Questions regarding future care needs

JoyL

New Member
Never bought Long Term Care but according to one friend, she pays more now w/less benefits than she did 10 yrs ago when she signed up. Is Long Term care worthwhile to get? Thought Tricare for Life covered everything Medicare didn't but I was wrong. Best advice for planning what may be ahead in 10 yrs or so... Advice?
 

Don M.

SF VIP
Location
central Missouri
We took out a LTC policy almost 20 years ago. Yes, the premiums are a bit high, and increase a few dollars every year, but according to our last statement, we are each covered for up to $250K. At todays prices, that would probably only last 3 or 4 years, but if we ever get so incapacitated, that should allow us to "end" reasonably well, without going bankrupt, or becoming a burden to the kids. Personally, I hope we go quickly, and this money is just flushed down the drain.
 

Myquest55

Member
Location
Happily in MAINE
My father had a policy but he never got to use it. As he approached 95, his health rapidly declined. The policy holders told us that once you apply to use it - there is a 90 day (3 month) waiting period. Apparently we waited too long to activate it. THEN, they told us that they would NOT cover any in-home health care so we were out of luck. They would only pay out if Dad was in a licensed care facility.

He was in a retirement community and in 2020, the nursing care building was FULL and locked down so, he was sent home to his unit. My sister took care of him and ultimately hired someone to be with him, when she couldn't. After a while we realized that he needed 24 hr care but the LTC policy was not going to help out. One blessing - he died in his own bed with my sister in the next room - just as he would have wished but that LTC policy would have been a big help. Check your policy. We need to re-read ours again.
 

Aunt Bea

SF VIP
Location
Near Mount Pilot
I don't have any good answers or advice.

I will pay as I go.

If the money gives out before I do I'll rely on Medicaid for the cost of my care.

I'll get by with a little help from my friends! :giggle:

 

Lethe200

Senior Member
We have LTCi policies, but there are not many insurers in this field any longer - less than a dozen, I believe. Unfortunately medical advances are made to help people live longer....not well, but LONGER. "Quality of life" is not a criteria for technology advancements. Illnesses that used to kill people, such as cancer, strokes, diabetes, heart attacks, etc., but now medical improvements can keep you alive for years longer.

These days, LTC premiums are high, coverage is limited, and medical underwriting is "tight"; i.e., restrictive. If you are over age 60 premiums will be exorbitant and likely unaffordable. If you are 69 or older it is unavailable, period. No insurer will write you a policy on someone that old. They cannot make a profit on it. That is a by-product of our for-profit healthcare industry: as costs rise but people live longer, insurers must have a large pool of customers paying in for XX # of years to have enough profit to pay out claims as they occur.

An insurer must guess how much an average claim might cost, 10 or 20 yrs in the future. If you have ever done retirement planning, you know that having to guess at long-term costs is like throwing darts blindfolded. You just don't know, and so to be safe, you guess "high costs". Break that down into length of time a person will be paying premiums, and it equals high premiums.

Almost without fail, US healthcare costs have risen faster than inflation every year for the past 50 years. And LTC is a labor-intensive industry, often paying the lowest wages and thus, high turnover which equals poorer resident care.

In our area, assisted living is roughly $4-5K/mo. Extras (dispensing medications, help getting dressed or bathing, etc.) are priced differently by every facility. Skilled Nursing Care is $12-17K.

In countries with universal healthcare, LTCi as the US knows it, becomes more like a Medicare Advantage policy, costing much less but offering perks such as private rooms, faster access to specialty care, helping to pay for nicer eldercare facilities.

If you do apply for an LTCi policy, select an agent who brokers for several LTCi carriers who can give you multiple quotes. Be aware of ALL the strict rules in making a claim and make sure you fully understand how the exclusion period works. 3 mos. is standard but some companies may offer an extended period for slightly lower premiums.

In our policy, we have a 90 day exclusion. This means we self-insure for 90 days before benefits kick in. HOWEVER, in our policies, 90 days is the aggregate total over the policy lifetime. This means if I needed Skilled Nursing for one month, but then recovered and went home - IF we start a claim with the insurer starting Day 1 when I go in, they will count those days spent in Care as part of the 90 day exclusion, with no expiration date. We will have paid the cost 100%.

So let's say, I trip and fall a year later, and once again need SNC! I file a second time as a continuation of the days I've already used, and spend 6 weeks this time. Those 6 wks get credited to the remainder of my exclusion period - again paying 100% - but now I only have 2 wks left on the 90 day exclusion that I have to pay for, the next time I need SNC.

After that, it's the insurer who pays, whatever my daily benefit is at that time. Premium payments are suspended once benefits start, and since my LTCi policy is a tax-qualified policy, all benefits are tax-free and I do not have to report them as income.

It is extremely important to understand what you are buying. LTCi is like your homeowners or auto insurance. It is not intended to cover all your costs, but it is a financial tool that can help deal with extraordinary expenses. Not understanding the fine print is guaranteed to make you unhappy as a waste of $$$.

There are new policies that combine life insurance with an LTC option. These are the "Wild West" solutions to a difficult eldercare issue. Some may be good, others probably are not. If you do not have an eldercare attorney or financial adviser to help understand the fine print, I think I personally would not risk buying one, but as always, YMMV.

Good luck to you whatever you decide.
 

HoneyNut

Senior Member
Is Long Term care worthwhile to get?
I think the majority of people die within one year of entering a nursing home, so I'd guess that Long Term Care is not worth it for the average person if they expect to still have some retirement funds available. My mom paid tons of money for her policy, then died without having used it at all. If it is just my health that goes, I hope to be okay without LTC, but I'm more worried that I'll need "memory care" at some point and I don't know if LTC covers memory care or not.
 

Leann

Member
I have a LTC policy which I took out a few years ago. The annual premium is exorbitant. I would have been ineligible if I applied after my cancer diagnosis. My reasons for having it are deeply personal and I wish I didn't feel compelled to have it. Life is unpredictable.
 

Myquest55

Member
Location
Happily in MAINE
You're right Leann, life IS unpredictable! We got our policies while husband was still working and we were in our 50's. My policy cost more than his due to my health at the time. I improved. The company we purchased the policies from told us we could have new physicals after 2 years but when we approached them about it, they said they weren't writing those policies any more so no - re-screening for us. After a few years, husband was diagnosed with Parkinsons. I'm gad we have them - we'll see.
 

dseag2

Dallas, TX
Location
Dallas, TX
We have LTCi policies, but there are not many insurers in this field any longer - less than a dozen, I believe. Unfortunately medical advances are made to help people live longer....not well, but LONGER. "Quality of life" is not a criteria for technology advancements. Illnesses that used to kill people, such as cancer, strokes, diabetes, heart attacks, etc., but now medical improvements can keep you alive for years longer.

These days, LTC premiums are high, coverage is limited, and medical underwriting is "tight"; i.e., restrictive. If you are over age 60 premiums will be exorbitant and likely unaffordable. If you are 69 or older it is unavailable, period. No insurer will write you a policy on someone that old. They cannot make a profit on it. That is a by-product of our for-profit healthcare industry: as costs rise but people live longer, insurers must have a large pool of customers paying in for XX # of years to have enough profit to pay out claims as they occur.

An insurer must guess how much an average claim might cost, 10 or 20 yrs in the future. If you have ever done retirement planning, you know that having to guess at long-term costs is like throwing darts blindfolded. You just don't know, and so to be safe, you guess "high costs". Break that down into length of time a person will be paying premiums, and it equals high premiums.

Almost without fail, US healthcare costs have risen faster than inflation every year for the past 50 years. And LTC is a labor-intensive industry, often paying the lowest wages and thus, high turnover which equals poorer resident care.

In our area, assisted living is roughly $4-5K/mo. Extras (dispensing medications, help getting dressed or bathing, etc.) are priced differently by every facility. Skilled Nursing Care is $12-17K.

In countries with universal healthcare, LTCi as the US knows it, becomes more like a Medicare Advantage policy, costing much less but offering perks such as private rooms, faster access to specialty care, helping to pay for nicer eldercare facilities.

If you do apply for an LTCi policy, select an agent who brokers for several LTCi carriers who can give you multiple quotes. Be aware of ALL the strict rules in making a claim and make sure you fully understand how the exclusion period works. 3 mos. is standard but some companies may offer an extended period for slightly lower premiums.

In our policy, we have a 90 day exclusion. This means we self-insure for 90 days before benefits kick in. HOWEVER, in our policies, 90 days is the aggregate total over the policy lifetime. This means if I needed Skilled Nursing for one month, but then recovered and went home - IF we start a claim with the insurer starting Day 1 when I go in, they will count those days spent in Care as part of the 90 day exclusion, with no expiration date. We will have paid the cost 100%.

So let's say, I trip and fall a year later, and once again need SNC! I file a second time as a continuation of the days I've already used, and spend 6 weeks this time. Those 6 wks get credited to the remainder of my exclusion period - again paying 100% - but now I only have 2 wks left on the 90 day exclusion that I have to pay for, the next time I need SNC.

After that, it's the insurer who pays, whatever my daily benefit is at that time. Premium payments are suspended once benefits start, and since my LTCi policy is a tax-qualified policy, all benefits are tax-free and I do not have to report them as income.

It is extremely important to understand what you are buying. LTCi is like your homeowners or auto insurance. It is not intended to cover all your costs, but it is a financial tool that can help deal with extraordinary expenses. Not understanding the fine print is guaranteed to make you unhappy as a waste of $$$.

There are new policies that combine life insurance with an LTC option. These are the "Wild West" solutions to a difficult eldercare issue. Some may be good, others probably are not. If you do not have an eldercare attorney or financial adviser to help understand the fine print, I think I personally would not risk buying one, but as always, YMMV.

Good luck to you whatever you decide.
Great information! As I understand it, not only are long-term insurance costs exorbitant, they can be raised at any time. I wouldn't consider one for myself at 64 y/o.

My mother's assisted living costs were $7,000 per month in a facility outside of Dallas. They were JD Power-approved, so I was happy to keep her there. The sale of her home in her 55+ community almost exactly paid for her almost 4 years there.
 

Lethe200

Senior Member
I think the majority of people die within one year of entering a nursing home, so I'd guess that Long Term Care is not worth it for the average person if they expect to still have some retirement funds available. My mom paid tons of money for her policy, then died without having used it at all. If it is just my health that goes, I hope to be okay without LTC, but I'm more worried that I'll need "memory care" at some point and I don't know if LTC covers memory care or not.
This link gives very good information on why older LTCi policies do not mention Asst. Living (or Memory Care, for that matter), as well as 3 pts that are important to look into if you ARE buying an LTCi policy: How to Use Long-Term Care Insurance for Assisted Living

Home Healthcare coverage is an option on most LTCi policies although newer policies will usually include it automatically. For people who want to try to stay at home as long as possible, an LTCi policy can help cover the cost. Note that again, there are legal restrictions! They won't pay for "grey labor" off the street, no matter how many of your neighbors rave about a caretaker. Payment is determined by Medicare standards (I think virtually all insurers use the Medicare legal definitions for commonality); meaning a licensed, bonded employment agency/firm.

Be aware home healthcare is almost always limited to less serious disabilities. Needing a health aide to help you dress or take medicine is one thing; requirement for a R.N. to handle ICU-type monitoring equipment is another thing altogether. Most agencies will not touch the latter situation due to legal liability.

"Memory care" falls under Skilled Care Nursing, so it warrants full payment. But check the wording on the policy in question - it's that 'fine print' issue again!

BTW, as medical technology advances, people should note that recent studies have shown the length of time spent in Skilled Care Nursing (i.e., hospitalization) is increasing. It's now over two years on average.
 

Lethe200

Senior Member
Sorry, I did not discuss costs of LTCi.

Yes, premiums can and do rise. Ours have risen substantially over the last 22 yrs, but I was certain that insurers were underpricing the business (there was a lot of competition back then) and I told my spouse we had to be sure we could afford a doubling or more of costs. We have individual policies; women always pay more because their longevity is better.

There was a modest premium increase 8 yrs later. 4 yrs after that, a more serious increase, about 25%. There have been four premium increases over the last decade, substantially increasing costs.

Policyholders are always given options (from our insurer):
  • You can "freeze" benefits; payments will remain the same and never rise, but benefit amount never changes. Remember that inflation eats away cash worth: if you buy something in 2022 that costs $100, by year 2042 that same item will cost you almost $164 with average inflation of 3%/yr.

  • Or, you could drop all options (home healthcare, inflation compounding) and stay with just a flat SCN benefit; your premium would drop a bit.

  • Or, you could keep your base benefit and options, but accept a "cap", either in dollar amount (say, $350K) or in length of benefit (5 yrs or 7 yrs is usually offered). Your premiums would rise by about 15-20%, depending on what the insurer calculated.

  • Or, you can take the "Rolls Royce" option, keep everything the way it is, and pay 45-75% more premium (again, depending on what the insurer calculated).
We have always opted to keep what we have. We have extremely generous benefits, having grown 5% every year due to our purchase of the Inflation Rider; home healthcare; and an unlimited benefit period (which is no longer sold by any insurer).

Our original premiums, in total for BOTH policies, were originally $2300/yr. There is a final phase-in of the last premium increase coming in Nov 2022, at which point our total for (again) both policies, will be roughly $8300/yr.

My rough calculations are that we've spent about $51K in premiums to date - plus any future premiums.

It's a lot of $$$$. We are fortunate to have sufficient funds. I do not agree with those who say, if I save my money and invest it, I'll have enough to pay for any LTC needs.

#1, you need to save that money through thick and thin, for decades. What happens if you suffer a disability, or even just a job loss, and can't work? Even paying for SCN for six months can be a whopping sum these days. There are additional costs for being in a SCN facility. You want Depends? Pay for them yourself. You want a bathrobe and slippers? Medicaid doesn't pay for that. Medications are usually an extra cost not included in SCN charges.

#2, investing for gain carries risk. What if you have $500K in a special LTC-designated portfolio, and a true Bear Market wipes out 30% of your portfolio? And THEN you suffer a disability and need to start taking the money, with no more contributions?

#3, Not to mention, taking that money in distributions is taxable. Modern LTCi policies pay benefits tax free. And if you run out of assets and have to go on Medicaid, LTCi is not considered income, since it's paid to the facility.

Modern LTCi policies have limited benefit periods, inflation rider option is usually limited to 3%. A 51-yr old friend of mine in good health received a 2020 quote of $3K/yr. for $250/day benefit with home healthcare reimbursement and the 3% inflation rider, capped at 5 yrs length.
 

dseag2

Dallas, TX
Location
Dallas, TX
Sorry, I did not discuss costs of LTCi.

Yes, premiums can and do rise. Ours have risen substantially over the last 22 yrs, but I was certain that insurers were underpricing the business (there was a lot of competition back then) and I told my spouse we had to be sure we could afford a doubling or more of costs. We have individual policies; women always pay more because their longevity is better.

There was a modest premium increase 8 yrs later. 4 yrs after that, a more serious increase, about 25%. There have been four premium increases over the last decade, substantially increasing costs.

Policyholders are always given options (from our insurer):
  • You can "freeze" benefits; payments will remain the same and never rise, but benefit amount never changes. Remember that inflation eats away cash worth: if you buy something in 2022 that costs $100, by year 2042 that same item will cost you almost $164 with average inflation of 3%/yr.

  • Or, you could drop all options (home healthcare, inflation compounding) and stay with just a flat SCN benefit; your premium would drop a bit.

  • Or, you could keep your base benefit and options, but accept a "cap", either in dollar amount (say, $350K) or in length of benefit (5 yrs or 7 yrs is usually offered). Your premiums would rise by about 15-20%, depending on what the insurer calculated.

  • Or, you can take the "Rolls Royce" option, keep everything the way it is, and pay 45-75% more premium (again, depending on what the insurer calculated).
We have always opted to keep what we have. We have extremely generous benefits, having grown 5% every year due to our purchase of the Inflation Rider; home healthcare; and an unlimited benefit period (which is no longer sold by any insurer).

Our original premiums, in total for BOTH policies, were originally $2300/yr. There is a final phase-in of the last premium increase coming in Nov 2022, at which point our total for (again) both policies, will be roughly $8300/yr.

My rough calculations are that we've spent about $51K in premiums to date - plus any future premiums.

It's a lot of $$$$. We are fortunate to have sufficient funds. I do not agree with those who say, if I save my money and invest it, I'll have enough to pay for any LTC needs.

#1, you need to save that money through thick and thin, for decades. What happens if you suffer a disability, or even just a job loss, and can't work? Even paying for SCN for six months can be a whopping sum these days. There are additional costs for being in a SCN facility. You want Depends? Pay for them yourself. You want a bathrobe and slippers? Medicaid doesn't pay for that. Medications are usually an extra cost not included in SCN charges.

#2, investing for gain carries risk. What if you have $500K in a special LTC-designated portfolio, and a true Bear Market wipes out 30% of your portfolio? And THEN you suffer a disability and need to start taking the money, with no more contributions?

#3, Not to mention, taking that money in distributions is taxable. Modern LTCi policies pay benefits tax free. And if you run out of assets and have to go on Medicaid, LTCi is not considered income, since it's paid to the facility.

Modern LTCi policies have limited benefit periods, inflation rider option is usually limited to 3%. A 51-yr old friend of mine in good health received a 2020 quote of $3K/yr. for $250/day benefit with home healthcare reimbursement and the 3% inflation rider, capped at 5 yrs length.
All great points. And re: #2, I have also seen my retirement being whittled away in the stock market. A Bear Market has already wiped out 20% of my portfolio. But I do keep cash in those accounts as well for emergencies. And it won't last forever, so with any luck I can stay healthy until things start looking up again.

Sounds like you have a great policy. I have no doubt that it was the right thing to do for your particular needs.
 

Aunt Bea

SF VIP
Location
Near Mount Pilot
Most long-term-care insurance policies require two kinds of benefit triggers before they'll pay – either you need help with two out of six activities of living (which generally include bathing, dressing, toileting, eating, transferring, and continence) or you have severe cognitive impairment.

When I get to that point please just slip a pill into my Jello and send me on my way.

 

Lethe200

Senior Member
Most long-term-care insurance policies require two kinds of benefit triggers before they'll pay – either you need help with two out of six activities of living (which generally include bathing, dressing, toileting, eating, transferring, and continence) or you have severe cognitive impairment.
Yes, insurers now use the Medicare definitions. That's a plus for consumers; many older policies used to require 3 triggers, not just 2.
 

OneEyedDiva

Well-known Member
Location
New Jersey
Although after reading the pros and cons of getting LTC insurance made me leery, I applied anyway. Both my applications from my State Health Benefits retiree plan and AARP were denied due to pre-existing conditions. I read that premiums were subject to be raised substantially and that unless the insurance company is rock solid, buying them could be risky. My only option was to beef up my savings and investments so I could cover at least the average nursing home stay cost of care. Now I'm seeing that my Medicare plan (Aetna) is making it easy and affordable to receive in home care by paying for 35 hours a week for an unlimited period.

I don't doubt what your friend is experiencing is the norm with LTC policies. You didn't state your age but the older you are the more expensive these policies cost out the gate. The cost may actually be prohibitive.
 

Lethe200

Senior Member
... Now I'm seeing that my Medicare plan (Aetna) is making it easy and affordable to receive in home care by paying for 35 hours a week for an unlimited period.

I don't doubt what your friend is experiencing is the norm with LTC policies. You didn't state your age but the older you are the more expensive these policies cost out the gate. The cost may actually be prohibitive.
I think we'll see more Medicare insurers - certainly the Advantage carriers - offer home healthcare options. It makes fiscal sense.

We purchased our policies when I was 48 and my spouse was 46 - another big reason why the cost was very low. Many people wait until it's too late. Like quake insurance - you can tell I live in CA, LOL - people make excuses about "Oh, I can't afford it," until after a quake happens!
 

Just Jeff

Member
Does anyone know of or remember groups of people, families and nationalities or other,

who did not ever go for the high cost of insurance nor the high cost of medicine,

but helped each other, lived together, and took care of one another, including family but not only family ?
 

dseag2

Dallas, TX
Location
Dallas, TX
Does anyone know of or remember groups of people, families and nationalities or other,

who did not ever go for the high cost of insurance nor the high cost of medicine,

but helped each other, lived together, and took care of one another, including family but not only family ?
Yes, I remember those days in the US. Now these extended families live mostly in Europe, Asia and Latin America with the exception of those who immigrated to the US.
 

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