Questions re Long-Term Care Insurance

[stuper1]

I signed up for long-term care insurance for my wife and I through my employer about 12 years ago.  The policy is with CNA.  We pay $90/month to cover both of us ($45/month each).  This gives us coverage of about $233/day in a nursing home for up to 5 years (lifetime max of $426,000 for each of us, $852,000 total), or up to $176/day of in-home care, for each of us.  The daily coverage amount and the lifetime max amount automatically increase by 5% each and every year (we started at $130/day 12 years ago).

I'm wondering whether this is a good deal for us.  Would we be better off just canceling the coverage and putting the money in a HSA and investing it?  I am 49, and my wife is 52.

Is CNA a good company?

[WiseOne]

That sounds like a decent use of $90/month to me.  Frankly I think you scored with that one.  The policies I'm familiar with all cost a great deal more than that and have more limited benefits.

A decent nursing home would run you upwards of $100K/year, and of course it's climbing faster than inflation.  If you quit the policy and invested the money in an HSA, you're unlikely to end up with more than a single year of nursing home care saved by the time you're 80.

Be aware though, it's perfectly possible to spend more than 5 years in a nursing home, but personally I wouldn't want to.  It absolutely amazes me to see people admitted from nursing homes with full code, full care written on their charts.  Would the insurance let you pay for home care?  That is harder in some ways but a lot less expensive.

[ngcpa]

You might not be aware that there are some tax deductions related to long term care insurance premiums.  Premiums do count as medical expenses, although there are
limitations based on age, besides the 7 and 1/2 % floor.  Also many states have credits and special deductions (Maryland for example has a rather generous tax credit).  The following site has details plus a lot of other information related to long term care insurance:

http://www.aaltci.org/long-term-care-in ... siness.php

Norm

[mathjak107]

New york gives us a 1600 tax credit as well as great perks with our plan.
The perks are worth more than the insurance. We take 3 years of coverage and we get no 5 year look back , no shifting of assets to trusts to protect them , medicaid picks up the bills after the 3rd year, and most importand the stay at home spouses income is not restricted to medicaid limits once they pick up the bills.

It is a ny state partnership plan with total asset protection.

[mathjak107]

It is very important to understand that without a states sanctioning total asset and income protection having an ltc policy still requires very careful planning if protecting assets once the insurance runs out is important.

Of course the draw back of using irrovocable trusts is you cut each other off from 1/2 the assets  since by tax law the stay at home spouse can only get 5% of the principal and what are deemed gains a year.

That can suck if money is wanted.

Medicaid income for the stay at home spouse is capped by law to  low levels so it is all well and good you preserved all the assets but now try living off them , it can be tough with the restrictions.

So i recommend if your state offers partnership plans that are total asset protection and not just dollar for a dollar plans that you go for it. The perks after the insurance runs out are worth more than the insurance.

[mathjak107]

I just want to say this about self insuring long term care.

I was big on self insuring. Why buy an expensive plan when i may be able to pay for it out of assets.

Well money magazine did a feature story on us years ago where they had their team of pros review my own financial road map.

We did well until we got to my wanting to self insure.

They explained some very valid reasons why that was a poor idea and they were right.

If you self insure like any insurance that money has to be always ready and available.

That means in stable low risk investments . You can't risk that money being down in an extended downturn when you need it most.

For the 1% or so of our average gains i can pay for the policy , protect those assets and keep them invested in more potentially lucrative investments.

Plus look back time frames change , they went from 3 years to 5 years and they could change again.

Usually when folks say they will self insure they have no real plan or

money set a side. They just hope they do not need what they have 

which is just their investment portfolio.

The other factor is the stay at home spouse goes in to financial survival
mode as dollars start flowing out like water for the spouses care.

Most times money that should go for better care doesn't as the stay at home spouse trys to preserve dollars.

So self insuring may be the worst route to take if you have options.

[WiseOne]

New york gives us a 1600 tax credit as well as great perks with our plan.
The perks are worth more than the insurance. We take 3 years of coverage and we get no 5 year look back , no shifting of assets to trusts to protect them , medicaid picks up the bills after the 3rd year, and most importand the stay at home spouses income is not restricted to medicaid limits once they pick up the bills.

It is a ny state partnership plan with total asset protection.

Hey Mathjak, can you post some details or a website about this??  Sounds like it's worth looking into!

[barrett]

Hey Mathjak, can you post some details or a website about this??  Sounds like it's worth looking into!

Yes, a link would be great. Was just thinking about this the other day and this thread appeared. I have been in the self-insure with no damn plan mode... just figuring that my wife and I would try to be frugal-ish and hopefully have enough left over to tide us over when all we can do is drool and stare off into space.

Mathjak is going to throw away all my PP money on long-term care, annuities and other crap. 

[mathjak107]

Each state is different but for ny just google  new york state long term care partnership plan. I only have my nook on vacation with us so i can't do links.

Down in savaanah and having a great time.

I think most states have them but not all are total asset protection like we have

[mathjak107]

Ny is pretty strict who they take. A doctor came to our house and did a full exam with aids and drug testing as well as memory tests.

[barrett]

WiseOne, Here is the link from MJ's post:

http://www.nyspltc.org/

[mathjak107]

Ny gives you two options, total asset protection which cost more or dollar for dollar . That means if insurance pays out 300k as an example then 300k in assets are exempt .

Total asset plans revert to dollar for dollar if you move out of state since ny can't give you all the perks when you live somwhere else.