted living. The question is, what happens if she runs out of money after a few years? I know most if not all of these places are private so would they kick her out? She doesn't live in the States right now but would like to come back because she feels lonely. I would appreciate any information provided.FunkyHippy
Greetings, FunkyHippy, and welcome. You wrote:<<I have read the postings on LTC with a great deal of interest, not only for what I should do myself (I'm 55)but mostly for my mother who is 85 but in good health. She doesn't need a nursing home but she will probably need independent or assisted living. The question is, what happens if she runs out of money after a few years? I know most if not all of these places are private so would they kick her out? She doesn't live in the States right now but would like to come back because she feels lonely. I would appreciate any information provided.>>A strictly private facility that does not accept Medicaid could indeed eject someone who runs out of money. At the present time I know of no state Medicaid program that authorizes coverage for independent living facilities, but most now do so for assisted living. Most of the latter are licensed by the state and approved for Medicaid. As such, they cannot deny service to persons on Medicaid.Regards..Pixy
OOOPS! I should have said an assisted living facility approved for Medicaid cannot deny service to someone on Medicaid if that person was already in that facility prior to becoming eligible for Medicaid.Regards..Pixy
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