New Strategies for Covering Long-Term Care Costs

[glennds]

Unfortunately, the root issue, as unsolvable and inevitable as it is, is the aging process itself. I'm not defending nursing homes by any means, but it is difficult to imagine a setting where suffering from incontinence of bowel and bladder, dementia, and general debilitation can look acceptable to anyone looking in from the outside. Surely the cruise comment was tongue-in-cheek because a cruise ship is certainly no place for someone in such condition, nor is a luxury hotel. A foreign country? Maybe, if you could set up a situation that protects you from a long list of vulnerabilities. It's a tough, widespread problem, and not one that is purely medical either. For many people, end stage of life is such a terrifying thought they avoid confronting it at all, let alone planning for it.

I'm not sure exactly what the government can do about it. Legislate away aging?

The only recommendation I can make is to (counter-intuitively) confront the issue, get informed and educated, and plan for how you want the end stage of your life to look under a short list of various scenarios. My personal opinion is that there can exist a balancing act between medical care and quality of life, where more of one can result in less of the other, which again is a counter-intuitive thought.

To elaborate on this point - by definition, the highest octane, turbo charged level of healthcare is an Intensive Care Unit. Anyone who has spent much time in one would probably agree that it would difficult to find a lower quality of life, particularly for the end of life patient.

Sorry I think I'm digressing too much here, but the thread is a good one, and this subject is worthy of thoughtful, informed planning.

Don't get me started about financial incentives/dis-incentives and conflicts-of-interest in healthcare......

[Pointedstick]

I think there's a lot going for choosing when you want to die and mentally checking out, which makes it happen naturally very quickly once you're at the point where your body is already starting to shut down. The elderly folks I've known who have had the worst end-of-life experiences were the ones who clung to life with everything they had.

[LC475]

Surely the cruise comment was tongue-in-cheek because a cruise ship is certainly no place for someone in such condition,

Not at all.  No one had specified any particular specific "condition."  For many elderly people, a cruise ship would be a perfectly wonderful place to be, and that includes many who are currently living in nursing homes.  For others, in extreme states of disrepair, it would be unworkable.

[glennds]

Surely the cruise comment was tongue-in-cheek because a cruise ship is certainly no place for someone in such condition,

Not at all.  No one had specified any particular specific "condition."  For many elderly people, a cruise ship would be a perfectly wonderful place to be, and that includes many who are currently living in nursing homes.  For others, in extreme states of disrepair, it would be unworkable.

I can see your point in the case of a healthy elderly person who would otherwise be living independently. The cruise ship would be an alternative to independent living. Anyone in a nursing home is there because there is a reason they can no longer safely live independently. It might be a medical condition, confusion, fall risk, general frailty. If one or more of these reasons were not present, then they wouldn't be in a nursing home which is why moving to a cruise ship makes no sense to me thus I thought it was a joke.

For a healthy, functional elderly person, a permanent cruise ship might be a blast, but that person would not be in a nursing home. Maybe you meant the cruise as an alternative to a retirement home (very different from a nursing home)?

[LC475]

Maybe you meant the cruise as an alternative to a retirement home (very different from a nursing home)?

There's a spectrum.  There's a spectrum from "health" to "falling apart", and on to "vegetable" (and on to "dead") and there's a spectrum of all kinds of over-the-hill living arrangements.  Not everyone in a "nursing home" is as decrepit as everyone else.  Some people in nursing homes could survive just fine on a cruise ship, and have at least as high a standard of life (some plusses, some minuses) but for far, far less expense.

Those who couldn't on their own could with a companion.  They could recruit an assistant, possibly from the third world, to accompany them at little cost.

Maybe some entrepreneur will create a cruise ship experience specifically catering to those needing long-term care.

[Libertarian666]

Maybe you meant the cruise as an alternative to a retirement home (very different from a nursing home)?

There's a spectrum.  There's a spectrum from "health" to "falling apart", and on to "vegetable" (and on to "dead") and there's a spectrum of all kinds of over-the-hill living arrangements.  Not everyone in a "nursing home" is as decrepit as everyone else.  Some people in nursing homes could survive just fine on a cruise ship, and have at least as high a standard of life (some plusses, some minuses) but for far, far less expense.

Those who couldn't on their own could with a companion.  They could recruit an assistant, possibly from the third world, to accompany them at little cost.

Maybe some entrepreneur will create a cruise ship experience specifically catering to those needing long-term care.

That would be a very good approach, considering that labor costs are the main reason that nursing home costs are so high, and cruise ships generally recruit from much lower-cost countries. I'm surprised no one has done this yet, actually.

[dualstow]

Start early with an HSA.  Invest wisely.

I brought up the possibility of an HSA to my accountant and a friend and they both advised me to stick with taxable. Maybe that's because I'm high-savings low-income. I'm still tempted though.

[MachineGhost]

Start early with an HSA.  Invest wisely.

I brought up the possibility of an HSA to my accountant and a friend and they both advised me to stick with taxable. Maybe that's because I'm high-savings low-income. I'm still tempted though.

I don't think you can open an HSA without wage income or self-employed income just as with IRAs.

[dualstow]

This is true, but it's not a problem.
Anyway...

[sophie]

Hi all - glad to finally have a moment to check back with the forum.  It's been an insane couple of weeks.

I thought I'd weigh in on the long term care issue since I've been rather steeped in it lately.  My parents elected not to get LTC insurance because they read the fine print, and there was a cap on benefits - be sure to check that carefully before signing up!  I think it was only good for a year.  If you stop to think about it, premiums would have to be insanely high to cover long term care indefinitely (plus the insurance company's overhead and profits) given the number of people who eventually need it.

My mother had pieced together several income sources to cover my father's care, and if it proved necessary all of us kids would certainly have pitched in - and in fact a family member loaned my mother a large slug of cash.  One thing that really helped in the last several months was hospice.  It covers less than it used to but it was most definitely welcome, especially in the last few days when they kept us supplied with medications, oxygen, and nurse visits.  And, I'm really glad we kept my father at home.  The care he got with us was certainly better than it would have been even in a hospital, much less a nursing home.

LTC is all the more reason to save up a good sized nest egg and retirement income streams.  Perhaps this cost should be factored into "magic numbers" for retirement.  My mother estimated that my father's care cost about $6500 per month for about two years.  Yes there are people in nursing home care for 10 years, but generally those people are less disabled than my father was, and don't need as much care as he did.  Managing at home with a part time aide is far less expensive than a nursing home, and if there is a healthy spouse (which is the nightmare scenario of a nest egg on which the spouse is dependent for income being whittled down to pay for care) that can work.  If not, then fine, let the nest egg get used up.

I'll just mention also that having a family member pass away at home is a very powerful experience.  It just wouldn't have been the same at a nursing home.

[Reub]

Welcome back, sophie. You were missed!

[MachineGhost]

Amen!

[MachineGhost]

From another forum, I thought this was funny:

My mother had one of those “Long term care” policies…What a joke!
The policy was through Met-Life. She had been paying $285.00 per month for 26 years that’s $88920.00; I paid over 7K for her care and Met-life paid back only $236.00. They said that the rest went towards processing – 6800 bucks for processing?
Be careful if you have Met-Life they are crooks. 3 times they (lost) my papers/recites and then they sent me a bill for over 700 bucks…for her rear payments…she was dead!

[Coffee]

I've got the house paid off. If the wife dies before me, I'll be importing 5 to 6 Filipina nursing school graduates for the in-home care: One to actually take care of me and the other five just to have fun messing with their head.

[Kevin K.]

Here's a link to an excellent two part series on this very topic by Darrow Kirkpatrick. For those unfamiliar with his writing, he's one of the clearest and most insightful writers on early retirement and investing I've come across in the past few years:

http://www.caniretireyet.com/long-term- ... buying-it/

[MachineGhost]

http://www.caniretireyet.com/long-term- ... buying-it/

Great link!  LTCI looks like a joke.  Spend around $1000 a month and only get twice that back at best when you need it.  In 35-40 years from now, I seriously doubt retirement homes will even exist anymore.  Or even LTCI.  It seems like a very risky bet.

[mathjak107]

most states now sponser 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 in home,nursing 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.


but since they can only control the agreement in state you only get those perks in state.

if you move out of state you  will only get the 3 years insurance coverage but no agreement.

the perks after the  3 years of insurance is why we really wanted the policy.

[mathjak107]

we just made a long term care policy part of our plan  last year.

the insurers are backed by most states as well as if they have financial issues must be absorbed by other companies so default is not a concern.

todays policies are very clear and concise as to what they pay. but the real value is not in the 3 years insurance we took, that is bubkas in comparision to the life long deal once the insurance runs out.

in new york if you take a 3 year partnership plan you get to chose any home or better yet elect to have in home care and not be sent off to a medicaid home 100 miles away.

you get to stay there on medicaid when the insurance runs out.

there is no look back , no shifting of assets needed and MOST IMPORTANT no limitation on the stay at home spouses income.

that is something everyone forgets. it is all well and good that you shifted assets and had to lose control of them and principal but there are income restrictions that are quite low on the stay at home spouse.

great you preserved all the assets, now try living off the income while your spouse is on medicaid.


we figured out for less than 1% of the average return on our assets we can protect all the assets and not have to worry.

we also realized that if we tried to self insure in reality a large chunk of money had to be kept safe ,liquid and secure and not at risk since an extended downturn could wipe out a major portion of that money.

just losing the ability to invest that chunk would negate the fact we could have invested it ,paid a premium and had more left over .

most folks who claim they will self insure do not , they just leave everything invested and hope they do not need it or get caught.

one other factor too is the stay at home spouse makes alot of decisions as well as being concerned for their own survival.

many expenses ,and things for the spouse that needs care gets pushed aside for fear of over spending from their own funds they will need.

all in all when we looked into the insurance there were so many advantages that we had to be foolish not to protect ourselves.

the real deal is all about the stay at home spouse, not the spouse that needs the care..

[Pointedstick]

That's where the PP shines, IMHO. Compared to other investments, it's so non-volatile and has you holding so much cash that you really can self-insure. You're almost never going to be forced to sell a depreciated asset to pay for expenses.

[mathjak107]

that would not really hold true depending on the sum needed. here in our area we are talking 120-140k a year.  depending how long you need to insure for most of the assets may go a a bad time  or before any growth gives them a cushion .

plus self insuring still does not help the situation as far as protection and retaining asset control  once the money runs out.  it also doesn't help the stay at home spouse receive a decent income from any assets that are shifted and preserved . once you are forced to medicare income from preserved assets is limited.

if you need to shift assets to protect them then the stay at home spouse loses not only control of the assets but is restricted by law to no more than 5% of the principal and all of the gains a year without showing cause for more money.

not a pleasant way to have to live,.

we found it much easier to eliminate all of that and just take a state partnership plan which at this point very few states do not offer.

years ago we were featured in a money magazine article where they wanted to match their team of pro's against us and our plans.

we did well but disagreed on one point.

we wanted to self insure ltc. they were against it. after doing much research on the subject and having my dad in a home for years they were right.

self insuring is not really  a plan , it is more just cross your fingers and hope you do no have to start burning up assets.

most of our estate attorneys work is scrambling to try to help those with assets who thought they were going  self  insure but really only had their one lump sum savings and they never truly counted on having to use that.

many times now the stay at home spouse goes in to survival mode and cuts back on care that should be had in fear of blowing through their own money they need to live on...

[mathjak107]

as far as those  linked benefit policy's ?  we looked in to that but they have 2 major issues.  there are no perks after the money runs out  like you have with partnership plans and worse  there is no inflation adjusting.

you also have to tie up a huge chunk of money to be able to really cover things .

in our case it was a far better deal taking a policy , investing that money  and using a small piece of the average returns to pay for the policy.

those linked policy's are okay for those who can't get a regular policy.

they are soooooooo strict as far as being able to get a regular  LTC plan.

they came to our house and  did extensive blood work , aids and drug testing  and memory testing .

we took 3 years insurance coverage at 350 a day  with 5% inflation adjustment a year or 6 years in home or assisted living.

the perks were no look back period , no shifting of assets needed , no trusts cutting a spouse off from control , no income limitations on a stay at home spouse ,  we can use the insurance to get in to any private home we want  and then after the insurance ends a special version of medicaid pays all the bills .

you can't self insure and get those important perks.

[MachineGhost]

we found it much easier to eliminate all of that and just take a state partnership plan which at this point very few states do not offer.

Where can I find more information about these plans?

[mathjak107]

Just google your state and  long term care partnership. Most have them now

[mathjak107]

The state partnership plans are not cheaper than tthe regular plans , they just offer perks once the insurance is up.

I am 62 and my wife 64. I am in excellent health and prediabetic . We pay 6800 a year and new york state gives us 1600 back as a tax credit.

But with 3 million in assets to protect it takes about 1% of our gains on average to protect the whole thing.

If we took it younger it would have been cheaper. You do not save anything by waiting , you just risk not being accepted or charged more if you have anything crop up.

I am paying a few hundred more a year because now i was diagnosed as prediabetic.

[mathjak107]

we found it much easier to eliminate all of that and just take a state partnership plan which at this point very few states do not offer.

Where can I find more information about these plans?

did your state offer them ?