Not to change the topic (well, actually...maybe so) the insurance, philosophical, and especially the straw man issues and questions raised and discussed here are interesting, but perhaps the only insurance issue that potentially applies to most of us here is long term care insurance. Statistically, most of us are going to need some form of care later in life.
I've been told that the best time to buy it is in your fifties.
InsuranceExpert: A topic devoted exclusively to long-term care insurance would be useful. Not saying it should be a "sticky" necessarily, but I'm sure a lot of us would benefit from such a discussion. I would certainly look forward to such a topic...and would do my best to refrain from taking any cheap shots .
I was asked to start a thread on Long Term Care Insurance (LTCi)
Let's start the questions coming and we'll see where it takes us.
For the record, I feel the same way about LTCi as I do about most insurance products. It is neither good nor bad. It is either appropriate or inappropriate based upon the situation. The challenge is that it seems to be much more difficult to determine whether it is appropriate or not. Price increases are one concern as is the political situation. We're obviously going to avoid direct political conversation, but politics factors very much into long term care discussions. It's really a long term care thread that we need to have as opposed to just long term care insurance. LTCi is simply one way to pay for care.
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Ok, I'll start with my questions/concerns about LTC insurance. 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). Also a discussion of the estimated per month or per year costs of a policy would be good for different age groups. If I buy a LTC policy at 50, 60 or 70 what are the price differences? Obviously at age 50 it is cheaper but I will also pay premiums longer. Another issue is that medicaid reimbursement laws currently do not take into account LTC insurance. So if you have an estate worth 200K, and LTC pays for your first 3 years in nursing home care, the state will expect you to use your assets to pay for nursing home care until they are below a threshold for medicaid. The fact that you used LTC to pay for your costs does not affect medicaid eligibility and cannot be used to offset your assets. I believe there has been some discussion of allowing people higher asset exclusion if you had LTC coverage (to encourage people to buy it). Although I am younger than many people on these forums (sub 30), I have delt with nursing hoome/medicaid issues with several relatives. The fact is that if you are over 65 mediCARE will pay for up to 120 days of skilled nursing care, following a hospital discharge, if medically necessary. After that you have to pay out of pocket (if you don't have LTC) because mediCARE and typically private insurances do not cover skilled nursing care outside of the hospital. Once you get below minimum asset thresholds (I think this was $2000, but it can be increased if your spouse is alive and there are some tricks to get around assets like a house and car) mediCAID will pay for the nursing home care. So the issue is never that you will be thrown out on the street. There are always mediCAID eligible nursing homes (some of which are very decent). But LTC insurance could give me the option to be in a better nursing home, get skilled care in my house, and potentially preserve some of my assets (if the policy lasts long enough to cover my stay and doesn't cost so much over the years that I would have been better off paying myself).
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)?
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.
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).
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...
I've read the other articles that SIS posted, but what about people that are in their 30s that don't have perfect health. At about what age should people in that situation start considering LTC insurance?
My fear is that by the time I'm 50 or 60 that I'll have a chronic health problem and won't qualify for the LTC insurance, or it will be so expensive that it is not affordable.
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.
This is a relavant topic for me. My father bought a LTC policy for himself and my mother in mid 1990's at age 71, doing no research at all, just from a sales person's pitch. GE policy. Prmiums paid have been in excess of 200k, and never a claim. Dad decided about a year ago to downgrade the coverage due to the cost, and changed the policy's to one that has less benefits. Undoubtedly a bad decision as this is just the time that it is likely to be needed.
Dad passed a month ago. He was vey secretive about finances, and would accept no help/advice from any family member, as he thought it took control away from him. Now that it is just mom we can begin to evaluate finances and plan logically.
I am in the process of applying for benefits under the LTC policy for 84 yo mom who is now living by herself at home and having some difficulties with housekeeping due to her age and some physical limitations. This downgraded policy pays $100/day max, and max lifetime benefit of 73K. Reimbursemant policy for homecare but will not pay relatives.
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.
2 Questions: -could it be best to wait until there is a higher level of need before using any LTC benefits? Or just grab for whatever the policy will pay for now?
-how to shield home from medicaid? I know see a lawyer, but just want some preliminary ideas.
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.
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.
TxAggieJen said:I've read the other articles that SIS posted, but what about people that are in their 30s that don't have perfect health. At about what age should people in that situation start considering LTC insurance?
My fear is that by the time I'm 50 or 60 that I'll have a chronic health problem and won't qualify for the LTC insurance, or it will be so expensive that it is not affordable. One other issue about buying LTC insurance now for something that is 20-30-40 years out is that it isn't clear to me how the medical system will be then. Will we have nationalized health insurance that covers nursing homes? Will we be so poor as a country that mediCAID stops paying for nursing home care? Both of these have huge impacts on LTC insurance. The best advice is to save as much money as you can. See mrlandlords post about how his father spent over 200K on premiums over 15 years. If he had just saved the premiums he might have 250K (counting interest) and that would cover 4-5 years in a nursing home.
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.
ThursdaysChild said: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)?
Be careful because a group policy doesn't always make it less expensive. Additionally, because they are designed to try to get lots of people to buy the policy, they are often not as good as they should be. An example of this would be a group policy that pays 100% of the benefit for facility care and only 75% of the benefit for home based care. It will be less expensive because the benefit is less.
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.)
TxAggieJen said:I've read the other articles that SIS posted, but what about people that are in their 30s that don't have perfect health. At about what age should people in that situation start considering LTC insurance?
My fear is that by the time I'm 50 or 60 that I'll have a chronic health problem and won't qualify for the LTC insurance, or it will be so expensive that it is not affordable.
I'd vote "no" on LTCi for you. First of all, the price for everyone under the age of 40 is typically the rates of a 40 year old. The major reason for my "no" is simply that there are just way too many unknowns for the future of health care. Also, since you are in your 30's, I would guess that you have a lot more pressing needs.
In LTCi discussions, I am often going to be bringing up the subject of life insurance. Here's why. Let's say that you put your money into a permanent life insurance policy instead of an LTCi policy. When one buys LTCi, they may or may not collect. With a life insurance policy, their family is guaranteed to collect. What happens in the future if you need Long Term Care, but you don't have an LTCi policy? You will pay out of pocket. Those expenses will then be reimbursed at death with the life insurance proceeds. What if you don't need care? The expenses that you might have incurred, but didn't incur, get reimbursed anyway.
Life insurance is only an adequate substitute if someone can afford to pay for care out of pocket.
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.
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