Long Term care insurance

Check with your employer's HR Department - do they have a group policy? One that you can keep after you leave the company (as long as you pay the premiums)?

SUCKISSTAPLES said: Perhaps far more important than LTC insurance is MEDICAID PLANNING.


Most ppl who will have an extended stay in a nursing facility will end up spending all their assets and getting on Medicaid anyway, so you must preplan to make sure the govt takes as little as possible. Plus, Medicaid planning is part of ones overall estate planning anyway.

When I get time later I will link past threads, where people lost hundreds of thousands of dollars due to no planning. LTCi does not solve this.

LTCi may be part of a medicaid planning strategy, but should not be considered the answer to your LTC preparation.that's what my parents are thinking of doing. I asked them 4 years ago to transfer their home into an irrevocable trust and they balked.

I told them to leave me off the list of beneficiaries (they actually accused my wife of gold-digging when it was my idea).

They still haven't done it.

Heres my old comments from 2003, still applicable today..

http://www.fatwallet.com/forums/arcmessageview.cfm?catid=52&thre...
ok...here comes the lowdown on LTC insurance (LTCI)...

You have seen the online info about LTCI....the consumer law page has a lot of good info ....Nolo Press also offers a book on LTC www.nolo.com which discusses transferring assets if that is important to you....And all insurance agents/financial advisors should be able explain the BASICS of LTCI to you, such as inflation protection, daily benefit amount, elimination period, ADLs, non forfeiture, tax qualified vs. non tax qualified, benefit period, etc, so Ill leave all that out (unless you have some specific questions)...What I'll post is things THEY MAY NOT TELL YOU....and things I learned when researching specific LTCI providers...

I personally researched nearly EVERY COMPANY offering LTCI in CA, as I was considering it for my father. I did an EXHAUSTIVE research (actually reading the CONTRACTS of each insurer!) He is 71, has type II diabetes, and has also had a stroke...obviously, that meant he was disqualified from many carriers immediately (AARP/Met Life, GE and Prudential)...however some LTCI allows certain preexisting conditions, so we applied with JOHN HANCOCK, CNA, UNUM/PROVIDENT, and MUTUAL OF OMAHA...we found some significant differences...keep in mind there may be additional differences depending on the state, and particular policy (each insurer offers 2-5 different policies)

#1 IF YOUR PARENT NEEDS IN-HOME CARE, WHO WILL THEY PAY TO PROVIDE CARE? As the consumer law page states, Some policies only pay licensed health care providers to perform in-home care. And some policies pay "informal caregivers", such as friends or workers who are not licensed healh care people....but even if you get a policy with "Home Care and informal care" as well as nursing home care, many insurers will NOT PAY FAMILY MEMBERS for providing care. This was very important to us, as we planned on providing the care if the need arose...

If I recall correctly, MetLife/AARP, UNUM, and Prudential have policies that will pay anyone, including family members (an additional policy rider and premium may be required)...CNA pays family members, but not IMMEDIATE family members (spouse, children)..Mutual of Omaha pays immediate family members, but only up to $100/week (not really significant enough to be of value). John Hancock does not pay family members, but will pay informal caregivers..

#2 DO YOU NEED TO SUBMIT BILLS, OR DO THEY PAY THE POLICY AMOUNT AUTOMATICALLY? also called "reimbursement" vs. "indemnity" policies....... A reimbursement policy, as the name suggests, REIMBURSES ACTUAL EXPENSES incurred for care. So even if you buy a $100/day policy, if the cost of care is only $80/day, the insurer will only pay out $80, and only AFTER they receive bills to "review". MOST LTCI policies are reimbursement-based. Again, this may differ among policies and states, but only UNUM and Prudential offered indemnity policies when I researched LTCI...

By contrast, an "indemnity" policy pays the full benefit amount regardless of actual expenses...so once the person is deemed eligible to start receiving benefits, they are paid the full benefit amount without having to prove bills...again, this is especially important if the person is not in a nursing home (where there is a clear bill), but rather receives home care...

#3 WHO should you purchase LTCI from, and who NOT to purchase it from....LTCI is generally better if purchased privately, as opposed to being part of a group policy such as with your employer, credit union, etc. The reason being is that if you no longer work for your employer, you may lose coverage, or the master policy can be changed or eliminated...weigh any savings purchasing through a group vs. individually..

#4 What can I expect to see as far as LTCI prices??? Visit quotesmith.com for INSTANT LTCI quotes from various insurers... Expect a policy which can cost 2-5k or more annually, depending on various factors...Compound inflation protection will typically DOUBLE the cost of LTCI, but since your mom is relatively young, its important...we chose to look at policies without any inflation protection, as it was likely coverage would be needed within 5 years...

#5 What is the application process? This runs the whole range...some apps are done entirely through the mail, and you receive the policy without ever seeing anyone...some policies send an agent out to meet with you personally, and some insurers send out a nurse to evaluate the health of the applicant....UNUM's interview was easily the most thorough, asking if you have any of dozens of ailments....some also perform a "memory test", asking you to remember a few items, then recite them later in the interview...most will also request medical records...its imperative to be truthful during the application process, because if you "cheat" to qualify when applying, but later claim benefits, you can be sure they will deny you if they are able to find anything which was misrepresented. Some insurers willingly write policies, then do the "investigation" only after a claim is filed, and then deny coverage if they find info they can use to get out of paying...

#6 What else should I think about? ASSET PROTECTION. A LTCI policy can "shield" assets from Medicaid spend-down requirements. In CA, this is called a "partnership" plan. Check on whats offered in your state. For example, if mom has $365,000 in assets, buying a 10 year, $100/day "Partnership" LTCI policy would protect all her assets from spend-down requirements. After the LTCI ran out, she would qualify for Medicaid without having to spend down her assets....

Also, Is dad still in the picture? If so, some insurers give a discount when 2 spouses signup together. CNA offers a "shared advantage" plan, which adds an additional benefit period for either to use....so if 2 people signup for a 5 year benefit period, there is an additional 5 years of benefit which can be shared, (5mom+5dad+5either) ...so one person can use 10 years' coverage..this plan is much cheaper than if each took out a 10 year plan....

#7 What other options are there besides expensive LTCI? Well there's always Medicaid..as stated above, Medicaid limits what facilities can be used, and also requires spend-down of assets (if they havent been transferred prior)...It is always a wise idea to get assets in a position where they would be safe PRIOR to thinking about these needs....regardless of purchasing LTCI...

There are also certain Life Insurance Policies which have a "long Term Care Benefit" portion attached to them...these are usually single-premium upfront policies....for example, you pay $50k upfront....if LTC is needed, the policy will pay $100k, and upon death, the policy pays $200k....this can be valuable as a way of passing down the $$$ tax-free, with the additional benefit of LTC assistance. It is also an option when an applicant cannot qualify for LTCI because of medical problems...

Getting a policy while you are easily insurable definitely makes sense, but very few LTC policies have a guarantee that premiums wont drastically increase over the next 30-40 years.

Buying LTC now in your 30s is highly unusual and doesnt make sense. If you have chronic health conditions preventing a LTC purchase later in life, proper estate/Medicaid planning will get you where you need to be.

If you are afraid of disability or needing care while young, get a LTD policy.

mrlandlord said: Now, I am also looking at the topic brought up briefly above, MEDICAID PLANNING. Mom only has 50k in liquid assets, $1652 income from SS, and a paid off house worth 400K. She has no debt of any kind. She is running a spending deficit of $500 monthly just covering her nesessities. I am thinking about how to shield the house from medicaid? She is in relarively good health and could have quite a few years left.
...
-how to shield home from medicaid? I know see a lawyer, but just want some preliminary ideas.
About 3-5 years ago the federal government standardised most of the medicaid asset rules (before then there was a great deal of state to state variation). What you should know is that any asset transfers within 5 years are subject to scrutiny. So if you transfer the house to yourself now or someone else it will count against your mom for medicaid eligibility for the next 5 years. Same thing with any cash assets she has. This make sense, because quite frankly why do I want you to inherit your mom's 400K house when I as the taxpayer have to pay her 200K nursing home bills?
Now, there are some tricks you can play.
#1 is if your mom starts to have some physical problems and needs to go into the hospital and stays more than 3 days ask the doctor to discharge her to a nursing home. MediCARE will pay up to 120 days, and most nicer nursing homes take mediCARE since it pays well. For one relative we used this 120 day provision several times after different illnesses over several years. But if she goes home first and then you or she can't take care of herself and needs to go into the nursing home (even temporarily) then mediCARE won't pay.
#2 now is the time to begin researching your options while your mother is doing okay. Go and visit the mediCAID eligible nursing homes and see which one is the best one. Hint: sometimes the worst looking ones outside are actually decent inside and the best thing is that they have good staff at the aid/nurse level. Try to have at least 2-3 options since one might be full when you need to get in. Also investigate the MediCARE eligible homes incase you try out #1 above.
#3 you can keep the house if you can show that you lived with your mom and took care of her for at least 2 of the last 5 years and that this delayed her entry into a nursing home. So basically think of it that you are being reimbursed for taking care of your mom.
#4 if your mom gets into a home and you try to qualify for mediCAID then you can avoid selling the house by stating that your mom has a desire to return home. You can also do the same thing with her car, furniture, and clothes. If you do this they cannot require you to sell the house prior to qualifying for mediCAID, but they can (and likely will) attach a lien on your mom's estate for the costs mediCAID spends on her. So you can avoid selling her house, maybe she stays in the nursing home 1-2 years and passes away, then the state will come after the 50-100K they spent and you can decide to reimburse them directly and keep the house or you can sell the house and pay them. Obviously if the costs are greater than the estate you will get nothing but you don't have to reimburse the state.
#5 think about the best choice for your mom. 400K will cover 6-8 years of nursing home care, which is probably more than you need. You are in a much better position than some people are with their parents who didn't save enough.

Right it just pays you a % of your salary and you can use the money for whatever you need.

in CA $250k will barely cover 3 yrs in a nursing home, and the rates keep increasing by five figures every year. I agree that health care and coverage provided is likely to be vastly different many years from now.... '

we have SO MANY people living longer, but still needing assistance in their later years, and less and less willingness from the younger generations to care fot them....

I predict we will see our borders relaxzed for more entry of "elderly au pairs" from Brazil, the Phillippines and other countries who will come to take care of elderly in their homes when their children dont want to, rather than putting them in nursing homes. But thats a different issue entirely.

SUCKISSTAPLES said: Perhaps far more important than LTC insurance is MEDICAID PLANNING.


Most ppl who will have an extended stay in a nursing facility will end up spending all their assets and getting on Medicaid anyway, so you must preplan to make sure the govt takes as little as possible. Plus, Medicaid planning is part of ones overall estate planning anyway.

When I get time later I will link past threads, where people lost hundreds of thousands of dollars due to no planning. LTCi does not solve this.

LTCi may be part of a medicaid planning strategy, but should not be considered the answer to your LTC preparation.

We may have some disagreements on this subject...like lots of other things. Medicaid planning is primarily about turning countable assets into uncountable assets. One of the problems with Medicaid planning is that it helps people to qualify for something that they don't want in the first place. For instance, where do people want their care to take place? Most people want care at home for as long as possible. Medicaid is basically useless for that.

Please explain why a properly designed LTCi policy isn't the answer to one's LTC preparation? (I'm not necessarily saying that I disagree, but I'd like to hear more of your thoughts.)

SUCKISSTAPLES said: Getting a policy while you are easily insurable definitely makes sense, but very few LTC policies have a guarantee that premiums wont drastically increase over the next 30-40 years.

Buying LTC now in your 30s is highly unusual and doesnt make sense. If you have chronic health conditions preventing a LTC purchase later in life, proper estate/Medicaid planning will get you where you need to be.

If you are afraid of disability or needing care while young, get a LTD policy.

Company is very important when choosing an LTCi policy. If you buy a policy from a stock company, you absolutely need to assume that substantial price increases will occur. If you buy from a mutual company, this is still possible, but not very likely.

No LTCi policies have guaranteed premiums.

InsuranceExpert said:

Please explain why a properly designed LTCi policy isn't the answer to one's LTC preparation? (I'm not necessarily saying that I disagree, but I'd like to hear more of your thoughts.) A 5 yera LTCi policy is exhausted and the person is either required to spend down, or get in Medicaid if indigent at 5 years 1 month. So as I said, for >extended< nursing home stays, its not the answer. You end up in the same position that someone who never spent money on LTC is in.

InsuranceExpert said:
No LTCi policies have guaranteed premiums.Some used to have rate guarantees for an initial # of years (CNA back in 2002 or so)

biomedeng said: SUCKISSTAPLES said: If you are afraid of disability or needing care while young, get a LTD policy.
Does an LTD policy cover skilled nursing care? I thought disability insurance just gives you X% of your salary when you are disabled.

LTD, as SIS pointed out, gives you cash. LTCi does not cover skilled nursing care. LTCi covers unskilled care. Health insurance covers skilled care.

SUCKISSTAPLES said: InsuranceExpert said:
No LTCi policies have guaranteed premiums.Some used to have rate guarantees for an initial # of years (CNA back in 2002 or so)

You are correct, but that is meaningless long term. CNA has had giant rate increases. Quite frankly, I don't know if companies choose to not have guaranteed rates or if there is something about tax qualified policies that take away the ability for companies to have long term guaranteed rates. My guess is that it's the former.

Most LTCi is done as reimbursement simply because it costs less money to do it this way. It really only makes sense to have an indemnity policy if it is going to be a very large policy in terms of daily benefit.

Most indemnity policies still require there to be a long term care expense.

Ex. John buys a $100/day policy. It doesn't make much sense for this to be done as indemnity. If he needs care, he will probably incur more than $100/day in expenses. Therefore, a reimbursement and indemnity policy will pay identical benefits.

Ex. 2: John buys a $300/day policy. In this instance, an indemnity policy can make lots of sense. If his care costs $150/day, He will still collect $300.

Indemnity makes the most sense when someone wants to primarily use a family member as a caregiver. For instance, let's assume that someone is going to remain at home and a family member is going to provide care, but the insurer won't pay a family member. With a reimbursement policy, the insured is out of luck. With a indemnity policy, they can have someone come in for an hour a day, and get paid the entire amount.

I could really benefit from a discussion of the types of LTC insurance. Specifically if you could give us some examples of the maximum length and/or payout of current LTC policies. In your other thread you mentioned an LTC policy that gives lifettime coverage, but my prior experience the policies were only for 3 years maximum. My real concern for me or a relative is that we end up needing skilled care for 5-10 years (very possible with things like Alzheimers). My opinion is that most upper middle class people could likely pay for 1 year of nursing home costs (my estimate is that this runs about $5,500/month depending on the facility).

Almost all long term care policies that are now sold are for three years or longer. The maximum is lifetime benefits. Insurance companies in most parts of the country will allow benefits in the $300/day range and these benefits can be compounded at 5%.

If you need skilled care, LTCi won't pay for that. It is unskilled care that LTCi covers. Health insurance covers skilled care. The Alzheimer's patient doesn't need skilled care. He/she needs someone to help them turn off the oven so they don't burn down the house (just an example).

The cost of facilities is very different in different parts of the country.

We're I am, we estimate care at about $6,000 a month. This doesn't necessarily mean that someone needs a $200/day benefit. What I find is that most older people would prefer to not touch their assets, but they are fine with touching their income. If someone has a pension and SS that will pay $3,000/month, a benefit of $3000 month should be adequate.

InsuranceExpert said: If you need skilled care, LTCi won't pay for that. It is unskilled care that LTCi covers. Health insurance covers skilled care. The Alzheimer's patient doesn't need skilled care. He/she needs someone to help them turn off the oven so they don't burn down the house (just an example).
I think we have different definitions for the terms skilled vs. unskilled, and I apologize if I was using them incorrectly. I assumed that LTC insurance pays for both a worker to come into my house and also pays in the even I need to go into a nursing home. I was using the term skilled to refer to a nursing home and unskilled to refer to someone that comes into your home to help with cooking, laundry, bathing, etc.
You are correct that some Alzheimer's patients need just a basic sitter to make sure they don't leave the oven on. Other more advanced cases of Alzheimers, dimentia, etc, need facilities that have high security to keep these people from literally wandering away and/or hurting themselves. Many other diseases leave people with limited mobility, bladder control, etc, and difficulty to talk, hear, breathe, and see. These patients need daily monitoring, a strict medication schedule, and need some sort of physical therapy. For many families these people's needs cannot be addressed within the home. If what they need is basic help around the house many larger families can provide this for them, and in these cases LTC insurance would just be incase the person needs a nursing home.
I have had this discussion previously with you regarding health insurance paying for "skilled" care (by skilled care I assume you mean in a hospital). Health insurance will not pay for unlimited amounts of skilled care in a hospital. I have researched mediCARE and there is a limit (per condition and per lifetime) on the number of days you can be hospitalized. Private health insurance also has yearly and lifetime limits as well. In my experience a hospital is quick to discharge you if there is little they can do to improve your condition, and I have been in nursing homes with patients that were nearly comatose that were being fed by a feeding tube.

The Alzheimer's patient doesn't need skilled care. He/she needs someone to help them turn off the oven so they don't burn down the house (just an example).

I can tell you've never lived with someone who subsequently died of Alzheimer's. Forgetting to turn off the oven is very early stages. One thing after the other they forget. At the end, dad died because he forgot how to breathe. It isn't just amusing simple mindedness. It feels awful when dad forgets your name, especially when you're his namesake.

WalStMonky said: The Alzheimer's patient doesn't need skilled care. He/she needs someone to help them turn off the oven so they don't burn down the house (just an example).

I can tell you've never lived with someone who subsequently died of Alzheimer's. Forgetting to turn off the oven is very early stages. One thing after the other they forget. At the end, dad died because he forgot how to breathe. It isn't just amusing simple mindedness. It feels awful when dad forgets your name, especially when you're his namesake.

I deserved to be called on this. I didn't mean to be insensitive. I apologize.

InsuranceExpert said: We need to be on the same page in terms of terminology. "Skilled care" and "unskilled care" have nothing to do with where the care takes place. It has to do with the qualifications necessary to give the type of care needed.

For instance, physical therapy could take place in a nursing home, an assisted living facility, at a hospital, or at home. Regardless of where this takes place, it would be considered "skilled care" and would be covered by one's health insurance and not their LTCi policy.

People don't go to nursing homes because they need unskilled care. Like the name implies, "nursing" home is for people who need skilled care. If someone just needs unskilled care, they would go to an assisted living facility.
But the problem is older people in nursing homes are not covered by their primary health insurance if it is medicare. So LTC insurance is their only option. Are you telling me that LTC does not pay for people who need to go to a nursing home?