Long Term Care

[mathjak107]

be very careful with these hybrid life insurance policies ...on the outside they look like a good deal because of how they appear to turn in to a life insurance policy if you don't use it on care ... under the hood they end up being incredibly expensive for what you get .

remember they control the interest on your policy over the years ..they don't have to raise you in premium ... they keep all the interest you get and the higher rates go the more that policy cost you...

[mathjak107]

be very careful with hybrid life insurance policies , they have become popular ...on the outside they look like a good deal because of how they appear to turn in to a life insurance policy if you don't use it on care ... under the hood they end up being incredibly expensive for what you get .

remember they control the interest on your policy over the years ..they don't have to raise you in premium ... they keep all the interest you get and the higher rates go the more that policy cost you...

[WiseOne]

Something to remember about an extended nursing home stay: it's a one way trip.

The reason I can self insure is that the same retirement portfolio and owned home that supports me while I'm happily living independently, becomes an expendable source of funds to pay for nursing home care once I'm no longer independent. Definitely it's harder for a couple, but there's no fixed amount to save like $3 million. Do something like the calculation I posted about accounting for a worst-case 10 year nursing home stay, and either add to retirement savings goal or find some other way to plug the gap. The problem is that LTC insurance is unlikely to be much help, given the structure of covering only the first 2-3 years. For many people that's ok since most are in nursing homes less than that time, but by the same token that should be a piece of cake for a couple with a big retirement portfolio. It's the long-tail risk we're concerned with here, for which you currently cannot buy any form of insurance.

Of course there's always the option of the one way first class ticket to Switzerland :-).

[mathjak107]

if it wasn't for the fact we are a couple i would just let the portfolio exhaust itself .... but we each have a spouse to worry about .....

the new york state partnership plan is great ... we checked and we can get in almost anywhere as a paying customer ...once the 3 years insurance is up our plan calls for medicaid picking up the bills and they will take assignment after 3 years of paying .... we have no spend down , no income restrictions on the stay at home spouses income like regular medicaid and no look back .... we could not care less about the 3 years coverage ... it is the fact all assets are protected after the 3 years and medicaid will pick up the bills ..... only two states offer total asset protection plans and new york is one of them

[Maddy]

The problem is that LTC insurance is unlikely to be much help, given the structure of covering only the first 2-3 years. For many people that's ok since most are in nursing homes less than that time, but by the same token that should be a piece of cake for a couple with a big retirement portfolio. It's the long-tail risk we're concerned with here, for which you currently cannot buy any form of insurance.

I didn't know this. Very interesting, and a game-changer when it comes to planning for the worst. I doubt most people know this.

While my situation is a good deal more austere than yours, I'm thinking along the same lines. I'll just add that a property, house, or apartment is something that could potentially be willed to an in-home caretaker, whether that be a family member or someone else, making it possible to afford services that might otherwise require those assets to be spent down. If staying at home is your priority, you have to get creative!

Of course there's always the option of the one way first class ticket to Switzerland :-).

?? Could you explain?

[mathjak107]

i can tell you with my dad there was no way anyone of us could have taken care of him in our home .

usually by the time snf is needed it is well beyond family .

how it typically plays out is a family member gets hurt trying to move 200 lbs of limp flesh if they are moving someone paralyzed from a stroke and they are both in trouble or the person becomes violent with memory issues and someone gets hurt ...

the best way to bust up a family is have one sibling step up to the plate and take in a parent who needs care . odds are the other siblings step back and the battles begin .

usually the person providing the care takes a monetary hit , a career hit , a social hit and maybe even loses a job .

if you have a spouse odds are you can kiss that marriage good bye once the spouse starts on why do we have to do it and sacrifice so much and your brothers and sisters do nothing .


one of the worst things parents can do to their kids is drop their long term care burden on their children .

remember we are talking people who need a snf , not in home care or assisted living .

[mathjak107]

Something to remember about an extended nursing home stay: it's a one way trip.

The reason I can self insure is that the same retirement portfolio and owned home that supports me while I'm happily living independently, becomes an expendable source of funds to pay for nursing home care once I'm no longer independent. Definitely it's harder for a couple, but there's no fixed amount to save like $3 million. Do something like the calculation I posted about accounting for a worst-case 10 year nursing home stay, and either add to retirement savings goal or find some other way to plug the gap. The problem is that LTC insurance is unlikely to be much help, given the structure of covering only the first 2-3 years. For many people that's ok since most are in nursing homes less than that time, but by the same token that should be a piece of cake for a couple with a big retirement portfolio. It's the long-tail risk we're concerned with here, for which you currently cannot buy any form of insurance.

Of course there's always the option of the one way first class ticket to Switzerland :-).

the new york state partnership plans are geared for the long tail risk after the insurance runs out ...that is why we buy them , certainly not for the 3 years of insurance

[WiseOne]

The problem is that LTC insurance is unlikely to be much help, given the structure of covering only the first 2-3 years. For many people that's ok since most are in nursing homes less than that time, but by the same token that should be a piece of cake for a couple with a big retirement portfolio. It's the long-tail risk we're concerned with here, for which you currently cannot buy any form of insurance.

I didn't know this. Very interesting, and a game-changer when it comes to planning for the worst. I doubt most people know this.

While my situation is a good deal more austere than yours, I'm thinking along the same lines. I'll just add that a property, house, or apartment is something that could potentially be willed to an in-home caretaker, whether that be a family member or someone else, making it possible to afford services that might otherwise require those assets to be spent down. If staying at home is your priority, you have to get creative!

Of course there's always the option of the one way first class ticket to Switzerland :-).

?? Could you explain?

I didn't know this either until I read the fine print on the LTC policy offered through my employer. About 5 minutes later I decided it made no sense to buy it, and proceeded to ignore the beseeching emails pleading with me to change my mind. Nope sorry! However - if anybody hears of an insurance policy with a very large deductible (e.g. 2 years worth of nursing home costs) but no cap on benefits, I'll be interested to know about it.

Maddy, you might want to check the Medicaid long term care setup in your state. They allow a spouse (not sure if that includes "family member or someone else") to keep a home and some savings. I don't know if you can will it to someone while you're still alive though, plus there are "look-back" laws that go back as much as 5 years to prevent you from doing something like that and then claiming Medicaid benefits. I think you'll just have to arrange for those assets to be liquidated when you go into a nursing home. Needless to say, Medicaid nursing homes are not wonderful places to end up in.

Which brings me to your last question. Look here for the answer: http://www.dignitas.ch/

Basically, I'd opt for this over 10 years in a nursing home any day of the week. If I can no longer make decisions for myself, to me that's an instant indication to go comfort care only. Pneumonia? It's the friend of the elderly. Give me some oxygen, morphine, a dash of benzos, and a nice comfortable bed. You can only imagine what I think of cancer chemotherapy. Sick and throwing up for 6 solid months in order to extend my life for 3 months? oh right. Where do I sign up?

[flyingpylon]

This is an interesting article:

Why I Hope to Die at 75 by Ezekiel Emanuel

Sorry that it doesn't exactly help with the task of finding LTC options.

[Kriegsspiel]

Basically, I'd opt for this over 10 years in a nursing home any day of the week. If I can no longer make decisions for myself, to me that's an instant indication to go comfort care only. Pneumonia? It's the friend of the elderly. Give me some oxygen, morphine, a dash of benzos, and a nice comfortable bed.

Just think, the Romans used to put a sword under their ribs and tip over onto it. We've come so far.

You can only imagine what I think of cancer chemotherapy. Sick and throwing up for 6 solid months in order to extend my life for 3 months? oh right. Where do I sign up?

That seems like a much more common opinion among doctors than one would assume.

[mathjak107]

The problem is that LTC insurance is unlikely to be much help, given the structure of covering only the first 2-3 years. For many people that's ok since most are in nursing homes less than that time, but by the same token that should be a piece of cake for a couple with a big retirement portfolio. It's the long-tail risk we're concerned with here, for which you currently cannot buy any form of insurance.

I didn't know this. Very interesting, and a game-changer when it comes to planning for the worst. I doubt most people know this.

While my situation is a good deal more austere than yours, I'm thinking along the same lines. I'll just add that a property, house, or apartment is something that could potentially be willed to an in-home caretaker, whether that be a family member or someone else, making it possible to afford services that might otherwise require those assets to be spent down. If staying at home is your priority, you have to get creative!

Of course there's always the option of the one way first class ticket to Switzerland :-).

?? Could you explain?

I didn't know this either until I read the fine print on the LTC policy offered through my employer. About 5 minutes later I decided it made no sense to buy it, and proceeded to ignore the beseeching emails pleading with me to change my mind. Nope sorry! However - if anybody hears of an insurance policy with a very large deductible (e.g. 2 years worth of nursing home costs) but no cap on benefits, I'll be interested to know about it.

Maddy, you might want to check the Medicaid long term care setup in your state. They allow a spouse (not sure if that includes "family member or someone else") to keep a home and some savings. I don't know if you can will it to someone while you're still alive though, plus there are "look-back" laws that go back as much as 5 years to prevent you from doing something like that and then claiming Medicaid benefits. I think you'll just have to arrange for those assets to be liquidated when you go into a nursing home. Needless to say, Medicaid nursing homes are not wonderful places to end up in.

Which brings me to your last question. Look here for the answer: http://www.dignitas.ch/

Basically, I'd opt for this over 10 years in a nursing home any day of the week. If I can no longer make decisions for myself, to me that's an instant indication to go comfort care only. Pneumonia? It's the friend of the elderly. Give me some oxygen, morphine, a dash of benzos, and a nice comfortable bed. You can only imagine what I think of cancer chemotherapy. Sick and throwing up for 6 solid months in order to extend my life for 3 months? oh right. Where do I sign up?

maybe you don't understand ---- there is zero reason for me to look in to protecting any assets outside of the new york state partnership plan ... that is exactly what the full asset protection plan we have DOES NOT REQUIRE YOU TO DO .

ALL assets are 100% protected with NO LOOK BACK , NO SPEND DOWN , NO CAP ON SPOUSES INCOME , ... when the insurance runs out after 3 years the bills merely get assigned to A SPECIAL VERSION OF MEDICAID created just for these plans ,..
so you are incorrect about the 5 year rule in this case .. it does not apply .

they offer different levels of coverage...you can get 100% asset protection which is what we took or you can take a dollar for a dollar plans which are cheaper.. in the dollar for dollar if medicaid spends say 300k then 300k in assets is protected ... only ny and Illinois have full asset protection plans , all other states only offer dollar for dollar ... you get none of this protection in a conventional long term care plan , it has to be specifically a state partnership plan

"

Name:NYS Partnership for Long Term Care
Description:
The NYS Partnership for Long-Term Care (NYSPLTC) is a unique Department of Health program combining private long-term care insurance and Medicaid Extended Coverage (MEC). Its purpose is to help New Yorkers financially prepare for the possibility of needing nursing home care, home care, or assisted living services someday. The program works by allowing an individual or couple who purchases a Partnership insurance policy and keeps in effect to hold onto all or part of their assets (depending on the type of policy purchased) under the Medicaid program if their long-term care needs extend beyond the period covered by their policy.

https://www.cnbank.com/Your_Bank/Educat ... are_Plans/

[ochotona]

Mathjak when does one enroll in these partnership plans? I've not decided I'm going to live in my current State at retirement. Do I have until 65-67 to decide?

[mathjak107]

i look at this no different then any other insurance i have . it covers me for the year ... my dad was younger then me when he had a stroke and was paralyzed ..

this is our 4th year and so far not a penny in increases ... with the insurers ties to the state it is doubtful the insurers failure would mean much .. like most insurer failures another company picks up the plans .

[mathjak107]

Mathjak when does one enroll in these partnership plans? I've not decided I'm going to live in my current State at retirement. Do I have until 65-67 to decide?

any age is fine but they get costlier . i waited , ended up having some early blood tests come back diabetic and even though by the time i applied i was only prediabetic i got surcharged 1k a year now forever ... even being over weight can get you denied ... but waiting can make them very costly because of the asset protection perks

[stuper1]

More information is at www.partnershipforlongtermcare.com.

Only a few states don't have plans, although apparently just as of last month, my state (California) has no participating insurance companies. Interestingly, most state's plans have reciprocity with most other states, so that you can move to a different state and still retain your asset protection.

[mathjak107]

More information is at www.partnershipforlongtermcare.com.

Only a few states don't have plans, although apparently just as of last month, my state (California) has no participating insurance companies. Interestingly, most state's plans have reciprocity with most other states, so that you can move to a different state and still retain your asset protection.

Yes and no ... it is like my plan only has 100% asset protection in New York...if I go to another state it reverts to a dollar for a dollar plan ...not a great deal since I am paying more for 100% asset protection.. most states are dollarfor a dollar only

[flyingpylon]

More information is at www.partnershipforlongtermcare.com.

People should also look for information on their state's official website. The website above seems to be run by an anonymous third party.

[mathjak107]

ny has a nice website devoted to it ... i can't speak for other states


https://nyspltc.health.ny.gov/expansion.htm

[mathjak107]

the older long term care policies saw big jumps in premium because the insurers used statistics that turned out to be soooo wrong about usage ..

According to a report from the National Association of Insurance Commissioners for people turning age 65 in 2015-2019:

48% are expected to have no long-term care costs during their lifetimes,
15.4% will have costs of up to $50,000,
9.7% will have costs of $50,000-$100,000,
11.7% will have costs of $100,000-$250,000, and
15.2% will have costs that exceed $250,000.

all in todays dollar so these numbers inflation adjusted are much higher ...

original usage was based on generation old stats which were flawed ... many who needed care like my dad could not afford a nursing home .. there are healthcare workers who take one or 2 in full time like my dad who was paralyzed and care for them ... there were so many like my dad who were never counted in the statistics as far as usage .. plus we are living longer and more of us will need care both in home , assisted living and snf ...

families today can't or won't ruin their careers and break up families trying to provide care like generations ago who did not know better .. plus those with insurance tend to use it ....

today they seem to have the pricing right . like i said we have no increase now in 4 years ..considering we get a 5% inflation increase each year in the amount that is pretty good .

[mathjak107]

A lot of reasons ... for one thing you need to pull a huge chunk of assets a side out of the income generation pool ....that 2 million generates 80k pretax safely before pulling a big chunk out .... depending where you live that can be a big hit ..

You can’t use it to self insure and include it in your draw rate calculations.

The pile of money that generates that income has a passing success rate if 1 dollar is left in safe withdrawal success rates , so you can’t base an income draw on it . if you have a spouse that can be a bad idea ...

Plus you need to tuck that money away safely and that means low returns .... I can buy a policy ,, pay the premium with just a piece of the return keeping the money invested normally ....plus look at al that asset protection you get ..

Even the pp is to risky in a rising rate environment for insurance money .

We thought about self insuring but it was silly if you are really going to self insure and not just in words

[ochotona]

Met a young very smart and brutally honest CFP at Schwab today, he looked at my plan and told me not to change anything. He said my per month LTC premium was low for the given benefit... Just continue with the current plan. He thought annuities were a poor value. They sell annuities.

LATER... methinks the young man was prejudiced. I ran the numbers, the QLAC really doesn't look so bad. See here. Absolutely nothing wrong with a 4.5% rate of return, if a highly-rated insurance company is involved. The cash starts coming to you late in life when LTC needs are likely, and you can't outlive that incremental cash stream. If no LTC needs, then you're just the most generous Granny / Grampy on earth!

If you both die early... well, you won't miss it, and your heirs get your partly used remaining portfolio.

I'm thinking of putting in 8% of the current retirement portfolio... not going all-in my any means.

[mathjak107]

you would need to likely put a lot of money in a qlac for long term care .. if it wasn't enough to cover things and you have a spouse you still have no asset and income protection ...

i don't like qlac's ... the only advantage they they have is you don't need to take rmds until around 85 or so .

the disadvantage is that by starting late you likely will pay more in then you get out and the worst part is by delaying rmds the qlac has it's own accelerated rmds schedule ... that can not only create a tax torpedo but it may effect what you pay for medicare.

as researcher kitces says :

as it turns out the unique nature of a longevity annuity’s payment structure is not very hospitable as an RMD deferral strategy. The fact that it can take until a retiree’s late 80s just to break even and recover principal means the retiree risks significant foregone growth by trying to merely defer RMDs through the use of a QLAC. And of course, the RMDs will still eventually happen anyway, as the QLAC merely defers when payments begin. In fact, ironically, if the retiree does live, the accelerated payments of a QLAC in the later years can actually deplete an IRA even faster than normal IRA RMDs would have anyway!



https://www.kitces.com/blog/why-a-qlac- ... bligation/

[ochotona]

Kitces is trying to evaluate a cat using dog criteria. The reasons he states for why a QLAC isn't any good aren't the reasons why you get a QLAC in the first place.

Also you cannot look at the annuity in isolation, you have to look at it in the context of the entire portfolio. Of course you are going to have bonds through the entirety of your life. So who cares if a portion of the bonds are really represented by an annuity? How it pays out is a little bit of a side detail but it might be important side detail for you because of the u-shaped spending profile in retirement. Lots of spending in the beginning not so much spending in the middle and lots of spending at the end.

[mathjak107]

i do like spia's in conjunction with your own investing ... i don't have one but i can see it functioning well in place of some bond money..but sticking one in an ira which is what a qlac is i think will cause more harm then good compared to a plain ole spia.

in fact i like the use of a nice juicy permanent life policy with an spia and your own investing ..

an integrated strategy for a couple using a single spia , your own investing and life insurance for a spouse or heirs can provide 100% tax free income to your spouse unlike a joint annuity . no rmd's , no taxable income .

in 10,000 different scenarios run by researcher dr wade pfau , an integrated strategy
using a single spia , a 60/40 mix and a permanent life insurance policy beat out buy term and invest the rest 67% of all scenarios .

while buy term and invest the rest always had a higher balance at 65 , it dropped the ball after that point .

in 100% of the cases you always had a higher safer income with the integrated strategy and in 67% of the cases just assuming normal life expectancy you had a bigger balance too . mostly as a result of the tax free insurance money .

but in our plan all that would go with mitigating substaintial damage from long term care costs which is why if you picture a pyramid , we have at the base of the pyramid , all the insurances we feel we need to protect the assets above it and the assets above it pay to have the insurance below it .

as individuals we can't function well acting as an insurer ...insurers count heavily on those who die to pay for those who live ... last i looked we can't invest in dead bodies .

whole life sucks as an investment proxy , you never buy it for cash value ..it is awfully expensive for that .. but people get products mixed up all the time ...they buy life insurance for living ... they really should be buying it for dying and annuity is the right product for living .... this is why hybrid products are really bad ... they don't really work well in all applications .. so it is always best to get the right product for the right purpose

[mathjak107]

the only question you need to answer if you are married is will my spouse be impoverished if i have to go in a home if i am the lucky one with the extended stay ? it has to be someone so it could always be you .

can she pay for both me and make it financially without a major upset .

if the answer is yes , she would find it very hard to manage then you need to come up with a better plan no matter what you decide .

rolling the dice and hoping it isn't you or your spouse that needs the care is a poor idea . hope is never a strategy . especially because now you have 2 bets and only 1 horse .

if it is only one person that has to escape extended care , well that is one bet , but when you are married you have to both escape it . either one of you can tip the apple cart over . those are 2x greater odds of things not playing out in your favor . .

talk to any busy estate attorney and they will all tell you that the bulk of their clients are those that had no real plan and called it self insuring .

now that reality struck and someone needs care all of a sudden they are scrambling to preserve assets as the community spouse ( stay at home ) goes in to survival mode .

so whatever you decide to do , do it and don't wait until after it is to late .

it isn't about preserving assets as much as the survival of your spouse .

have a meeting with a good elder law attorney and familiarize yourself with the options , laws and tools in your state . then you can make a decision with their guidance . as you see in these discussions most folks have no plan and no clue as to what is a good move and what isn't .

they think because they have a living trust that is a comprehensive plan and they are covered and medicaid can't get to anything . but they fail to realize everything in a revocable trust counts as dollars and that they can't qualify for medicaid with the items in the trust . the old catch 22 gets ya .


some of your options can be :

making medicaid approved family loans

irrevocable trusts

long tern care insurance

hybrid life insurance policy's with long term care links

right of refusal

real- self insuring , not just your general portfolio invested in things that are volatile .

attorney negotiated medicaid rates

and likely a lot more that i am not aware of .

but none except a state partnership plan and LTC cover everything . you can save assets but lose the income for the stay at home spouse so everything else has pitfalls .