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I know that I am only 66, but has anyone figured out how ridiculously expensive a nursing home is?
I just checked and it cost 346 dollars a day in 2014 for a nursing home in Massachusetts. That is close to $11,000 a month. I don't know anyone who could afford that.
Has anyone done any research on this subject?
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A lot of people cover this with long term care insurance.

From what I've read, whether LTC make sense depends on what the couple has in assets. If they have a small amount, and that number varies depending on who is writing the article, they spend the assets down and then depend on Medicare. If they have a lot in assets, again a variable number but generally $3M - $5M+, they self-insure and are unlikely to run out of money. LTC seems to make the most sense for the people in between.

The problem with LTC is when to buy it. Buy it too soon and you spend a lot of money before you need too even though the rates will be lower. Try to buy it too late and you may not be able to find an insurer who will sell it to you at a price you can afford or even at all.

We bought ours when we were 59. I was still teaching and the NEA offered a good middle-of-the-road policy through John Hancock. With good luck, we'll lead long full lives and never need it or any of our other insurance policies.

PF
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The problem with LTC is when to buy it. Buy it too soon and you spend a lot of money before you need too even though the rates will be lower. Try to buy it too late and you may not be able to find an insurer who will sell it to you at a price you can afford or even at all.

The other issues are:
1.) Will the policy be affordable until it is needed?
A problem is that as the premiums increase and discretionary income decreases with age, it may not be possible to continue to pay the premiums
2.) Will the policy cover enough to be useable?
To little coverage and the policy is useless
To much coverage and the policy maybe unaffordable
3.) Will the policy be maintained?
I have seen two issues:
as early dementia increases, policy holders either forget to pay the premium or become annoyed at it cancel it
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"I know that I am only 66, but has anyone figured out how ridiculously expensive a nursing home is?
I just checked and it cost 346 dollars a day in 2014 for a nursing home in Massachusetts. That is close to $11,000 a month. I don't know anyone who could afford that.
Has anyone done any research on this subject? "

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Keep in mind that nursing homes are a lot like hospitals used to be -
they push people out into either assisted living or into hospice
care as soon as the immediate nursing and therapy needs allow.
Assisted living costs - while not inexpensive - are much less than
nursing homes. Generally, the nursing staff is more limited and
there is a greater emphasis on providing living assistance - not
nursing assistance.

Howie52
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I just checked and it cost 346 dollars a day in 2014 for a nursing home in Massachusetts. That is close to $11,000 a month. I don't know anyone who could afford that.
Has anyone done any research on this subject?


I just happened to run across one of the old statements from FIL's nursing home, which was in MA, and it was $13,200 per month for him back in 2010. He could afford it because he was on Medicaid, so in effect, the taxpayers paid for his care.

For folks like FIL who have no assets, Medicaid is the answer to how nursing home care is provided. For folks with lots of assets, they can afford to self-insure and pay it themselves. For the vast majority of us in the middle, we do things like buy LTC policies (DH and I have done that), or hope for the best.

In our case, I wanted the LTC policies to protect the assets so that one of us would not leave an impoverished spouse because of nursing home care needs for the other. It costs $3600 per year for both of us, and the way I look at this is the same as homeowners insurance. I have it, and hope that I never need it.

An argument can be made that it is better to invest that $3600 per year and use the investments to pay for nursing home care, but I prefer to hedge my bets here and be sure that we are reasonably covered. If I were single, I might make a different decision because I wouldn't care if all my assets had to be used to provide my care leaving my heirs with nothing. I figure that my assets are there to be used for me, and anything left to heirs is a bonus for them.

So I think there are a lot of factors to consider, starting with if you are married or single, what you have for assets, general health and family history etc., but there are ways to provide such care if you run out of assets (Medicaid) and so you are generally not left with no care.

But my preference is to have some choices around my own care, and for that, I would prefer to be paying for it myself, and so have an insurance policy to help.

Others may have different plans and opinions, but this works for us.
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Generally, the nursing staff is more limited and there is a greater emphasis on providing living assistance - not nursing assistance.

Howie52


Nursing home is a general term that is casually used for both skilled nursing facility and assisted living.

Nursing care and custodial care are different. BIL was recently released from skilled nursing care because it was just out of ICU. It was no longer useful for him to be in a hospital, but needed more than custodial care. My MIL is descending into dementia, but otherwise her health is good. She needs protective custodial care, but not nursing.
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In our case, I wanted the LTC policies to protect the assets so that one of us would not leave an impoverished spouse because of nursing home care needs for the other. It costs $3600 per year for both of us, and the way I look at this is the same as homeowners insurance. I have it, and hope that I never need it.

An argument can be made that it is better to invest that $3600 per year and use the investments to pay for nursing home care, but I prefer to hedge my bets here and be sure that we are reasonably covered.


I see two major issues with LTC policies:
1.) Premium increases
Premiums increase based on the class and not the individual. Still there are going to premium increases, and the amount is unpredictable.
2.) Insufficient coverage
Too little and the policy is useless. Unless, you have the assets to make up the difference between the cost and the policy benefit, the policy is useless

Most policies are only for 3 or 5 years. New life time policies have been discontinued, and the premiums for the existing lifetime policies have experienced significant premium increases.
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I see two major issues with LTC policies:
1.) Premium increases
Premiums increase based on the class and not the individual. Still there are going to premium increases, and the amount is unpredictable.


Agreed that premium increases can be an issue, but as you note, these are raised on the class. We've had our policies for almost 10 years, and are still paying the same premium.

2.) Insufficient coverage
Too little and the policy is useless. Unless, you have the assets to make up the difference between the cost and the policy benefit, the policy is useless


I can't speak for other policies, but when we got ours, we opted to get enough coverage, based on the average cost at the time, so that we would not need a lot of our assets to cover the difference. We took the time to research the average costs, and the policy increases with inflation. That may not be enough, but it is still a lot better than nothing, and so this is something that people need to investigate.

Most policies are only for 3 or 5 years. New life time policies have been discontinued, and the premiums for the existing lifetime policies have experienced significant premium increases.

Average stays are for under 5 years, and for most people, that will be sufficient. My fear is that I will have Alzheimer's and need longer care, so we do have one that is life-time. However, as noted above, our premiums have not increased since we purchased them almost 10 years ago. Perhaps others have different experiences.
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But my preference is to have some choices around my own care, and for that, I would prefer to be paying for it myself, and so have an insurance policy to help.



I thought LTC was much more expensive than what you are paying. I will definitely ask my husband to look into it. My MIL had it for years but I thought she was paying $1,000 a month at the time. Possibly I was wrong. Hubby's life insurance policy will not be affordable after he reaches the age of 70 so maybe we will just look into LTC insurance.
In order to get Medicaid to pay for the cost of a nursing home you have to get rid of all your assets years in advance and your income cannot exceed roughly $2,000 a month either.
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In order to get Medicaid to pay for the cost of a nursing home you have to get rid of all your assets years in advance

Not exactly. If you are giving away assets to qualify for Medicaid, there is a look back period. If you spending your assets, then the look back period does not apply.
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Hubby's life insurance policy will not be affordable after he reaches the age of 70 so maybe we will just look into LTC insurance.

I know you are retired, so I admit that I am surprised that you still have life insurance on either one of you. We are in our late 50's, and we cancelled our term life insurance policy last year as the kids are finished with college, we have reasonable assets, and we don't really need to replace either of our income streams at this point if something happens to one of us. So it was very easy for us to get rid of life insurance as it had always been the plan anyhow.

In my mind, I have much more use for LTC than for life insurance.

In order to get Medicaid to pay for the cost of a nursing home you have to get rid of all your assets years in advance and your income cannot exceed roughly $2,000 a month either.

This is not quite accurate. If you plan to give away your assets, then there is a 5-year (?) look-back period. This is to prevent people who have assets from giving them all away to their heirs so that Medicaid can pay for their medical expenses. I actually have no problem with this as Medicaid is supposed to be used to provide medical care for those people who are too poor to be able to provide it for themselves, and it is paid by our taxes. Medicaid is not supposed to be used by someone who has/had assets and wants to be able to give their money to their heirs so that they can then get free medical care on the taxpayer's dime.

If, however, you need medical care and spend down all your assets to provide that care, then Medicaid would kick in and there is no need for a lookback period.

Medicaid allows you to keep your house, even if you are in a nursing home, although once you die and it is sold, they have a lien on the house (and all other assets) to get reimbursed. If there is a spouse, then the spouse can remain in the house, and the lien won't generally kick in until the spouse dies or the spouse decides to sell the house, at which point Medicaid will want their money back.

Medicaid allows for final expenses, legal fees to settle the estate including executor fees and some medical expenses or nursing home expenses for the final days. Beyond that, anyone else stands in line behind them if there is anything left.

Medicaid also allows the spouse to have a car, and up to $2000 in cash in the bank. They recipient can also keep something like $90 per month (I don't remember exactly) from their pension or SS for personal expenses.

From what I know about you, I suspect you have enough assets to pay for nursing home care, but it could potentially leave a spouse without much, and so for that reason, you may want to look at a LTC policy. But you may find that you have enough to self-insure, and don't want a policy, or as you have suggested, it may make more sense to use the life insurance premium money for a LTC policy instead.

It is good to be asking such questions to understand what makes the most sense in your own situation.
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