LTC discussion and self-insure trust discussion

seniorpetra

seniorpetra

New Member
Hello,
I need to discuss regarding the LTC and " Self-insure" trust for long term care.
 

We were going to self insure for ltc ...but we were featured in money magazine many many years ago and their team of pros convinced us we were not doing a good thing .

We agreed ....the problem with self insuring is you need a huge sum of money day 1....like insurers , you need to keep that money safe and that means low returns ..

That money can not be counted as part of the income generation pool either ...as even the 4% safe with drawl rate assumes that money can dwindle away under poor outcomes .

They showed us that just by keeping that lump sum invested normally we could take just a tiny portion of the gains and pay a premium on a real LTC policy...

In short I would never self insure.. we ended up getting a ny state partnership plan for long term care ....it gives us 6 years in home care and 3 years in a nursing facility ...when the insurance runs out all assets are 100% protected and Medicaid picks up the bills ...the stay at home spouses income is protected too ....there is no look back , no spend down , no nothing ...

That is the deal with our partnership plans
 
I agree with Mathjak. While the premiums for our two LTC policies aren't cheap, knowing that a fixed plan is in place for
down the road is very comforting. I think it would take a lot of discipline to separate and not touch funds for self insuring, especially if life gets in the way.
 

I have no choice but to "self insure". I have/had pre-existing conditions that made me un-insurable both with our state retiree LTC plan offering and AARP's. For that reason I'm continuing to save/invest using most of my SS. I live in New Jersey which has some of the highest nursing home rates in the country. My retiree insurance through Aetna will pay for 120 days per benefit period of nursing home or home health care but I believe that is via reimbursement, not up front. Benefit periods start again after 60 days of being out of a skilled nursing facility (SNF). Each admission to a SNF must be via transfer from a hospital. It is my hope that if it ever comes to that...I'd be able to get a very good care at home or at least be able to use that option for awhile. The cost difference is quite significant. This website shows the monthly cost of SNF by state as well as the cost of different care options. https://www.seniorliving.org/nursing-homes/costs/
 
Last edited:
OneEyedDiva said:
I have no choice but to "self insure". I have/had pre-existing conditions that made me un-insurable both with our state retiree LTC plan offering and AARP's. For that reason I'm continuing to save/invest using most of my SS. I live in New Jersey which has some of the highest nursing home rates in the country. My retiree insurance through Aetna will pay for 120 days per benefit period of nursing home or home health care but I believe that is via reimbursement, not up front. Benefit periods start again after 60 days of being out of a skilled nursing facility (SNF). Each admission to a SNF must be via transfer from a hospital. It is my hope that if it ever comes to that...I'd be able to get a very good care at home or at least be able to use that option for awhile. The cost difference is quite significant. This website shows the monthly cost of SNF by state as well as the cost of different care options. https://www.seniorliving.org/nursing-homes/costs/
Click to expand...
what about a hybrid life . ltc insurance policy ? they are way less tougher to get

https://www.investopedia.com/insurance/paying-longterm-care-how-its-changing/
 
while not my first choice for ltc , they can serve a purpose... the hybrids though are one of the most costly ways to get coverage though in a very sneaky way .

they do require a fairly large lump sum and you forfeit the interest to pay for the ltc policy .... they never have to raise your costs because increases are built in as interest rates go up and they keep your interest .....
 
mathjak107 said:
it still does not solve the problem of protecting assets once that money runs out and or impoverishing the stay at home spouse
Click to expand...

Have you looked into the division of assets after the policy runs out? We have LTCi policies, so I've never paid much attention to discussions of asset division. But I know it's recommended by some, and actually I have a Net friend who did it when her husband had to suddenly go into a nursing home . She was advised to do it by both the VA rep and her CPA.

I believe one of the issues with it is that there is an asset limit, as she had to "spend down" very quickly before doing the division. She certainly is not rich (five years after the death of her spouse, who sadly passed away after about a year in SCN), but she was able to keep the house and can support herself with a part-time job and SocSec.

If I recall, one of the reasons I don't follow asset division posts is that when I first read up on it, the limits were low enough that it wasn't applicable to us. When one lives in an expensive RE area, the appraised value of a home is large enough that it isn't possible to divide the value yet stay under the limits.
 
Pecos said:
We have paid-up "hybrid life insurance" and are planning to self insure beyond that.

But frankly, the amount of money that a couple will actually need is a bit of a "crap shoot."
Click to expand...
which is why we opted for a state partnership plan for ltc .. pretty much all offer them , but only two states offer full asset protection like ours does . most are dollar for dollar protection .
 
michael kitces looked at the hybrid plans .

Executive Summary
As traditional long-term care (LTC) insurance becomes more and more expensive, and interest rates remain at ultra-low levels, planners and their clients have become increasingly interested in so-called “Hybrid LTC” policies that match together a life insurance or annuity policy with LTC coverage, especially with a more favorable set of tax rules that took effect in 2010. For many, though, the primary appeal of hybrid policies is the simple fact that, unlike their traditional LTC insurance brethren, the premiums really are guaranteed and cannot be increased in the future. Given some of the extraordinarily large premium increases that traditional LTC coverage has experienced in recent years – especially for some of the early policies issued in the 1990s and early 2000s – a cost guarantee is remarkably reassuring.

Yet the reality is that the guarantee of LTC premiums in a hybrid policy may be entirely offset by the fact that the insurance company controls the cash value, and is under no obligation to pay a going rate of return, especially if interest rates rise. In other words, it doesn’t really matter that the insurance company can’t increase the premiums on the policy by $4,000/year, when the company can simply under-pay on the interest rate by $4,000/year to accomplish the same result! And while the cash value of a hybrid LTC policy generally does remain liquid, taking a withdrawal to reinvest to get better, higher rates would entail surrendering the policy and forfeiting the LTC coverage! In fact, for some types of hybrid LTC policies, the arrangement contractually provides no rate of return to the client at all, and is essentially the equivalent of the client selling a call option on interest rates to the insurance company, where the more rates rise the greater the company wins at the expense of the client!



https://www.kitces.com/blog/is-the-...-annuityltc-insurance-policies-just-a-mirage/
 
DH and I are self insuring, at least partly because CA's Medicaid asset seizure is less draconian than most states. If there's a living spouse, the family home (of any value) is excluded from asset assessment, the spouse can keep $126K in liquid assets, and $3161 monthly "spousal allowance" is also shielded. None of this is subject to a later clawback if the non-Medicaid spouse survives the Medicaid spouse. Not even when both spouses have passed.

Yes, there are a lot of scares regarding long term nursing home care costs, but in my experience very few people actually spend months or years in Skilled Nursing Facilities these days. In fact, over the past 20 years none of my or my husband's relatives have spent long periods in SNFs. Assisted Living, yes. Nursing homes, no.

The lion's share of SNF patients are released within a few weeks. ALs have picked up more and more of the care previously only supplied by home health aides and nursing homes.

With hospice and end of life care moving toward not prolonging life when there's little quality remaining, I don't see myself or my husband needing years of SNF care. Maybe that's naive. Who knows?

Good ALs cost roughly $4K a month, memory care with all the bells and whistles are closer to $5K. We could manage that. SNFs are closer to $10K, a less doable option and a far less pleasant environment.
 
StarSong said:
DH and I are self insuring, at least partly because CA's Medicaid asset seizure is less draconian than most states. If there's a living spouse, the family home (of any value) is excluded from asset assessment, the spouse can keep $126K in liquid assets, and $3161 monthly "spousal allowance" is also shielded. None of this is subject to a later clawback if the non-Medicaid spouse survives the Medicaid spouse. Not even when both spouses have passed.

Yes, there are a lot of scares regarding long term nursing home care costs, but in my experience very few people actually spend months or years in Skilled Nursing Facilities these days. In fact, over the past 20 years none of my or my husband's relatives have spent long periods in SNFs. Assisted Living, yes. Nursing homes, no.

The lion's share of SNF patients are released within a few weeks. ALs have picked up more and more of the care previously only supplied by home health aides and nursing homes.

With hospice and end of life care moving toward not prolonging life when there's little quality remaining, I don't see myself or my husband needing years of SNF care. Maybe that's naive. Who knows?

Good ALs cost roughly $4K a month, memory care with all the bells and whistles are closer to $5K. We could manage that. SNFs are closer to $10K, a less doable option and a far less pleasant environment.
Click to expand...
Lets pray we and your family never need full nursing home care. I do wonder if in the earlier days the options were less than today. Both my MIL and her father spent years in a SNH facility.
 
Liberty said:
Lets pray we and your family never need full nursing home care. I do wonder if in the earlier days the options were less than today. Both my MIL and her father spent years in a SNH facility.
Click to expand...
Life is fraught with risks and gambles.

Hubby and I have both expressed strong desires for an easy exit over a long-term nursing home existence because of a condition that offers no hope of improvement.

Guess we need to start stashing meds that will offer an easier way out of this life if it comes down to that.
 
StarSong said:
Life is fraught with risks and gambles.

Hubby and I have both expressed strong desires for an easy exit over a long-term nursing home existence because of a condition that offers no hope of improvement.

Guess we need to start stashing meds that will offer an easier way out of this life if it comes down to that.
Click to expand...
Yeah, Star...or get that "one way ticket to Oregon" as hub says!
 
Butterfly said:
I cannot imagine much of anything worse than year after year in some nursing home with no hope of recovery or improvement or any quality of life. If I ever find myself facing something like that, I hope I can find the courage to do something about it. A judiciously applied .38 to the temple comes to mind if all else fails . . . .
Click to expand...
Eek! Couldn't do that. What a terrible scene for someone to stumble on, not to mention clean up. Pills would be my exit of preference.
 
my wifes father inlaw was a big smoker ...he used to say all the time . why should i stop smoking if i enjoy it , for what , so i can live a year or two longer ? if i get cancer i will just pull the trigger on my gun .

well he got lung cancer and he cried like a baby for being so stupid , he begged for each additional day to live ...

so all this talk about doing one's self in rarely comes to pass as we have a huge drive to live .
 
mathjak107 said:
my wifes father inlaw was a big smoker ...he used to say all the time . why should i stop smoking if i enjoy it , for what , so i can live a year or two longer ? if i get cancer i will just pull the trigger on my gun .

well he got lung cancer and he cried like a baby for being so stupid , he begged for each additional day to live ...

so all this talk about doing one's self in rarely comes to pass as we have a huge drive to live .
Click to expand...
I'm sorry about your FIL, @mathjak107. That must have been difficult to watch. Did he do a long stint in a nursing home?
 

Back
Top