As a caregiver, I now think much more about planning for my own healthcare needs in my elder years. Does anyone have a good experience with long-term care insurance? Is it worth it?
Mother and dad bought this back in the 80's. $100-$200 a day "extra" seemed like a fortune.
Guess what?
Its wasn't and it isn't. If mother were to use hers now, she would get about $75 a day added to her SS, That won't make a hill of beans difference. As they had added a codicil to include in home CG's, it could have been used all these years we kids (well, 2 of the 5) could have been helped along. As it is, I don't think she'll ever recoup a cent. Dad thought he was saving us kids the trial of having a difficult patient in mother, and he was right.
YB who is her self appointed primary CH will NOT ALLOW outside help of any kind.
DH and I have just been saving like crazy so we will not be burdens to our kids. That;s probably the best LTC insurance.
If you have enough assets, then you don't really need it. Your money could be working harder for you during the intervening years and growing more than what the insurance premium would save you. The insurance companies preach about what percentages of people need long term care, but what they don't mention is that some people end up in long term care for only a relatively short time before they die. My father was in a nursing home less than a year, and some are there for a matter of weeks.
I looked into this some time ago. It is VERY expensive and more as you get older. There are pro's and con's, as with everything. Whatever you do, research and research and research some more. I have heard horror stories where so often money that was anticipated was never paid out. Others said it saved them so it is a very personal issue. If possible enlist the services of a specialist who is very, very familiar with how all this works and with the different companies and types. I assure you, and I am extremely business oriented and highly intelligent, the money in this case what you would pay vs. what you reap is worth the services of a professional to advise you. Be careful before you choose the yes/no answer. And if you do run out of money, there is Medicaid.
I don't think it is frankly. Our law firm offered for only one year a policy, you had to pay premiums. After one year, they decided no. Too many companies go under because they underestimated the number and costs associated with. And the premiums rise continually. Many struggle to pay the increase because of a sunk cost. I already have this much invested. There are many who will disagree. But when you 30 tax and insurance attorneys say nah, I think one is wise to heed that.
If you are determined do,look into when they start paying. Under what criteria? How many facilities accept LTC pay, because many no,longer do so.
Read the fine print. Ask around who takes payment. From which companies. Why not yours.
Agingmyself: There are differing ways to do Long Term Care Insurance. My husband and I have put LTC into our investment portfolios. So "setting aside funds" does make sense if you're building on it. Btw, I did understand the OP.
We have considered LTC policies. I'd be interested in knowing what you've decided on. The offerings we considered just didn't appeal to us; BUT, I am not eager to bet on my own misfortune, so to speak, which is what insurance is, imo. The best LTC policy that we looked at a year or two ago included a partial return of premium if it went unused or kinda like life insurance. Even so, we decided against it. The only direct experience I've had with LTC insurance was a family member who became a quadriplegic. He collected an amount about equal to what they had paid in over the years. Now, it's a lot more expensive than what they paid in premiums. I do think insurance is important for many people--young families, especially, for example. But it needs to be based on your individual means and needs. So, what made you decide to do it, specifically?
I think the question is not about whether to set aside money for our older years, but rather whether LTC insurance is a good way to do so. In fact, to "set aside" money would seem to imply not spending it on insurance.
If by "worth it" you mean, will it pay out more than you put into it? Well, obviously, not for everybody! Just like any other insurance you pay for. Like car insurance. If you never get in a wreck, was it a waste of money? No! Fire insurance? Is it a waste of money if your house doesn't catch fire? Of course not. Insurance is for DISASTERS. My hubby has had round the clock care for over eight years now because of his dementia, and increasing physical disability. We had decided years ago that we didn't need to buy long term care insurance--we thought we could "self-insure". I can bear the cost of his care for quite some time, still, but we are not so well off that I could bear the cost of a similar situation for myself. That's why I bought a policy. Same reason I have flood insurance even though I don't live in a flood area. I don't expect to recoup the premiums for any of these.
Maybe this was said somewhere before, but I'll that although we see statistics saying "a large percentage of people" will require long-term care. However, what ISN'T said is that some of these people may only need it for a few months or less, so the insurance may end up costing 6 figures to cover an expense that is in the low 5 figures.
My mother has it and it has been very helpful but I have to say that if it were not for my husband and I advocating on her behalf the situation might have been different. My mother has also spent years alone as a single woman. One can be put through the wringer in terms of all the steps they require to begin payment. Then one is again put through the process with the frequency of evaluations. All during these times payment is halted. I can't imagine how she would have coped with it were it not for all the steps we take. We are diligent with the AL facilities and have been fortunate that the 2 she has been in have the process down. It still requires alot of follow up when notices are sent that if material they request is not sent by a certain date the claim will expire. It is stressful. I also learned that the policy my mother bought years ago is no longer sold because it is too advantageous. It has made me not want to consider buying it but then I also live a more careful life than my mother and am entering retirement with a spouse. I just know that if I were to have it I would be overly concerned that my children were following all the necessary steps in order to seek reimbursement.
Yes, I have been handling LTC claim for my dad for two years now. In fact, I just received the annual packet of information to have filled out regarding his needs and plan of care.
If you have an LTC policy, it is most likely that at the time you need it, YOU WILL NOT BE ABLE TO HANDLE THE PAPERWORK AND LEGWORK TO FILE THE CLAIM. Therefore, you must have someone that will be there fore you TO FILE THE CLAIM for you. Otherwise I would say the policy is worthless.
There is extensive initial paperwork, including visiting doctor(s) to sign-off on things, there is monthly paperwork, and there is annual paperwork to continue the claim. I am lucky that my dad purchased a policy when they were spectacular and the policy has paid out as promised. It's my understanding you cannot buy a policy like this one anymore.
We are thinking about an equity life policy. By the time we reach that point it should have enough equity to cover expenses if we cash out, but if it doesn't get used the funds go to our children. Just a thought.
LTC insurance is like a gamble on a gamble. First you are gambling that you will need it before you pass on. Secondly you are gambling that you will need it at all since you may die of natural causes from age. The short answer is it depends. Sort of like the question of whether to collect social security at 62 or 66 or 67. It depends. I will admit the LTC question is more complex and I doubt if anyone has the answer without the caveat being added that it is a gamble. So the question might be "Are you felling lucky" I didn't buy it. Will I regret it. "It depends".
LTC insurance is one option. A Lifecare or what they used to call CCRC (continuing care retirement community, is another. Fee for service retirement community, third option, and CCAH (continuing care at home is a fourth option. All based on your age and unique financial and health status. Plan before you need assistance in ADL.
We have LTC that pays &3600 month. I am ckg costs of places. Amazing Seattle base cost $6350 w $5000community or mom in fee. 2 hrs away same company 4700 base & s1500 community fee. Palm Springs area $2750 base &$2000 move in fee. Then add the level of care to that. You may need to move to another state for a few years to afford care before it kills the caregiver. I am reminded that I need to ck w our LTC that the facility matches LTC . requirments. Some policies cover Board & Care homes or called also Family Residence which has 6 persons vs 50. Policies have chg since 90's when we purchased never knowing my husband would get Alzheimer's.
From my understanding of long term care insurance, once a person is diagnosed with any dementia, he/she is no longer eligible. Premiums for eligible folks are pretty high if you are past age 50 when you apply. I was told if you are going to get this insurance that you should get it at the youngest age possible. Premium quote for me at age 53 was $6000 a year and that was almost 3 years ago. However, one year in a facility is easily $60,000. It’s basically a crapshoot because you don’t know how long you will be needing to live in a facility. We were told the average time spent in a facility is 2 years. So let’s say I got the insurance at 53 and needed a facility at 73. I will have spent $120,000 on premiums and care at today’s rate for 2 years would be approximately $120,000. In my case, no it wouldn’t be worth getting.
I would like to add a few comments. One is that numbers are spouted about that "X% of people will need long-term care, so one had better buy LTC insurance". However, that means (100-X)% do NOT need long-term care, so if that's the case the money just goes to waste. Furthermore, not everyone who is in a facility is necessarily there for a long time--some might just spend their last month or so of life there, so this is obviously a lot less expensive than spending years there--but I doubt any of these companies provide a breakdown of this. Third, many people who don't have considerable assets end up getting support by Medicaid, so they receive care even if they don't have the funds (or insurance) to cover it. Finally, if one doesn't have children (such as in my case), I don't really worry about the possibility of "my last check bouncing"--I'd rather use the cost of LTC insurance while I'm younger and healthy to enjoy life as well as for investing (with the idea that some of this might be needed for long-term care), and if anything is left it can go to causes I choose, and if I don't need long-term care than there is that much more available to give when I'm gone.
I very much doubt that someone already needing care would be accepted for LTC ins. The older you are the more difficult it is to obtain coverage and the more expensive. I don't have the skills to work out comparisons but if I was single woman with no children I would feel my best course would be to set up an account as early as possible and keep it for this purpose only.
Your concerns about rate increases would be valid if long-term care insurance companies were allowed to price their new policies, available for sale now, the same way they priced their policies 10 to 20 years ago.
Fortunately, insurance regulators do NOT allow any policy purchased today to use the old pricing assumptions. To protect consumers purchasing LTC policies today, 41 states have passed strict pricing regulations. The new regulation has helped curb long-term care insurance rate increases because it forces long-term care insurance companies to lower their profits if they seek a rate increase. Even if a rate increase is approved, due to this new regulation, the result to the insurance company is less profits. Which insurance company wants to lower their profits?
Now that’s good news and that’s bad news. The bad news is that a policy purchased today costs more than a similar policy that was purchased 10 years ago.
The good news is that since today’s policies are priced more conservatively they are less likely to have a large premium increase in your lifetime.
The insurance companies love it when people buy these single-premium hybrids.
1) They earn money on your money for a very long time. The investment return on your deposit is usually less than zero. When you look at the guaranteed surrender value, if you cancel the policy you usually get back less than what you put in.
2) When you need care, they use your money first. If, for example, the single-premium is $100,000, they’ll use that money to pay for your care FIRST before they use their own money. If the single-premium is $100,000, essentially you’re buying a long-term care policy with a $100,000 deductible.
3) When you need care, you'll have to use even more of your own money. A $100,000 single-premium “hybrid” policy will probably pay less than $4,000 for each month that you need long-term care. From the very first month you need long-term care you’ll have to use your own money in addition to the $4,000 the insurer gives back to you each month. Most “hybrid” policies have no inflation protection. Twenty years from now, if care is costing $12,000 per month, you’ll have to pay $8,000 per month from your own money to make up the difference.
I do this type of analysis for my clients every day. 99 times out of 100 these single-premium products are a bad deal for the consumer and a great deal for the insurer.
Thanks for making the distinction between projected values and guaranteed values. I'm curious about why you say they're not a good value for someone in their 50s or older. Can you point me to a resource or provide more information?
I was thinking it could be a good thing to purchase around age 60 when you have a good idea of what your available retirement funds will be.
A Life/LTC "hybrid" policy is usually a great choice for someone who buys it in their forties (maybe early 50's). They are usually not a good value for someone older than that. Be careful because not all hybrids have guaranteed premiums or benefits. Don't judge the policy by the "projected values". Judge the policy by the guaranteed values. Also, keep in mind that most hybrid policies do not have any inflation protection.
At least 50% of the seniors in the United States should NOT own long-term care insurance because they can qualify for Medicaid. Your mother is one of them. She doesn't need long-term care insurance, she has Medicaid. Today, when someone buys long-term care insurance, there's a form they have to complete regarding their income and assets. The form is designed to prevent people from buying long-term care insurance if they can easily qualify for Medicaid. It's a very important form and it's been required in most states since the late 90's. If that form had been required 23 years ago, in your mother's state, the insurance company would not have issued her a policy.
Had a family mtg this week to discuss mother's long term care. She's always had a LTC policy and has stated repeatedly that it was "more than enough".....big surprise, although she's kept up the premiums for 23 years, it will pay $35 maximum per day towards any kind of NH, ALF. SNF. $35. Wow.
She is never going in to care. Brother will NOT ALLOW IT. She's with him until she dies. The mtg simply established what the rest of us sibs needed to know--was there really any money there for her care. Answer, no.
I started searching morningstar.com for articles on LTC insurance. (I love that website!) I found out about a hybrid life insurance/long term care insurance policy. It's a single premium policy, so you give them a lump sum and don't have to worry about your premiums going up, and apparently, it can pay several times the original investment in the form of a long term care annuity. Some part of what's left will go to your beneficiary when you die. That sounded like a more predictable option than a policy you pay on over time. Thoughts?
LTCShop, I'm not trying to scare anyone. I'm just stating facts. It is not a given that a LT claim will be paid. People should have a plan B . LT companies prefer to pay the Home Care benefit as it a smaller payout. Moving to the next level, Assisted Living , can be difficult as many policies claim to be " Nursing Home" only, when in fact, the contract verbiage covers Assisted Living. Policies purchased now will also have issues, as no one can foresee the future.
Badandy, please stop scaring people. 30 years from now care will be provided the same way it is today: by caring, loving human beings. Of the nearly 300,000 long-term care insurance claims filed this year, about 80% of them are for care that is received at home; care that is provided by home health aides. That's not going to change.
It's a good deal , if the insurance company will pay the claim! You all need to know that if you have planned on your long term care to pay for your needs in 30 years, withno plan B , then you are taking a big risk! The insurance landscape will have changed, as will the different types of facilities available. Care offered in 30 years from now, will most likely be very different ,with different licensing from today. These differences greatly affect your ability to collect on a claim. Collecting on any insurance policy is never certain. Long term care is no different.
Guess what?
Its wasn't and it isn't. If mother were to use hers now, she would get about $75 a day added to her SS, That won't make a hill of beans difference. As they had added a codicil to include in home CG's, it could have been used all these years we kids (well, 2 of the 5) could have been helped along. As it is, I don't think she'll ever recoup a cent. Dad thought he was saving us kids the trial of having a difficult patient in mother, and he was right.
YB who is her self appointed primary CH will NOT ALLOW outside help of any kind.
DH and I have just been saving like crazy so we will not be burdens to our kids. That;s probably the best LTC insurance.
Many struggle to pay the increase because of a sunk cost. I already have this much invested. There are many who will disagree. But when you 30 tax and insurance attorneys say nah, I think one is wise to heed that.
If you are determined do,look into when they start paying. Under what criteria? How many facilities accept LTC pay, because many no,longer do so.
Read the fine print. Ask around who takes payment. From which companies. Why not yours.
The best LTC policy that we looked at a year or two ago included a partial return of premium if it went unused or kinda like life insurance. Even so, we decided against it.
The only direct experience I've had with LTC insurance was a family member who became a quadriplegic. He collected an amount about equal to what they had paid in over the years. Now, it's a lot more expensive than what they paid in premiums.
I do think insurance is important for many people--young families, especially, for example. But it needs to be based on your individual means and needs.
So, what made you decide to do it, specifically?
In fact, to "set aside" money would seem to imply not spending it on insurance.
If you have an LTC policy, it is most likely that at the time you need it, YOU WILL NOT BE ABLE TO HANDLE THE PAPERWORK AND LEGWORK TO FILE THE CLAIM. Therefore, you must have someone that will be there fore you TO FILE THE CLAIM for you. Otherwise I would say the policy is worthless.
There is extensive initial paperwork, including visiting doctor(s) to sign-off on things, there is monthly paperwork, and there is annual paperwork to continue the claim. I am lucky that my dad purchased a policy when they were spectacular and the policy has paid out as promised. It's my understanding you cannot buy a policy like this one anymore.
Just a thought.
Sort of like the question of whether to collect social security at 62 or 66 or 67. It depends. I will admit the LTC question is more complex and I doubt if anyone has the answer without the caveat being added that it is a gamble. So the question might be "Are you felling lucky" I didn't buy it. Will I regret it. "It depends".
I don't have the skills to work out comparisons but if I was single woman with no children I would feel my best course would be to set up an account as early as possible and keep it for this purpose only.
Your concerns about rate increases would be valid if long-term care insurance companies were allowed to price their new policies, available for sale now, the same way they priced their policies 10 to 20 years ago.
Fortunately, insurance regulators do NOT allow any policy purchased today to use the old pricing assumptions. To protect consumers purchasing LTC policies today, 41 states have passed strict pricing regulations. The new regulation has helped curb long-term care insurance rate increases because it forces long-term care insurance companies to lower their profits if they seek a rate increase. Even if a rate increase is approved, due to this new regulation, the result to the insurance company is less profits. Which insurance company wants to lower their profits?
Now that’s good news and that’s bad news. The bad news is that a policy purchased today costs more than a similar policy that was purchased 10 years ago.
The good news is that since today’s policies are priced more conservatively they are less likely to have a large premium increase in your lifetime.
That's a real eye-opener. Thank you.
The insurance companies love it when people buy these single-premium hybrids.
1) They earn money on your money for a very long time. The investment return on your deposit is usually less than zero. When you look at the guaranteed surrender value, if you cancel the policy you usually get back less than what you put in.
2) When you need care, they use your money first. If, for example, the single-premium is $100,000, they’ll use that money to pay for your care FIRST before they use their own money. If the single-premium is $100,000, essentially you’re buying a long-term care policy with a $100,000 deductible.
3) When you need care, you'll have to use even more of your own money.
A $100,000 single-premium “hybrid” policy will probably pay less than $4,000 for each month that you need long-term care. From the very first month you need long-term care you’ll have to use your own money in addition to the $4,000 the insurer gives back to you each month. Most “hybrid” policies have no inflation protection. Twenty years from now, if care is costing $12,000 per month, you’ll have to pay $8,000 per month from your own money to make up the difference.
I do this type of analysis for my clients every day. 99 times out of 100 these single-premium products are a bad deal for the consumer and a great deal for the insurer.
Thanks for making the distinction between projected values and guaranteed values. I'm curious about why you say they're not a good value for someone in their 50s or older. Can you point me to a resource or provide more information?
I was thinking it could be a good thing to purchase around age 60 when you have a good idea of what your available retirement funds will be.
A Life/LTC "hybrid" policy is usually a great choice for someone who buys it in their forties (maybe early 50's). They are usually not a good value for someone older than that. Be careful because not all hybrids have guaranteed premiums or benefits. Don't judge the policy by the "projected values". Judge the policy by the guaranteed values. Also, keep in mind that most hybrid policies do not have any inflation protection.
At least 50% of the seniors in the United States should NOT own long-term care insurance because they can qualify for Medicaid. Your mother is one of them. She doesn't need long-term care insurance, she has Medicaid. Today, when someone buys long-term care insurance, there's a form they have to complete regarding their income and assets. The form is designed to prevent people from buying long-term care insurance if they can easily qualify for Medicaid. It's a very important form and it's been required in most states since the late 90's. If that form had been required 23 years ago, in your mother's state, the insurance company would not have issued her a policy.
She is never going in to care. Brother will NOT ALLOW IT. She's with him until she dies. The mtg simply established what the rest of us sibs needed to know--was there really any money there for her care. Answer, no.
LT companies prefer to pay the Home Care benefit as it a smaller payout. Moving to the next level, Assisted Living , can be difficult as many policies claim to be " Nursing Home" only, when in fact, the contract verbiage covers Assisted Living.
Policies purchased now will also have issues, as no one can foresee the future.
You all need to know that if you have planned on your long term care to pay for your needs in 30 years, withno plan B , then you are taking a big risk!
The insurance landscape will have changed, as will the different types of facilities available. Care offered in 30 years from now, will most likely be very different ,with different licensing from today. These differences greatly affect your ability to collect on a claim.
Collecting on any insurance policy is never certain. Long term care is no different.