Long Term Care

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Don
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Long Term Care

Post by Don » Sat Oct 20, 2018 11:17 am

I'm curious what people here think about long term care. LTC is, to many, an esoteric issue that most of us don't want to think about today. Is it worth buying? What about self-insuring instead?
I'm 62 and beginning to think about these things now. Thanks!
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l82start
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Re: Long Term Care

Post by l82start » Sat Oct 20, 2018 11:24 am

I was signed up for a long term care plan for a brief while, and the maths seemed to sense.. but it was all based on getting a plan before age 50 and the lower rates and better benefits that came with it. changes to my personal situation resulted in my dropping it, but there is something to be said for having this in place if you can get a decent deal, I have family members (parents) who have it and have made use of it successfully..
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ochotona
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Re: Long Term Care

Post by ochotona » Sat Oct 20, 2018 1:34 pm

Don what is your net worth?
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pugchief
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Re: Long Term Care

Post by pugchief » Sat Oct 20, 2018 2:46 pm

I think LTC insurance would be worth considering if the rates they quote you initially would be guaranteed not to increase beyond X%/year for the life of the policy, with X=twice the rate of inflation, or something else reasonable. But since that is not the case, I can't see where paying for a bunch of years and then dropping it later when you are closer to needing it because it is no longer affordable is a good idea.
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Re: Long Term Care

Post by Don » Sat Oct 20, 2018 11:45 pm

ochotona wrote:
Sat Oct 20, 2018 1:34 pm
Don what is your net worth?
It's considerable. Let's leave it at that.
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ochotona
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Re: Long Term Care

Post by ochotona » Sun Oct 21, 2018 5:22 am

Lately I've heard that north of $3 million it's feasible to self insure.
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pugchief
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Re: Long Term Care

Post by pugchief » Sun Oct 21, 2018 8:29 am

ochotona wrote:
Sun Oct 21, 2018 5:22 am
Lately I've heard that north of $3 million it's feasible to self insure.
That depends on what your other expenses are. If you have 2M at retirement but could live on 1M, you have another 1M to self insure with. If you don't use it, the kids get an inheritance. My goal is to die broke and let the kids earn their own fortune through hard work, the way I did. O0
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sophie
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Re: Long Term Care

Post by sophie » Sun Oct 21, 2018 9:01 am

I looked at LTC insurance, but the limits on coverage (2 years, pays only about 2/3 expenses, and has lots of little "gotcha" exceptions that I'm sure would kick in when it comes time to make claims) didn't seem worth the expense. Because it's virtually a certainty that we will all need LTC eventually, it's not so much insurance as a cost-sharing pool with a big slice of management overhead.

My insurance policy is the equity in my apartment plus core savings that can be spent down. If I needed more than that, I think a life insurance policy with ability to withdraw funds early would be a better choice. I also have an intangible advantage: I will be able to stay where I am quite happily for a lot longer than someone who lives in a surburban house with a yard and is car-dependent. I remember a great-aunt who never learned to drive as was often the case for women of that era. She had to move to a nursing home even though she was cognitively intact after her husband died, because she had limited mobility (knee problems) and lived in a typical car-dependent suburb. So sad. Yes, you can move to an apartment when necessary and I know people do this, but the longer you wait the harder it gets. Plus, most apartment complexes don't solve the transportation problem, because they're often stuck in the middle of nowhere with nothing to walk to except the grounds.
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ochotona
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Re: Long Term Care

Post by ochotona » Mon Apr 08, 2019 6:05 am

pugchief wrote:
Sat Oct 20, 2018 2:46 pm
I think LTC insurance would be worth considering if the rates they quote you initially would be guaranteed not to increase beyond X%/year for the life of the policy, with X=twice the rate of inflation, or something else reasonable. But since that is not the case, I can't see where paying for a bunch of years and then dropping it later when you are closer to needing it because it is no longer affordable is a good idea.
CNA keeps raising our premia, and I want to diversify our response function away from their product.

I am looking at life insurance with LTC rider, and deferred income annuity which would start age 80-85 as alternatives. Getting quotes from Fidelity and Schwab.

Will let everyone know how it goes.
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Re: Long Term Care

Post by Don » Mon Apr 08, 2019 7:37 am

ochotona wrote:
Mon Apr 08, 2019 6:05 am
pugchief wrote:
Sat Oct 20, 2018 2:46 pm
I think LTC insurance would be worth considering if the rates they quote you initially would be guaranteed not to increase beyond X%/year for the life of the policy, with X=twice the rate of inflation, or something else reasonable. But since that is not the case, I can't see where paying for a bunch of years and then dropping it later when you are closer to needing it because it is no longer affordable is a good idea.
CNA keeps raising our premia, and I want to diversify our response function away from their product.

I am looking at life insurance with LTC rider, and deferred income annuity which would start age 80-85 as alternatives. Getting quotes from Fidelity and Schwab.

Will let everyone know how it goes.
I had a banker at Chase pitch me the life insurance with the LTC rider but it sounded too good to be true so I haven't done it.
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sophie
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Re: Long Term Care

Post by sophie » Mon Apr 08, 2019 8:02 am

Definitely let us know!

If there were such a thing as long term care insurance with indefinite coverage but a long elimination period (e.g. 3 years, the average nursing home stay), or an equivalent deductible eg $300K, I'd definitely consider it. That's something you might call "insurance", since it's insuring against a low probability, high cost event. Whereas the policies I've seen have benefit caps designed to pay for only 2-3 years, with just a 90 day elimination period at most. This is "insuring" for a cost that I know I can handle and is very likely to occur. That's not really insurance. Hence, there is no actual product out there that I want!

Not only that, but as the boomer generation moves through nursing homes, insurance companies are likely to start playing every trick in the book to avoid paying out on policies. Like, just denying everything and forcing you to fight for reimbursement. They will undoubtedly be aware that by the time you need nursing home care, you're not going to be in any condition to fight. And nursing homes simply won't have the bandwidth to deal with it. They'll just boot you out to make space for the next person on their waiting list.

If you look up info on maximum length of nursing home stays (e.g. pubmed articles), a typical number is 10 years. Multiply by $150,000/year (or price out good quality nursing homes in your area - that's what it is in mine). If $50K/year is covered by fixed income sources (Social security, pension, annuity, RMDs), that leaves $1M to be funded. No problem for a single person with a paid off home and a responsibly sized retirement nest egg, but more difficult for a couple. It should be possible to plan for this with the type of life insurance products Ochotona is looking into though - let us know what you find!
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Re: Long Term Care

Post by mathjak107 » Mon Apr 08, 2019 8:13 am

we have a very nice ny state partnership plan .

most states now sponsor plans that are partnerships.

you buy your plan from an approved insurer and the state agrees that in exchange for buying this plan they agree to certain things.

in our case ,ny, they agree:

not to touch assets at all if you buy 3 years of coverage for nursing home /6 years in home or assisted living .

no 5 year look back


no cap on the income the stay at home spouse gets

when the insurance runs out you go on a special version of medicaid and they pick up the bill.

nys gives us a 1600 dollar a year tax credit for having it too .

we bought it for the perks after the insurance is up , not for the 3 years care or 6 years in home care.

you need to qualify and being obese or unhealthy knocks you right out of the box . our agent was over weight and was denied a plan .

everything is clearly spelled out in the plan in simple english .. there are no gotcha's .

it is great you protected a million dollars in assets through trusts but now try drawing it to live on . medicaid will take every thing above around 3k a month in our state from the stay at home spouse .

so living in queens in nyc where we do that feature is a huge plus .


each state likely has a plan but they vary as to the perks after the insurance runs out .
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