My husband and I are looking into purchasing Long Term Care insurance for ourselves. Interested in hearing others' experiences, caveats, things to consider, question we should be asking the vendors of these policies.(Not looking for advice on professional resources; we already have an estate lawyer and a financial planner.)
We are late 60s, in good health. I have some genetic risk for Alzheimers and arthritis; the husband is successfully managing pre-diabetes. I am anticipating needing home care at some point later in life; perhaps AL or SNF.
We are financially in a good place; not likely to need to rely on Medicaid unless something catastrophic happens. We were caregivers for my Dad in his last few years, and now for my mom long distance, so we know that it takes a village. Our one child isn’t likely to be able to provide the level of care or coordination needed for any long term condition, nor do we want to burden her.
Suggestions? Things to consider? Questions to ask? Your experiences (good/disappointing) using LTC insurance?Thanks
My mom’s second & eons better NH did not accept LTCI. Signs at the entrance, in the elevators and couple of the offices. It was part of a small group of NHs in a region of the State. I asked billing office guy about it. Quite the earful (he needed to vent as rarely did residents family come to talk with him), anyways the issues were that each of the LTCI companies have their own paperwork and contract requirements. So paperwork hell. And if families opted to do the filing themselves, they still had to get info from the NH. For some policies, they were written that care is to be provided by Registered Nurse. Like it had to be services done by a RN, so if it was a CNA or a LPN, then too bad, so sad, not approved. One insisted on info on education & licensing on staff. He felt it was basically anything to delay a payment & spending too too much time to deal with LTCI. For this group of NHs, was simpler & better to be only private pay or LTC Medicaid (which paid like clockwork based on daily census) for their custodial care beds.
Fwiw big exiting of LTC insurers abt 10/15 years ago. MetLife, John Hancock, Prudential….. so no new policies underwriting at all and servicing old policies done by outside contractors. These are big solid insurance companies and they determined LTCI was not going to ever be profitable. To stop underwriting says a lot about the inherent risk LTCI pose for a company. Even Genworth - the market leader for LTCI - changed their underwriting strategy. You have to be careful about who you choose.
HOWEVER…
What is happening nowadays is doing “hybrid” policies. They are not Medicaid compliant. Which is something to take into consideration if you & hubs could be on the cusp of outliving your $ and may need to file for LTC Medicaid for NH. I know someone who got a hybrid from Thivent. His company got bought out so got a big chunk of change to be able to place into the hybrid all up front without affecting regular living costs.
A good FA should be able to come up with options for what to do with your $. And you should be able to get in detail how their commission is structured. There are a lot of “fa’s” who are mainly insurance agents and not doing comprehensive financial planning that a FA does. They are more about selling annuities or other insurance products. Be real clear in asking questions. Good luck!
A true financial advisor should be able to reasonably tell you what sort and how much coverage you might need from an LTC policy.
Be warned - they are all very, very pricey. Many companies that offered LTC policies no longer do so because they lost a lot of money on them. And of the few remaining, most will no longer "guarantee" fixed installment payments or prices.
Also bear in mind, any health issues you have - for example, your genetic predisposition for Alzheimer's - may keep you from even qualifying for a policy in the first place.
My mom had purchased one about 20 years before she passed away. Her premiums quadrupled in those 20 years. If her finances weren't as strong as they had been, it probably would have been impossible for her to continue to pay for it. This company doesn't even sell them anymore. So, it's not just about what you can afford right now, at this moment in time, but what you will be able to afford years in the future. Again, this is where your financial advisor should be guiding you.
Now, we did use mom's plan to cover a respite stay; but there were all sorts of rules about it. IIRC, the policy covered 21 days per year; but those 21 days couldn't all be in the same month. There were all sorts of little caveats like that in the policy, so be certain to read ***all*** of the policy before you sign on the dotted line, and not just depend on the salesman's pitch.
Good luck!
Seek out and get quotes from at least 3 different agents who specialize in long-term care insurance. You'll probably get three different recommendations.
There are very few long-term care insurance specialists. You will probably have to speak with agents who do not live near you.
Do a ton of research.
Apply before your next birthday.
Apply before your next physical.
I will add only one point; it is crucial for you, I think, to read or have someone else read and point out, all the finer points in your policy. Like all insurance it sounds WONDERFUL on the face of it, and when the house caves in there are lots of fine points you missed about coverage.
You apparently are fairly well self-insured already financially. Gives you lots of choices. But do know that the fine points In SOME LTC makes coverage an impossibility until you are in-facility care, and then it comes down to WHICH facility. Some won't cover until there's an RN on duty at all times; that's very rare.
There is then only the Medicaid problem which you feel you will not need. Some LTC policies, just like some Reverse Mortgages, bump up your monthly income. If there is no wealth held in anything but monthly income and a home, let us say, then sometimes there is too much income monthly to qualify for government help. That's bad when there are states that don't allow Q.I.T. trusts or Miller Trusts.
As I said, you are covered with expert advice. We are just a forum of caregivers and not experts on much but survival of a sort. Glad you are checking everything; it's the wise way. I wish you lots of good luck.
We've considered whether we can afford to keep it but are very reluctant to surrender it now that we may actually need it. There's also the issue of how much money we've already paid into it. There's a 90-day exclusion period. It covers home health services if medically necessary. Unless we need it, I won't know if the company is reasonable to deal with. I sincerely hope so.
I don't know if we would buy LTC insurance again given the now-sky-high premiums. They are a MAJOR expense on a retirement income. I see the point of establishing a self-insurance fund--but I might not have been sufficiently disciplined not to touch it in my younger years!
It's a difficult choice to make.
This is one of the highest rated LTC companies in the US. Their tactic is to delay, delay, delay. If the patient dies before it's all paid out, they win. For claims, they only accept documentation in a certain format. Submitting online was their favored option, which I love, but sometimes the forms weren't accepted, no explanation. Then a phone call was necessary to find out what went wrong. They are going to only online claims procedures, so if you can't use a computer fairly well, someone will have to submit for you. Filling out by hand and mailing in forms for the claim will soon no longer be acceptable. They control what facilities or agencies qualify to be paid by them to take care of you. They can deny a facility or agency. They can refuse to pay directly to the facility and only deposit to your bank account, which means you have to pay the facility's fees yourself if the money's not in your account yet. That's an extra step in your routine just when you're exhausted and overwhelmed with taking care of your loved one. The LTC company can make you jump through 1000 hoops to get the benefits you paid for. It is miserable.
LTC insurance works like this (simplified): You pay premiums to the company. They invest the premiums in financial instruments so they can get a return on their investment. That's how the company makes money for their stockholders. They are the middleman and earn a fee.
There is a better way: Find a good investment with a good rate of return, like a mutual fund, savings account, whaever you feel comfortable with. Name the account "Dorene and Steve's LTC Nest Egg." Invest regularly, just as you would have paid premiums to the LTC company. Do NOT ever touch that money for anything. Watch it grow. YOU then earn ALL the proceeds, as there is no middleman. When you are ready for LTC, you control when you take the money out. You can pay to any facility or agency, not only accepted ones. You jump through no hoops, you have no imposed rules, you access the money without having to satisfy annoying demands and without delay. It is much simpler.
My husband went the LTC route, and I was the one who had to deal with the company because he isn't capable now. I've gone the investment fund route, so I'm self-insured and glad that when I need care, my children will not have to go through what I did for him.
We were very careful about reading the policy again before turning in the application and emphasizing how my Mom met the criteria for coverage, so it was approved on the first try. The deductible period ran by calendar day rather than days of service, so they started paying out after 3 months, even though she only used two visits a week at first.
There were a few nuisance fees that they didn't cover, including a charge for short (3 hour) shifts with the first provider.
Having the coverage was very useful for overcoming my Mom's reluctance to rely on others for assistance. She was a woman of frugal habits and had a tendency to make do rather than spend money unnecessarily. Having the policy meant that the services had essentially been prepaid, so it was easier for her to accept that this was something she had a right to expect; dressing fully and bathing safely, as well as incidental help with personal meal prep, fresh linens on the bed, and other light housekeeping. They also were available to take her appointments as needed. The regular agencies were very good at submitting the appropriate forms for reimbursement so we didn't have to.
If you want a good discussion on the financial aspects, do a search on Bogleheads.org where the "do it yourselfers" lean towards self funding. Mathematically, this can make sense for middle class folks who are good at saving money.
I can also recommend "The Retirement and IRA Show" podcasts for deep dives into many topics, including long term care funding, including insurance, or reverse mortgages, if you are considering that as an alternative.
I got my own coverage very young, when my Mom got hers. I've kept it without reducing coverage through a number of premium increases. I share my Mom's frugality so hopefully I will share her ability to accept help more easily by having coverage. I like the idea of not having my older self make difficult financial calculations on where to take money to pay for care or worry about protecting it from scammers. I have some hope that care providers will see my coverage as a long term stream of income that motivates them to keep me content. For all the years that I have had the coverage I have been eligible if I needed assistance due to accident or other disability.
Retirement accounts can't go into a trust unless you pay the taxes on the full amount of the trust.
Real estate also has tax consequences if you try to put it into an irrevocable trust.
Lastly, revocable trusts are powerless to protect assets from Medicaid.