Long term care plan surprise

[JMummey]

Hi! I wanted to share something that happened regarding my elderly relative's long term care plan just so others are aware that something like this can happen. This is the chain of events that took place:

1. A long term care plan that my relative purchased in youth had to be used for care in an assisted living facility.
2. The long term care plan company made the whole process very easy and they were easy to work with, as was the assisted living facility.
3. Each month we received an easy to understand statement from the long term care plan company showing the balance my relative had to work with and what had been paid to the assisted living facility so each month it was very clear what funds were available and for how long.
4. After several years, the statement from the long term care plan company changed without warning. The balance went to zero (the prior month statement reflected a balance that would cover another year in the assisted living facility). When we spoke with the company we learned something troubling. The company had gone through a routine internal audit. They found that when the company first calculated what the full sum the policy was worth for my relative when he went into the assisted living facility initially, they calculated it incorrectly (really incorrectly by a value equal to a year's stay in the assisted living facility). This meant the problem was present from the very beginning starting with the first statement. It also meant we had a serious dilemma. Suddenly a year of funding was just gone. We spoke with the lawyers handling the account for our relative and they reviewed the long term care policy. They said there was a clause in the policy that protected the company from litigation in situations like this.

If you are working with a long term care company, ask them to carefully review the monthly statement value with you periodically to hopefully catch erroneous calculations early so you and your family can adequately prepare for the future.

 

[seadoug]

Maybe not completely related, but I once considered purchasing long-term care insurance but from all I've seen/read recently premiums are not locked in and can go up drastically.

Why Do Long-Term Care Insurance Raise Rates?​

First, it is important to understand that insurers CAN NOT single out specific policyholders. They must file rate increases for a 'Class' of policyholders. That could be everyone who bought a particular policy in specific state(s) with specific policy features.

Second, insurers must demonstrate specific reasons that a rate increase is requested. Lack of profitability is NOT A VALID REASON to request a rate increrase.

Here are some main reasons insurers have requested rate increases:

• Lower than anticipated voluntary lapse rates - (31%)
• Higher than anticipated incidence (policy claims) - (29%)
• Longer than anticipated claim continuemnce - (20%)
• Change in investment rate - (3%)
  
  What does this really mean? When insurers calculate pricing for long-term care insurance, they factor in a "lapse" rate. Simply said, they know that over time people will decide they no longer want to pay for this coverage.
  Boy were they wrong! Insurers in the 1990s and early 2000s were conservative. But they still projected that (say) 4% would lapse their policy each year. Over say 20 years, 80% of policyholders would thus lapse their coverage.
  What really happened? People DID NOT LAPSE THEIR COVERAGE. Only 1% did (or less). So a company that sold 100,000 policies and expected 20,000 after 20 years (20 x 4% = 80% dropped policies) ACTUALLY HAD 80,000 policies still in-force (20 x 1% = 20,000 lapsed policies). More policies meant more claimants.
  To be preparded to pay future claims, insurers needed to raise rates.

Long-term care insurance rate increases

 

[seadoug]

BTW, Welcome JMummey!

 

[JMummey]

BTW, Welcome JMummey!

View attachment 329507

Thanks

 

[officerripley]

Welcome, JMummey.

Sorry to hear about your relative's trouble with long term care ins. Thanks for posting this; it's something everyone should be aware of. I myself have heard nothing but bad things about it, here in our state anyway. Our capital city's newspaper did a big expose' on it a few years back and looks like it's a really troubled industry; one poor woman that the newspaper article wrote about, when she and her family tried to sue the insurance company, it had filed bankruptcy and slid off into the night.

 

[OneEyedDiva]

I considered purchasing a policy when I was in my 50s, but the write ups about LTC policies outlined the complications that could arise. They also mentioned the very real possibilities that the company could go under (if not a big, well trusted company) and that premiums could rise. I was still on the fence when my dilemma was solved. I was ineligible for my retiree benefits LTC policy and the one offered by AARP's insurance, due to having A-fib.

From things I've heard since, I'm glad I didn't get a policy. I've been saving and investing aggressively so as to have money to pay out of pocket for at least a couple of years. But even better yet, Aetna Medicare will pay for 35 hours a week of in home, skilled nursing care for an unlimited period. I could easily cover additional hours if needed.

What happened in your relative's case is terrible, especially since it seems there is no legal course of action that can be taken. Thank you for posting this so that our members will be aware of possible pitfalls. And...

 

[Brookswood]

I looked at LTC polices several times over the past 15 years. They just don’t make sense to me.

the main reason is that most people spend 18 months of less in LTC. IOW, I will probably die in less than two years or, if I am one of the lucky ones, I’ll get well enough to go back home. While I would hate to spend my retirement funds on LTC, I suppose I could do it If necessary. In can’t case, I don’t trust the insurance companies to pay up as required, or to not price me out of the market as the probability of using the LTC policy goes up.

While about 1/2 of us will end up in LTC for some time, most of us wont spent much more than two years total in LTC.

24.0%: Percentage of people turning age 65 who will require paid long-term care for more than two years.

15.0%: Percentage of people turning age 65 who will spend more than two years in a nursing home.

3.7 years: Average duration of long-term-care need for women who require long-term care.

2.2 years: Average duration of long-term-care need for men who require long-term care.

 

[mathjak107]

the problem is those statistics are from a generation ago as boomers are not in the sweet spot yet and already usage is off the hook .

most insurers got out of the business and the ones that didn’t have had insane increases as they found usage way different then expected .

at this stage , every insurer pulled out of our new york state partnership plans ..you were grandfathered in if you had one .

so today most couples need to work and can’t take the financial hit of taking in a parent .

plus our generation learned that when one sibling steps up to the plate to care for a parent all the others step back .

that has broken up more families and caused more divorces as well as if a spouse is involved the why do we have to take the financial and social hit and your brothers and sisters do nothing usually starts .

so we only have two outcomes as humans and statistics mean nothing , it’s us that needs care or it isn’t …someone is always on the wrong side of a statistic, is it you ?

my dad was and he spent 5 years needing care which impoverished his wife

 

[Rich29]

We have LTC and yes the premiums are steep. Our policies are through the Federal Government as I'm a former fed employee.
I'm reasonably confident that our policies will be secure as they are backed by the govt. Future premium increases can be minimized
if one reduces built-in inflation rates for future years. Are LTC's a good option in the long run? I'm not sure but we have made the
commitment.

 

[PeppermintPatty]

the problem is those statistics are from a generation ago as boomers are not in the sweet spot yet and already usage is off the hook .

most insurers got out of the business and the ones that didn’t have had insane increases as they found usage way different then expected .

at this stage , every insurer pulled out of our new york state partnership plans ..you were grandfathered in if you had one .

so today most couples need to work and can’t take the financial hit of taking in a parent .

plus our generation learned that when one sibling steps up to the plate to care for a parent all the others step back .

My older siblng coulda, shoulda, woulda but DIDN’T step up to the plate when my mom had a stroke so I did, knowing fully that I was disinherited.

that has broken up more families and caused more divorces as well as if a spouse is involved the why do we have to take the financial and social hit and your brothers and sisters do nothing usually starts .

Lots of people told me the same thing. In fact, apparently lots of families break apart at this stage in life. Families true colours shine brightly when moneys involved. Relationships that seemed strong, frazzle away.

so we only have two outcomes as humans and statistics mean nothing , it’s us that needs care or it isn’t …someone is always on the wrong side of a statistic, is it you ?

my dad was and he spent 5 years needing care which impoverished his wife

In hindsight……. my parents would have been best off going into independent retirement living with an ALL inclusive package. They could have lived it up with friends and neighbours and slowly transitioned into ‘assisted’ living.

It’s hard knowing all this when the time comes which is why I’m doing my homework NOW. Fill out a living will and update it often. Be clear about your wants and needs.

My parents still had a great life. I learned a lot from them.

 

[officerripley]

my dad was and he spent 5 years needing care which impoverished his wife

There's a federal program through the Social Security Admin., called something like "Impoverishment of Spouse", wherein they can't impoverish a spouse by denying paying Medic-Aid to the one that needs care. It's administered differently by each state, but last time I checked, in this state, Medic-Aid will pay for one spouse to be in Skilled Nursing and allow the other spouse to retain one roof over their head--looked at by the Medic-Aid office on a case-by-case basis, so if you're in a 6-bedroom mansion you won't qualify--one working vehicle, and no more than $140,000 in the bank.

It's very complicated to apply (on purpose, I'm sure); my dad used it when my stepmother had to go into skilled nursing and he paid an elder law attorney to help him qualify. It was worth it, though: I know someone who's highly intelligent, ran an office of about 6 people before she retired, and thought she had it all figured out, but when she tried to help her stepmother use it, got shut down and had to go the attorney route to get her stepmother qualified.

 

[Teacher Terry]

Very few people in my family have needed care. My dad was one of the exceptions having a stroke at 59 and my mom took care of him for 14 years. He wasn’t competent after the stroke.

We bought the house next door and I helped my mom and she helped with my kids so I could go to college. My siblings didn’t help but I didn’t mind because I helped out of love for both my parents.

If my dad had outlived my mom he had enough money to pay for someone to live with him and care for him. We had the house in a life estate so someone couldn’t marry him and get it. I would have been able to oversee his care living next door. My dad had a good friend that was a lawyer and had drawn up all the paperwork to protect him. Luckily my mom outlived him.

 

[todalake]

LTC companies are betting you won't need it or rates are high enough to cover. They have resources to know odds are in their favor. So why bet against the house, their not in business to lose money. I'm 80 and wife 77 and fully independent and no LTC.

Mom was in nursing home for 5 years and paid own way. Roommate was on state aid and paid nothing. Got same treatment and food. Dad was in 3 days before dying at 90 and medicare covered it.

 

[Lethe200]

Here is the big difficulty:
Statistics about your parents, grandparents, aunts and uncles aren't really relevant to the Boomer generation. Why?

Because virtually all medical advances over the past 60 years are aimed to lengthen people's lifespan. The fastest-growing age group all over the world is the age group of 80+ years old.

What they do not automatically do, is improve the quality of life in keeping the very elderly alive.

Here is something to think about: if BOTH spouses are alive at age 65, what is the average age at which the SECOND spouse dies?

Answer: 96 yrs!

Everybody's financial situation is unique, and costs for care depend on where you live. You must also take into account the AVAILABILITY of all types of care, whether home-based or facility-based.

We have LTCi policies because although we have a good retirement income, and a decent amount of retirement savings, a long-term mental or physical disability risks impoverishing the remaining spouse. And if both of us are (eventually) disabled/non compos mentis, the estate would be drained very quickly.

Skilled Care Nursing/Memory Care in our area is at the $15+K/month level. It goes up 3-5% every year, in July. Eight different facilities, when we were researching for my MIL, told us this.

My spouse had a major stroke twenty yrs ago. You'd never know it, if you met him. But on a simple baseline memory test, he's now testing slightly below average. So yes, we will be keeping our very expensive LTCi policies (which are the type not sold any longer, in fact) because both genetically and personal health history-wise, we'd be foolish not to keep them.

We are high-risk medically, and being honest about that means taking steps to mitigate that risk.

Our policies are fortunately through the state pension fund, which contracts with a third-party health mgmt team that assigns a rep to each LTCi claimant to guide them through the system.

I now actively discourage most friends from getting LTCi, unless I'm sure they can afford it. Sadly, it's often the people who need it the most that really can't afford it. In our state, Medicaid senior facilities are absolutely terrible. I'd hate to put a dog in there, let alone a friend or family member.

 

[mathjak107]

Here is the big difficulty:
Statistics about your parents, grandparents, aunts and uncles aren't really relevant to the Boomer generation. Why?

Because virtually all medical advances over the past 60 years are aimed to lengthen people's lifespan. The fastest-growing age group all over the world is the age group of 80+ years old.

What they do not automatically do, is improve the quality of life in keeping the very elderly alive.

Here is something to think about: if BOTH spouses are alive at age 65, what is the average age at which the SECOND spouse dies?

Answer: 96 yrs!

Everybody's financial situation is unique, and costs for care depend on where you live. You must also take into account the AVAILABILITY of all types of care, whether home-based or facility-based.

We have LTCi policies because although we have a good retirement income, and a decent amount of retirement savings, a long-term mental or physical disability risks impoverishing the remaining spouse. And if both of us are (eventually) disabled/non compos mentis, the estate would be drained very quickly.

Skilled Care Nursing/Memory Care in our area is at the $15+K/month level. It goes up 3-5% every year, in July. Eight different facilities, when we were researching for my MIL, told us this.

My spouse had a major stroke twenty yrs ago. You'd never know it, if you met him. But on a simple baseline memory test, he's now testing slightly below average. So yes, we will be keeping our very expensive LTCi policies (which are the type not sold any longer, in fact) because both genetically and personal health history-wise, we'd be foolish not to keep them.

We are high-risk medically, and being honest about that means taking steps to mitigate that risk.

Our policies are fortunately through the state pension fund, which contracts with a third-party health mgmt team that assigns a rep to each LTCi claimant to guide them through the system.

I now actively discourage most friends from getting LTCi, unless I'm sure they can afford it. Sadly, it's often the people who need it the most that really can't afford it. In our state, Medicaid senior facilities are absolutely terrible. I'd hate to put a dog in there, let alone a friend or family member.

where did you get 96 as a average life expectancy for a couple .

stats show a couple has a 47% chance of one seeing even 90

 

[mathjak107]

There's a federal program through the Social Security Admin., called something like "Impoverishment of Spouse", wherein they can't impoverish a spouse by denying paying Medic-Aid to the one that needs care. It's administered differently by each state, but last time I checked, in this state, Medic-Aid will pay for one spouse to be in Skilled Nursing and allow the other spouse to retain one roof over their head--looked at by the Medic-Aid office on a case-by-case basis, so if you're in a 6-bedroom mansion you won't qualify--one working vehicle, and no more than $140,000 in the bank.

It's very complicated to apply (on purpose, I'm sure); my dad used it when my stepmother had to go into skilled nursing and he paid an elder law attorney to help him qualify. It was worth it, though: I know someone who's highly intelligent, ran an office of about 6 people before she retired, and thought she had it all figured out, but when she tried to help her stepmother use it, got shut down and had to go the attorney route to get her stepmother qualified.

the problem was my dad made about 10 bucks over the limit from his post office pension and social security to qualify for medicaid.. it was crazy

 

[Paco Dennis]

If you are facing this difficult time of needing LTC it can be quite disrupting. I am 71 with some health problems, but it hard for me to see myself needed someone to care fore me. Very hard. I probably will find another way. It is a sad thing but we all get there. My best friend decided not to get into LTC. He lasted about 6 months and was able to arrange his departure by himself.

BUT, if you are involved or know others that are there is a great website where you just put in your zip code and it shows lots of places in your are that help with all the experiences of LTC. I hope someone finds it useful. We all need help from others who know more than we do sometimes. anyway here it is : eldercare.acl.gov

 

[officerripley]

If you are facing this difficult time of needing LTC it can be quite disrupting. I am 71 with some health problems, but it hard for me to see myself needed someone to care fore me. Very hard. I probably will find another way. It is a sad thing but we all get there. My best friend decided not to get into LTC. He lasted about 6 months and was able to arrange his departure by himself.

BUT, if you are involved or know others that are there is a great website where you just put in your zip code and it shows lots of places in your are that help with all the experiences of LTC. I hope someone finds it useful. We all need help from others who know more than we do sometimes. anyway here it is : eldercare.acl.gov

Great site, thanks for posting, Paco. Unfortunately, it only lists one place here--a place that is underfunded and run mostly by volunteers--then it directs me to a couple of places 2 hours away. What I get for living in the boonies. (This is why I've been advising any young people I happen to come in contact with, either IRL or online, to try not to strand yourself in a rural or suburban area; no matter how much you enjoy it now, won't be good when you get old.)

 

[Paco Dennis]

It makes me sad for you if you feel like me in this. 20 miles from people IRL to help if it comes to that. oh well...it is going to be different and difficult no matter what.

 

[officerripley]

It makes me sad for you if you feel like me in this. 20 miles from people IRL to help if it comes to that. oh well...it is going to be different and difficult no matter what.

I hear ya. (More and more, that solution featured in the movie Soylent Green's starting to sound better and better.)

 

[Teacher Terry]

Here is the big difficulty:
Statistics about your parents, grandparents, aunts and uncles aren't really relevant to the Boomer generation. Why?

Because virtually all medical advances over the past 60 years are aimed to lengthen people's lifespan. The fastest-growing age group all over the world is the age group of 80+ years old.

What they do not automatically do, is improve the quality of life in keeping the very elderly alive.

Here is something to think about: if BOTH spouses are alive at age 65, what is the average age at which the SECOND spouse dies?

Answer: 96 yrs!

Everybody's financial situation is unique, and costs for care depend on where you live. You must also take into account the AVAILABILITY of all types of care, whether home-based or facility-based.

We have LTCi policies because although we have a good retirement income, and a decent amount of retirement savings, a long-term mental or physical disability risks impoverishing the remaining spouse. And if both of us are (eventually) disabled/non compos mentis, the estate would be drained very quickly.

Skilled Care Nursing/Memory Care in our area is at the $15+K/month level. It goes up 3-5% every year, in July. Eight different facilities, when we were researching for my MIL, told us this.

My spouse had a major stroke twenty yrs ago. You'd never know it, if you met him. But on a simple baseline memory test, he's now testing slightly below average. So yes, we will be keeping our very expensive LTCi policies (which are the type not sold any longer, in fact) because both genetically and personal health history-wise, we'd be foolish not to keep them.

We are high-risk medically, and being honest about that means taking steps to mitigate that risk.

Our policies are fortunately through the state pension fund, which contracts with a third-party health mgmt team that assigns a rep to each LTCi claimant to guide them through the system.

I now actively discourage most friends from getting LTCi, unless I'm sure they can afford it. Sadly, it's often the people who need it the most that really can't afford it. In our state, Medicaid senior facilities are absolutely terrible. I'd hate to put a dog in there, let alone a friend or family member.

All 4 of my grandparents outlived their life expectancy for when they were born and 3 were born in the late 1800’s. Luckily I appear to have great genes on both sides. One grandmother died at 91. All lived to be quite old.

 

[hearlady]

Thank you all for the information. I always will wondered about these plans.