Long Term Care Insurance

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martincmartin
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Long Term Care Insurance

Post by martincmartin »

I'm 52 and about to retire. Should I get long term care insurance?

On the one hand, getting insurance for a big expense makes sense, and long term care can be a big expense.

On the other hand, LTC insurance seems like a relatively new kind of insurance. I hear many insurance companies left the market since the payouts seemed to be higher than expected, so they were losing money. Then the regulators allowed companies to raise rates -- a lot. Going forward, who knows what will happen.

Also, there are apparently lots of terms and conditions. It may not cover the first N months of stay, but that might be from when you notify the company of wanting to use the benefits, not when you first enter long term care. Also, new types of care that may become popular, even standard, after your insurance contract was written, may not be covered. I believe there were cases of this in the past, for "memory floors" of LTC if I recall correctly.

So all of this can get confusing, and there's a good chance that, by the time I need long term care, it won't be me sorting all this out, but my kids. They may not have the aptitude or patience to read through all the fine print and make sure the LTC they get me is what my insurance will cover.

So I'm torn between getting it or trying to self insure.

How have others approached this decision? Any way to think about it to help me?
ROIGuy
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Re: Long Term Care Insurance

Post by ROIGuy »

If you do a search on LTC here, you will find plenty of topics/posts regarding this issue.
chazas
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Re: Long Term Care Insurance

Post by chazas »

Lots of threads on this. You pretty much just have to get quotes, see what they cover, and then weigh and balance to see if it’s worth it to you. For many it’s not with today’s policies.

I have a good very old policy that is inflation adjusted and is completely paid at age 65, you better believe I’m keeping up with that premium.

My mom has one she’s been paying on for a long time - she’s 89 and just moved to assisted living. The facility is taking care of making all the claims, so that part isn’t difficult for us. But given it’s not inflation adjusted and covers only about 1/3 of her monthly fees, but the premiums have gone up a lot over the years, it’s probably a wash.
smitcat
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Re: Long Term Care Insurance

Post by smitcat »

"How have others approached this decision?"
- we researched LTCi on our own
- we recorded all of the 'pros' and 'cons' of LTCi that would apply to us
- we utilized the pros and cons to reasonably estimate the value at various future times
- we 'added' some pros and cons that are NOT financially measurable
Then we made our decision(s) - hope this helps
fortunefavored
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Re: Long Term Care Insurance

Post by fortunefavored »

Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
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willthrill81
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Re: Long Term Care Insurance

Post by willthrill81 »

As already noted, there have been many prior threads on the topic.

My take is that those with substantial portfolios, certainly $2m or more and very possibly half that much, and a paid-off home can very reasonably self-insure the financial risk of LTC. Note that self-insuring LTC requires both spouses to be willing to spend down several hundred thousand dollars if a lengthy LTC event occurs, leaving enough for the well spouse.
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Beehave
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Re: Long Term Care Insurance

Post by Beehave »

We went through this around 2004. We decided to self-insure, and did so pretty much for all the reasons you cited.

In my case, I was a couple of years older than you at the time, and leaving a job with a pension that did not increase much by delaying, so I was taking it immediately. I also planned to continue working, which I did for four more years. We would not have been in a position to self-insure without that.

We used the pension income during those four years to open a brokerage account intended purely for LTC or any other future high med expenses not covered by insurance. We also contributed periodically after those four years. Nearly all went into low cost index funds, with some in money market both for liquidity and dry powder. Since we haven't needed the liquidity, the money market funds have been primarily used as dry powder when the market dipped severely, and we've really been very lucky relative to sequence of returns. The accounts have grown and we now have more money there than the policy would have covered. If we never use it for LTC or med issues, it will probably just go in whole, with step up benefits to our kids. If we did have to use it, I do not know if we would have been better off with the LTC policy we considered back in 2004 and decided not to opt for because of the concerns about exclusion periods, rate hikes, ability of insurer to pay in the future, complex and possibly subjective terms etc.

Probably sounds good so far, and in fact we are very comfortable based on our overall circumstances with our choice. However, there's more to the story.

For one thing, if the market tanks severely, our account will shrink accordingly. So we keep some other liquid funds as a reserve to tide us over if LTC expenses do come when the market happens to be tanked. How you invest your self-insured funds and what asset allocation (if held separately or considered part and parcel of your whole allocation) are issues to consider.

Second, DW has developed issues that in fact may require assistance in the future. The costs may be high, and at this point this is no longer just a faint future possibility. Our division of labor has already shifted some because of her condition. My feeling is that for better or worse, if and when the need for heavy duty assistance arises, I will probably delay getting outside assistance and take on heavier lifting before getting assistance than I otherwise would if we did have insurance. Or it may work the other way - - that I will engage assistance sooner because with a policy I might wait until exclusion periods end or until something becomes clearly bad enough to meet the insurance company's coverage condition. In any case, this is a difference between self-coverage and insurance to consider.

Third, and completely unanticipated during our initial considerations, it has occurred to us that if we do incur significant LTC expenses, it will probably be better to cover them out of our IRA/401K accounts than out of our brokerage account. Under current IRS policies LTC expenses may well be tax deductible. That would mean that IRA funds could be withdrawn with no taxes ever having been paid on them. Under current policies, if we could cover LTC expenses out of our IRAs, and if we did not need to touch our brokerage account, the brokerage acc't could go to our kids on our demise with step up, and the taxes on IRAs would have been absorbed by deductions for LTC expenses.

There are lots of moving parts in the LTC vs. self-insure decision. The moving parts involve future personal health and financial conditions, future insurance company financial conditions and policy decisions, future economic conditions, and future tax policies. There are lots of unknowns and the decision really depends a lot on individual circumstances. So the choice is not an easy one.

In retrospect it would have been possible for us to buy some LTC coverage and then drop it when we started to feel confident we had enough to self-insure, or we could have purchased a a base level of LTC insurance and kept it "forever" while slowly self-insuring on top of that for future inflation. But because of changes in employment we felt rushed, and I don't think we considered all the possibilities carefully. We looked at the insurance versus self-insurance decision as all or nothing.

So this recitation of our decision process and experience is neither intended as a model of how to plan intelligently nor a specific recommendation. It is intended to be informative.

Best wishes to you in your decision and for the future.
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martincmartin
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Re: Long Term Care Insurance

Post by martincmartin »

Beehave wrote: Thu Jan 27, 2022 11:31 am We went through this around 2004.
Thanks for your post, it is really helpful to understand what someone else has gone through, see how they look at it, and various trade offs that I haven't even thought of.

And sorry to hear about your wife. It must be tough on you, supporting her in a time like this.

Thanks again.
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JoeRetire
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Re: Long Term Care Insurance

Post by JoeRetire »

martincmartin wrote: Thu Jan 27, 2022 8:11 am I'm 52 and about to retire. Should I get long term care insurance?
That's something only you can decide. You might want to speak with an insurance broker who deals with LTCi so you can understand the options an the premiums.
Going forward, who knows what will happen.
Most states have far tighter control over LTCi that they used to.
It may not cover the first N months of stay, but that might be from when you notify the company of wanting to use the benefits, not when you first enter long term care.
I assume you mean the "elimination period". That is something you choose when you purchase the policy.
So all of this can get confusing, and there's a good chance that, by the time I need long term care, it won't be me sorting all this out, but my kids. They may not have the aptitude or patience to read through all the fine print and make sure the LTC they get me is what my insurance will cover.
If your family isn't capable of understand any insurance then you shouldn't buy it.
So I'm torn between getting it or trying to self insure.

How have others approached this decision? Any way to think about it to help me?
What is the size of your portfolio?
If it's small enough, then you will end up on Medicaid anyway, so don't buy a policy.
If it's large enough, then you can just pay for your care out of pocket.

It's the middle ground that's a tough choice.

My wife and I have policies. We don't want to be a financial burden on our children, no matter what.
Your mileage may vary.
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Chicken lady
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Re: Long Term Care Insurance

Post by Chicken lady »

We have LTC policies. Have had them for about 12 years with no rate increases.

We studied the potential costs and concluded we can afford to pay 1/2 of the likely costs for in-home services so we bought the level of service that we estimate would cover just that amount, on average. Of course, it's all unknowable but my mom lived with us for several years before her passing so we have a pretty clear idea of the issues of hiring help (time and money, and intensity of need for example).

By not assuming complete care will be needed brought our costs for the insurance down. If we need to pay more out of pocket we'll be able to but actually hope we don't need to do that or even use the LTC policies.

Do your homework. Good luck!
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Re: Long Term Care Insurance

Post by Wannaretireearly »

Good thread. Following for both for myself and a parent.
For LtCi, Is there a recommended service like select quote for life insurance?
Seems pretty random how to navigate this.
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Re: Long Term Care Insurance

Post by willthrill81 »

Wannaretireearly wrote: Thu Jan 27, 2022 7:03 pm For LtCi, Is there a recommended service like select quote for life insurance?
Seems pretty random how to navigate this.
Not to my knowledge. In reality, there aren't that many companies still selling LTCi. You can check with your state's insurance commissioner's office to see which insurers are still licensed to sell it in your state.
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Watty
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Re: Long Term Care Insurance

Post by Watty »

martincmartin wrote: Thu Jan 27, 2022 8:11 am How have others approached this decision? Any way to think about it to help me?
My Mom survived my Dad and always said that her paid off house was her LTC insurance. She also made sure that my siblings and I had the paperwork we would need to sell the house if she needed LTC and strict instructions about putting her in the best facility in the area.

She was in the midwest and her house was not terribly expensive but her math was sound since with her Social Security, normal retirement budget, and the home equity she could have afforded even a high level of LTC for a very long time.

Using our home equity in our paid off house for LTC is our basic plan too.

You need to keep in mind that if you are single or only one spouse is surviving when LTC is needed then most of your other expenses will stop. In that case you mainly need to be concerned about the gap between your normal retirement budget and what you need for long term care.

For me the biggest risk is that LTC will be needed while both my spouse and I are both surviving so the other costs would not stop. Even then we could still tap the home equity with a reverse mortgage or more likely by selling the house and having the other spouse move into an apartment.

Something you should do is to consider what LTC costs in your area, you can check this web site to see that it says.

https://www.genworth.com/aging-and-you/ ... -care.html

You also need to keep in mind that "long term care" is a terrible term since it covers different levels of care. The assisted living is a lot less expensive than higher levels of care. When someone says they had a relative in LTC for five years they may mean that they were in assisted living for four years and a skilled nursing facility for one year.

If someone is getting $40K in Social Security and they are in LTC for five years then that will also fund $200K of the cost of LTC.

I happen to live in an area where the lower level of assisted living costs are below average, according to that web site it averages $48K a year. If only one of us is surviving when assisted living is needed then our costs could actually go down since we are budgeting to be able to spend $60K+ a year in retirement.

When a skilled nursing facility is needed that website says that it costs about $91K a year here so there is a gap of $31K a year, or a bit more with some costs that did not stop when a single survivor move into nursing care. We could handle that for a long time then go onto Medicaid if we needed to.

Again, the big risk for us is that LTC will be needed while we are both still alive. If both of use are surviving then the other spouse may be able to help delay the other spouse needing to move into LTC.

If that happens then the statistics show that it even in a memory care unit the typical stay is only few years and we could handle that with some significant belt tightening.

Our plan is not 100% bulletproof but even with LTC insurance the limited coverage would be a problem in the worst case scenario where someone needs LTC for 10+ years.
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JoeRetire
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Re: Long Term Care Insurance

Post by JoeRetire »

Wannaretireearly wrote: Thu Jan 27, 2022 7:03 pm Good thread. Following for both for myself and a parent.
For LtCi, Is there a recommended service like select quote for life insurance?
Seems pretty random how to navigate this.
I recommend Accuquote.

They did a great job finding several plans for us to choose from. Then, when my wife's health assessment was such that it took her out of the top health category, they recommended a different provider that would be less expensive.

We have a good plan that meets our needs with no increase in premiums for the past 8 years.
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teacher
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Re: Long Term Care Insurance

Post by teacher »

We bought LTC 18 years ago. Since then, our policy has changed hands three times and increased premiums once. The original plan brochure states home care is an option, and in some cases, family may provide non-medical care at home. As my family has kept our elderly at home to the end, we signed the papers. Now, it's unclear whether our current insurance company would honor that stipulation since the contract is not as boldly stated as the brochure. If we had to do over again, I think we would self-insure because there are too many unforeseen glitches. In fact we don't feel "insured", but rather hopeful we will get lucky.
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Re: Long Term Care Insurance

Post by Wannaretireearly »

JoeRetire wrote: Fri Jan 28, 2022 6:00 am
Wannaretireearly wrote: Thu Jan 27, 2022 7:03 pm Good thread. Following for both for myself and a parent.
For LtCi, Is there a recommended service like select quote for life insurance?
Seems pretty random how to navigate this.
I recommend Accuquote.

They did a great job finding several plans for us to choose from. Then, when my wife's health assessment was such that it took her out of the top health category, they recommended a different provider that would be less expensive.

We have a good plan that meets our needs with no increase in premiums for the past 8 years.
Thanks Joe!
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Wannaretireearly
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Re: Long Term Care Insurance

Post by Wannaretireearly »

teacher wrote: Fri Jan 28, 2022 6:38 am We bought LTC 18 years ago. Since then, our policy has changed hands three times and increased premiums once. The original plan brochure states home care is an option, and in some cases, family may provide non-medical care at home. As my family has kept our elderly at home to the end, we signed the papers. Now, it's unclear whether our current insurance company would honor that stipulation since the contract is not as boldly stated as the brochure. If we had to do over again, I think we would self-insure because there are too many unforeseen glitches. In fact we don't feel "insured", but rather hopeful we will get lucky.
Appreciate this open feedback. No wonder this decision is not a slam dunk.
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Re: Long Term Care Insurance

Post by pshonore »

You may want to consider a Partnership LTC policy. They allow you to shelter assets in the amount of your total LTC benefit. If your policy provides 10K/month for four years, that would be 480K. If you have the misfortune to exhaust those benefits and need to go on Medicaid, you get to keep the 480K and don't have to spend down that amount to qualify for Medicaid. Its a great way to avoiding impoverishing a spouse.
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Re: Long Term Care Insurance

Post by rich126 »

I'm pondering this as well. My first look at some numbers (very preliminary) worked out such that if we paid premiums for ~30 yrs for a married couple, then we would break even, after we used 3 years of benefits with a daily max rate of $300 day, or roughly $320K. I was figuring on premiums from 60 to 90 but I did not include likely premium increases. With those numbers I almost thing it would be better to put $300K aside in investments and self insure. The policies I looked at only covered a max of 3 yrs.

A financial person mentioned I should look at hybrid policies but a quick search on that indicated they were probably a poor investment (similar to variable annuities).

Good luck. (I plan to do further research later.)
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Re: Long Term Care Insurance

Post by irasymn10 »

pshonore wrote: Fri Jan 28, 2022 8:10 am You may want to consider a Partnership LTC policy. They allow you to shelter assets in the amount of your total LTC benefit. If your policy provides 10K/month for four years, that would be 480K. If you have the misfortune to exhaust those benefits and need to go on Medicaid, you get to keep the 480K and don't have to spend down that amount to qualify for Medicaid. Its a great way to avoiding impoverishing a spouse.
Wouldn't a Living irrevocable trust protect assets better than a Partnership LTC policy?
BruinBones
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Re: Long Term Care Insurance

Post by BruinBones »

My wife purchased LTC insurance 15 years ago before we married so she got in when rates were reasonable. On the other hand, I am now 56 and will maximize my Roth IRA and conversions to self-insure for long term care.
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Re: Long Term Care Insurance

Post by willthrill81 »

irasymn10 wrote: Fri Jan 28, 2022 1:45 pm
pshonore wrote: Fri Jan 28, 2022 8:10 am You may want to consider a Partnership LTC policy. They allow you to shelter assets in the amount of your total LTC benefit. If your policy provides 10K/month for four years, that would be 480K. If you have the misfortune to exhaust those benefits and need to go on Medicaid, you get to keep the 480K and don't have to spend down that amount to qualify for Medicaid. Its a great way to avoiding impoverishing a spouse.
Wouldn't a Living irrevocable trust protect assets better than a Partnership LTC policy?
One of the problems with an irrevocable trust is that tax-advantaged assets cannot be placed into one. Another is that, TMK, only the 'income' from such a trust can be withdrawn by the one who sets it up at least.
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Re: Long Term Care Insurance

Post by krafty81 »

Don't know if this will help, but here is how I did it.

1. Read "LTC for Dummies" - you need to learn the language
2. Found a broker (no fee, he can compare several companies)
3. Did my own research on companies - picked the ones with the highest bond ratings
4. Worked with broker and my own research to narrow down to three companies
5. Began negotiations with all three companies (painful as they are hard to pin down sometimes)
6. Checked my state insurance board and BBB info about complaints - that dropped one company from the three
7. For remaining two, I looked at their history of rate increases (CA regulators actually have to approve increases)
8. One company was a better deal than the other. I thought a "shared bucket" was best but individual was better.
9. 3 yrs for me, 5 yrs for wife. 3% inflation rider. Rates have not changed since we started four years ago...but I am watching!
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Re: Long Term Care Insurance

Post by KarenPDX »

I'm 49 and probably won't get it. My husband is 52 and he has ALS. We've been hiring at home caregivers, and we pay $35/hr. I considered having him qualified for Medicaid by transfering my 401Ks to Medicaid qualified annuities, but probably won't end up doing that. It's a tough decisions because everything in the future is an unknown.
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Re: Long Term Care Insurance

Post by drzzzzz »

In some ways long term care insurance also provides some benefit in case you need to use it earlier in your life rather than our natural thoughts to use it late in life. Like disability insurance, expensive and you hope not to use it, but it might well be beneficial.
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JoeRetire
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Re: Long Term Care Insurance

Post by JoeRetire »

pshonore wrote: Fri Jan 28, 2022 8:10 am You may want to consider a Partnership LTC policy. They allow you to shelter assets in the amount of your total LTC benefit. If your policy provides 10K/month for four years, that would be 480K. If you have the misfortune to exhaust those benefits and need to go on Medicaid, you get to keep the 480K and don't have to spend down that amount to qualify for Medicaid. Its a great way to avoiding impoverishing a spouse.
And that depends on the policy and the state. Sadly not every state allows this.
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GerryL
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Re: Long Term Care Insurance

Post by GerryL »

I was about the same age as OP when I got my LTCi policy around 20 years ago, but far from retirement. They say mid-50s are the best time to shop for LTC insurance. I worked with a broker who did a presentation at a support group for Alzheimer's caregivers.

Between the time I first met the broker and sat down with her to discuss buying a policy, I did a lot of research and got clarity with myself about what I hoped to achieve with the coverage. It can be very hard to imagine a future when you need the coverage, but I am a solo with a family history of Alzheimer's, so I knew I needed to think about how I could be taken care of.

I got a "gold" package with lifetime coverage for both home and institutional care. I've seen a few premium increases, including one that was rather dramatic. (But, happily, no increases in the years since then.) I talked with my broker and we revised the homecare coverage down to 3 years to manage the increase. As I get older and have a shorter horizon for a potential claim, I expect that I will reduce my coverage, with the knowledge that my portfolio will cover much of my needs.

Upon retiring, my company gave me a bucket of money that can be used only for insurance premiums. While some former colleagues draw theirs down as quickly as possible paying for Medicare and supplement, I keep mine for my annual LTCi premium. Figure I have about another 10 years left of "free" premiums, absent another dramatic increase.

Some people have very strong opinions about long-term care insurance. The decision about whether to buy has to be based on your personal situation -- so be very realistic when you analyze your needs.
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Re: Long Term Care Insurance

Post by pshonore »

JoeRetire wrote: Fri Jan 28, 2022 3:14 pm
pshonore wrote: Fri Jan 28, 2022 8:10 am You may want to consider a Partnership LTC policy. They allow you to shelter assets in the amount of your total LTC benefit. If your policy provides 10K/month for four years, that would be 480K. If you have the misfortune to exhaust those benefits and need to go on Medicaid, you get to keep the 480K and don't have to spend down that amount to qualify for Medicaid. Its a great way to avoiding impoverishing a spouse.
And that depends on the policy and the state. Sadly not every state allows this.
This map https://www.partnershipforlongtermcare. ... pmaps.html
seems to indicate Partnership policies are available in 44 of our 50 states.
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Re: Long Term Care Insurance

Post by Broken Man 1999 »

When I came home after being hospitalized for 8 months after my auto crash, I started drawing my LTC benefits. They lasted about ten years or so before they exhausted. I did need someone while my DW worked, as I was a mess, physically and mentally.

Ever since my LTC policy ran out, I self-pay. Two hours a day, @ $24/hour, 7 days a week, sometimes a bit more on holidays. I see it as a small mortgage.

I cannot qualify for for a new LTC policy.

My plan is to remain in our home with my aides coming every day. A good chunk of $$$ would be available from our VA, and our I-bond holdings. Plus, a reverse mortgage could be available.

Sadly, I don't live anywhere close to ice floes or that might be an option. JUST KIDDING! :D

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Zhuang
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Re: Long Term Care Insurance

Post by Zhuang »

fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
Agree 100%! :beer
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Re: Long Term Care Insurance

Post by willthrill81 »

fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
There are policies out there with unlimited benefits. IMHO, those are the only ones worthy of any real consideration for the reasons you outline. A policy with only $300k of maximum benefits doesn't provide substantial left-tail risk.
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Re: Long Term Care Insurance

Post by fortunefavored »

willthrill81 wrote: Fri Jan 28, 2022 5:56 pm
fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
There are policies out there with unlimited benefits. IMHO, those are the only ones worthy of any real consideration for the reasons you outline. A policy with only $300k of maximum benefits doesn't provide substantial left-tail risk.
Last time (2 years ago) I tried to quote policies, there were no unlimited ones available. And even the $500K ones were a bad value. Anyone on this thread get quotes recently? I'm curious if it has changed. Maybe the insurers have finally figured out how to not lose money on these.
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willthrill81
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Re: Long Term Care Insurance

Post by willthrill81 »

fortunefavored wrote: Fri Jan 28, 2022 6:01 pm
willthrill81 wrote: Fri Jan 28, 2022 5:56 pm
fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
There are policies out there with unlimited benefits. IMHO, those are the only ones worthy of any real consideration for the reasons you outline. A policy with only $300k of maximum benefits doesn't provide substantial left-tail risk.
Last time (2 years ago) I tried to quote policies, there were no unlimited ones available. And even the $500K ones were a bad value. Anyone on this thread get quotes recently? I'm curious if it has changed. Maybe the insurers have finally figured out how to not lose money on these.
WoW2012, a LTCi agent, has reported relatively recently on the availability of policies with an unlimited benefit, but I have no idea what the specifics, availability, premiums, or terms of such policies is.
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Re: Long Term Care Insurance

Post by adamthesmythe »

willthrill81 wrote: Fri Jan 28, 2022 6:13 pm
fortunefavored wrote: Fri Jan 28, 2022 6:01 pm
willthrill81 wrote: Fri Jan 28, 2022 5:56 pm
fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
There are policies out there with unlimited benefits. IMHO, those are the only ones worthy of any real consideration for the reasons you outline. A policy with only $300k of maximum benefits doesn't provide substantial left-tail risk.
Last time (2 years ago) I tried to quote policies, there were no unlimited ones available. And even the $500K ones were a bad value. Anyone on this thread get quotes recently? I'm curious if it has changed. Maybe the insurers have finally figured out how to not lose money on these.
WoW2012, a LTCi agent, has reported relatively recently on the availability of policies with an unlimited benefit, but I have no idea what the specifics, availability, premiums, or terms of such policies is.
I seem to remember that "a rider is available" but I don't remember any indication of cost.
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Re: Long Term Care Insurance

Post by fortunefavored »

adamthesmythe wrote: Fri Jan 28, 2022 6:29 pm
willthrill81 wrote: Fri Jan 28, 2022 6:13 pm
fortunefavored wrote: Fri Jan 28, 2022 6:01 pm
willthrill81 wrote: Fri Jan 28, 2022 5:56 pm
fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
There are policies out there with unlimited benefits. IMHO, those are the only ones worthy of any real consideration for the reasons you outline. A policy with only $300k of maximum benefits doesn't provide substantial left-tail risk.
Last time (2 years ago) I tried to quote policies, there were no unlimited ones available. And even the $500K ones were a bad value. Anyone on this thread get quotes recently? I'm curious if it has changed. Maybe the insurers have finally figured out how to not lose money on these.
WoW2012, a LTCi agent, has reported relatively recently on the availability of policies with an unlimited benefit, but I have no idea what the specifics, availability, premiums, or terms of such policies is.
I seem to remember that "a rider is available" but I don't remember any indication of cost.
Sure, if it is $5000/month with unlimited rate increases it's probably not a good idea either.. :) Hopefully someone reports back after calling brokers. The market moves fast so anything older than 6 months is usually inapplicable.
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Re: Long Term Care Insurance

Post by WoW2012 »

fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
This post is incorrect. There are catastrophic long term care policies for sale in every state.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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Re: Long Term Care Insurance

Post by fortunefavored »

WoW2012 wrote: Sun Feb 06, 2022 11:52 am
fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
This post is incorrect. There are catastrophic long term care policies for sale in every state.
We're looking for details. Can you outline a few typical scenarios and coverage, elimination periods, inflation adjustments, rate increase limits, etc.? Do people actually buy them? I thought they existed 2 years ago because everybody said so, but when I called around there was no such thing. They all had onerous limitations and maximum payouts.
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Re: Long Term Care Insurance

Post by A-Commoner »

In Los Angeles today, the cost of long term care (ie the actual care, not the cost of premiums) is about $11k per month. Assuming both me and my wife land in a nursing home today and live there for 3 years, our total out of pocket cost is $792K.

If one already has at least $792k saved up, does it still make sense to buy LTC insurance? I’d much rather invest that in a 60:40 portfolio. In 30 years when long term care may really be needed, there would be more money to spend on the actual care than burning it off paying those premiums for 30 years.
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Re: Long Term Care Insurance

Post by adamthesmythe »

fortunefavored wrote: Sun Feb 06, 2022 12:26 pm
WoW2012 wrote: Sun Feb 06, 2022 11:52 am
fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
This post is incorrect. There are catastrophic long term care policies for sale in every state.
We're looking for details. Can you outline a few typical scenarios and coverage, elimination periods, inflation adjustments, rate increase limits, etc.? Do people actually buy them? I thought they existed 2 years ago because everybody said so, but when I called around there was no such thing. They all had onerous limitations and maximum payouts.
Reading about ONE typical illustration- including age, enough details to judge the policy, and cost in dollars...might encourage many to take a trip to an agent and get an illustration for their own specific situation.

On the other hand...if it looks like an unattractive deal...it would be bad for business.
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Re: Long Term Care Insurance

Post by JoeRetire »

A-Commoner wrote: Sun Feb 06, 2022 1:04 pm If one already has at least $792k saved up, does it still make sense to buy LTC insurance?
Can you afford to lose the $792k? Or did you save it up for some other reason?
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ROIGuy
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Re: Long Term Care Insurance

Post by ROIGuy »

Last year Mutual of Omaha raised it's rates 40% on new policies starting 9/1/2021. I don't think they had raised their rates since 2013 but that is a lot of money for many people.
https://www.longtermcareinsurancepartne ... e-increase
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Re: Long Term Care Insurance

Post by JoeRetire »

Mr.BB wrote: Sun Feb 06, 2022 2:50 pm Last year Mutual of Omaha raised it's rates 40% on new policies starting 9/1/2021.
Not quite.

For some new plans, in some states, up to 40%.
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Re: Long Term Care Insurance

Post by bsteiner »

fortunefavored wrote: Sun Feb 06, 2022 12:26 pm
WoW2012 wrote: Sun Feb 06, 2022 11:52 am
fortunefavored wrote: Thu Jan 27, 2022 9:30 am Like all insurance, you have to ask yourself why you are carrying it.

For most people, they want LTC to insure against catastrophic LTC costs. Unfortunately these plans no longer exist - you will quickly find they all have maximum payouts that top out in the $500K range (plus all the other hoops and restrictions you allude to.)

For most retiring early Bogleheads, $100K to $500K of payouts isn't going to be very useful in a true "20 years of alzheimer's care" scenario, so self-insuring makes more sense.

You're better off looking at other estate planning moves in a catastrophic scenario (especially if married.)
This post is incorrect. There are catastrophic long term care policies for sale in every state.
We're looking for details. Can you outline a few typical scenarios and coverage, elimination periods, inflation adjustments, rate increase limits, etc.? Do people actually buy them? I thought they existed 2 years ago because everybody said so, but when I called around there was no such thing. They all had onerous limitations and maximum payouts.
Do you have any examples of policies that cover an unlimited duration but not the first 3 or 5 years, or the first, say, $500,000 of expenses, and don't require you to buy something else such as life insurance, an annuity, or a refund feature?

A large enough deductible or elimination period and no requirement to buy something else should substantially reduce the cost yet protect against a large loss.
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Re: Long Term Care Insurance

Post by ROIGuy »

JoeRetire wrote: Sun Feb 06, 2022 2:55 pm
Mr.BB wrote: Sun Feb 06, 2022 2:50 pm Last year Mutual of Omaha raised it's rates 40% on new policies starting 9/1/2021.
Not quite.

For some new plans, in some states, up to 40%.
Thank you for that correction.
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Re: Long Term Care Insurance

Post by willthrill81 »

A-Commoner wrote: Sun Feb 06, 2022 1:04 pm In Los Angeles today, the cost of long term care (ie the actual care, not the cost of premiums) is about $11k per month. Assuming both me and my wife land in a nursing home today and live there for 3 years, our total out of pocket cost is $792K.

If one already has at least $792k saved up, does it still make sense to buy LTC insurance? I’d much rather invest that in a 60:40 portfolio. In 30 years when long term care may really be needed, there would be more money to spend on the actual care than burning it off paying those premiums for 30 years.
We could analyze the likelihood of such an event as you described happening, but it's fairly rare (e.g., only half will ever need any LTC at all, only a few of those who need any LTC need the level of care you're describing and even fewer will need it for three years, and the likelihood of both spouses needing that much care for that long is rare). If you're willing and able to spend $800k on LTC in the event of such a scenario, then no, you don't need LTCi.
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Ray_McKigney
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Re: Long Term Care Insurance

Post by Ray_McKigney »

JoeRetire wrote: Sun Feb 06, 2022 2:38 pm
A-Commoner wrote: Sun Feb 06, 2022 1:04 pm If one already has at least $792k saved up, does it still make sense to buy LTC insurance?
Can you afford to lose the $792k? Or did you save it up for some other reason?
When asking what someone can afford, the premiums should be part of the discussion.

Can he afford the premiums for $11k/month / $792k/lifetime benefit in CA?

Do you know what the monthly premiums for a new policy that provides this benefit in California are?
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JoeRetire
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Re: Long Term Care Insurance

Post by JoeRetire »

Ray_McKigney wrote: Sun Feb 06, 2022 4:05 pm
JoeRetire wrote: Sun Feb 06, 2022 2:38 pm
A-Commoner wrote: Sun Feb 06, 2022 1:04 pm If one already has at least $792k saved up, does it still make sense to buy LTC insurance?
Can you afford to lose the $792k? Or did you save it up for some other reason?
When asking what someone can afford, the premiums should be part of the discussion.
I'll pass for now.
The question was about having $792 already saved. I was asking for clarification. Maybe once that happens, I'll talk about premiums. Maybe not.
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Ray_McKigney
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Re: Long Term Care Insurance

Post by Ray_McKigney »

Well, I have some idea, if it helps someone.

Out of four quotes, best I received (12 months ago):

Ages: Me 49 / DW 53
$4,200 monthly maximum per spouse / $750,000 lifetime maximum (one spouse can use up to 2/3 of this)
3% inflation rider
90-day EP
Combined Monthly Premium: $418

When I asked for a new quote with a 5% inflation rider:

“I would not recommend the 5% inflation rider. The cost of long-term care has NOT been going up at 5% each year. The real inflation rate for long-term care (especially home care) has been closer to 3% (even lower in some years). The 5% inflation rider is at least twice as much premium as the 3% inflation rider. You would be better off just increasing your daily benefit rather than buying the 5% compound inflation rider.” (a)
 
When I asked for a new quote with $10k/month benefit, saying that SNFs here in California currently exceed that:

“That's true. But most people who need long-term care are at home, not in SNF's. Only 1 out of 7 people who need long-term care are in SNF's and most of them are in SNF's because they are on Medi-Cal (they are relying on the state of California to pay for their care in the SNF).”



(a) Published two months earlier by Genworth:

2020 Annual Median Cost (and Increase since 2019) of Long Term Care in California

Homemaker Services $66,352 (3.65%)
Home Health Aide $66,352 (3.57%)
Adult Day Health Care $20,800 (3.90%)
Assisted Living
Facilities $60,000 (11.11%)
Nursing Home - Semi-Private Room $110,960 (5.56%)
Nursing Home - Private Room $137,240 (7.43%)

https://newsroom.genworth.com/2020-12-2 ... ture-Costs
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WoW2012
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Re: Long Term Care Insurance

Post by WoW2012 »

Mr.BB wrote: Sun Feb 06, 2022 2:50 pm Last year Mutual of Omaha raised it's rates 40% on new policies starting 9/1/2021. I don't think they had raised their rates since 2013 but that is a lot of money for many people.
https://www.longtermcareinsurancepartne ... e-increase
Those higher rates only applied to new applicants, not priir policyholders.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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Re: Long Term Care Insurance

Post by WoW2012 »

A-Commoner wrote: Sun Feb 06, 2022 1:04 pm In Los Angeles today, the cost of long term care (ie the actual care, not the cost of premiums) is about $11k per month. Assuming both me and my wife land in a nursing home today and live there for 3 years, our total out of pocket cost is $792K.

If one already has at least $792k saved up, does it still make sense to buy LTC insurance? I’d much rather invest that in a 60:40 portfolio. In 30 years when long term care may really be needed, there would be more money to spend on the actual care than burning it off paying those premiums for 30 years.
Why do you think you and your wife will only need 3 years of care?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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