I want to learn more about LTC insurance

[Rob Base 2.0]

So I kind of know the basics. But a few specific questions.

Let's see u have a policy that pays for 3 years of care. And then assume at age 68 u need LTC for 3 years. Is your policy now null and void? What if u recover and then at age 77 need 3 more years of LTC? Can I still use same policy?

As far as selecting the term, how can u really predict how many years you may need care? So is the idea to get 5 years since that's the look back and then transfer ur assets (if married) ASAP?

Hope that kind of makes sense. It's one of my concerns about retiring early if I pull the trigger in 5 years.

Thanks.

[andi9899]

LTC policies generally have a Restoration of Benefits rider that states that if you require care and then get better that your benefits start over again after so many days of not requiring care.

As far as picking terms and elimination periods, consider how long you are going to require care. People don't usually live for decades in nursing homes. They average around 3 years. You're really just buying a bucket of money. So if you select a benefit of $250/day for 3 years, you're getting $273,750 worth of coverage. If you're care costs $200/day, your policy will keep paying longer than the 3 years until your bucket is empty.

Elimination period means how long you are going to foot the bill until the policy starts paying. Look at average nursing home costs and determine how long you can afford to or are willing to pay for everything and then pick an appropriate elimination period based on that. There's a lot more that goes into an LTC policy, but that should give you a better idea of how they work.

ETA: I didn't notice in you OP that your bucket was already empty in your question. Yes, when the bucket is empty, it's empty. The policy will stop paying.

[Deleted]

I looked into LTC either last year or the year before.  What I found was that LTC companies basically wanted to co-insure.  That $250 a day for 3 years = a $273,750 bucket does not mean that you have a $273,750 bucket to work with.   It means they will pay x for 3 years.  If your cost is more than x (and it will be), then you have to make up the difference even if you haven't used up the bucket.

The companies are also trying to contain their costs by tying your premium cost to the cost of inflation for nursing homes.  That is, if the cost of nursing homes went up 10% in a year, your premiums go up 10%.  I think Genworth is pioneering this.  Since health care goes up faster than inflation, you can see where premiums can become unaffordable after 20 years on a fixed income.  No one wants to go into a nursing home so you will fight it as long as you can.  But can you afford to keep the policy in force 25 years from now?  I would have been 87.  Who knows what premiums and costs would be in 2041.

The company I looked at did let you use the bucket for home health care.  That's great, but $250 a day is only a little over $10 an hour if you need 24 hour care.  

In the end, I decided that it wasn't worth it and increased my retirement contribution.  I really hated saving up $$$ for something that really wasn't going to improve my quality of life.  By the time I go into a nursing home, I won't really be aware of where I am.  

Andi can give you the best advice.

ETA:  Today's LTC policies are not the policies of earlier years.  Companies got burned.

[Deleted]

Here's the link to the thread that I started a couple of years ago when I was really considering this.  link

[andi9899]

You'll need to add an inflation rider to keep up with inflation. You can have it either compound or simple inflate. This is part of the "there's more" part of my post.

My Genworth policy has increased the daily benefit because of the rider, yet my premium has never increased in the 5 years I've had it. Not one penny. You have to either know what you're doing or get an advisor that you trust to make heads or tails of it. It's complicated.

[Rob Base 2.0]

And I work for the government and retired military so I know there is a Federal LTIC I can qualify for too.......just not sure how good it is (but if it's as good as the other government bennies, than it should be good---BUT I like to review these things for myself)

As far as self insuring- that would be hella expensive, no?

[dee27]

This looks like a comprehensive site about Federal LTIC. www.ltcfeds.com/programdetails/qualifyingbenefits.html#

Of course, the devil is in the details.

[Tennesseer]

I signed up for LTHC back in my mid forties.  The sooner you sign up (age wise) the lower your monthly premiums will be versus someone in their (say) 60s signing up for it now.

I pay about $65 a month premium for $250 a day nursing home.  I think it was about $45 a month back when I signed up for it 20 plus years ago.  What I am paying total per year is about three days worth in a nusing home.

My group LTHC is thru Prudential.  A few years back, they stopped offering it to new customers because it was not profitable.  Their discontinuing it did not affect those who already had a LTHC account with them so I'm safe..

[Rob Base 2.0]

Most of the stuff I read recommended starting LTC insurance early / mid 50s...did u consider that vice 40s ?

[andi9899]

It's age based, so the longer you wait, the more expensive it will be. I got mine in my mid 30s, but I'm in insurance so I do things a bit differently.

[Deleted]

May 8, 2017 17:17:57 GMT -5 @bamafan1954 said:

In the end, I decided that it wasn't worth it and increased my retirement contribution.  I really hated saving up $$$ for something that really wasn't going to improve my quality of life.  By the time I go into a nursing home, I won't really be aware of where I am.  

This is my philosophy.  I figure if I ever do end up in one, my assets can be spent down and I'll go on medicare if I'm in there over a few years.  I'm not one obsessed with leaving a bunch of money for an inheritance though. 

I'd rather save/invest those insurance premiums.  A lot of people never end up in LTC. 

[Deleted]

They are all written backwards in my opinion. Every LTC policy will pay up to $X/mo to a maximum of $Y.

It makes no sense. I can afford $X/mo until $Y. What I need is something to cover when I exceed $X/mo or $Y.  And telling me 98% (or whatever high number they state) of people don't exceed the 5 years (with median being 2 years), I would think the 2 people that exceeded that really want a policy that doesn't kick them to the street.  

After that you have to add all the exclusions and rules to get the benefit, I think I will take the risk, invest myself and probably have better funding than the "fake" feeling of safety they try to sell.

[kittensaver]

May 9, 2017 9:50:54 GMT -5 minnesotapaintlady said:

May 8, 2017 17:17:57 GMT -5 @bamafan1954 said:

In the end, I decided that it wasn't worth it and increased my retirement contribution.  I really hated saving up $$$ for something that really wasn't going to improve my quality of life.  By the time I go into a nursing home, I won't really be aware of where I am.  

This is my philosophy.  I figure if I ever do end up in one, my assets can be spent down and I'll go on medicare if I'm in there over a few years.  I'm not one obsessed with leaving a bunch of money for an inheritance though. 

I'd rather save/invest those insurance premiums.  A lot of people never end up in LTC. 

This is us too. The money we considered spending on LTC has gone into savings. If need be, we'll spend everything down and then go on to Medicaid/Medicare. We are also not obsessed with leaving an inheritance behind - nice should it happen, but by no means a priority.

[kittensaver]

Rob Base 2.0 - you may want to think seriously about stashing away what would be your monthly premium into some sort of interest bearing account (hahahha in today's market) or investment. By the time you're 70 (or 75 or 80), you'll have a nice financial cushion should you need money for care.

[Rob Base 2.0]

I'm not worried about leaving an inheritance (no kids, and if I did I still wouldn't worry about it)....and I have no problems losing everything to get gov't to pay for care if needed......but I don't want to leave my wife behind with nothing.....for example: I understand they can take the house even if it is in both of our names and I need the care and can't pay otherwise......not sure if that is true or not......then where will wife live?

[dee27]

www.elderlawanswers.com/protecting-your-house-after-you-move-into-a-nursing-home-6897

Transferring a Home
In most states, transferring your house to your children (or someone else) may lead to a Medicaid penalty period, which would make you ineligible for Medicaid for a period of time. There are circumstances in which it is legal to transfer a house, however, so consult an attorney before making any transfers. You may freely transfer your home to the following individuals without incurring a transfer penalty:

Your spouse
A child who is under age 21 or who is blind or disabled
Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home
A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.
While you can sell your house for fair market value, it may make you ineligible for Medicaid and you may have to apply the proceeds of the sale to your nursing home bills.


However, Medicaid did try to force my neighbor, a widow, to sell her house that was her only possession before she died to recoup the monies they paid for her care. This happened when she was in a nursing home recovering from a critical surgery, and she believed she would be able to move back home. Medicaid harassed her and her daughter who had no ownership interest in the house. They also refused to pay for the special food she needed because she had a feeding tube, and moved her to two different nursing homes during her recuperation. Two months later she died.

[Deleted]

May 9, 2017 20:09:03 GMT -5 Rob Base 2.0 said:

I'm not worried about leaving an inheritance (no kids, and if I did I still wouldn't worry about it)....and I have no problems losing everything to get gov't to pay for care if needed......but I don't want to leave my wife behind with nothing.....for example: I understand they can take the house even if it is in both of our names and I need the care and can't pay otherwise......not sure if that is true or not......then where will wife live?

I don't think that's true if there is a spouse living in the house. 

[jlbear71]

I work in an agency that sells LTC.  Or should I say sold since we have not sold an LTC policy for a while.  Bossman has been selling since 1965.  FTR, I am no longer a licensed agent.

Todays LTC is not the same as what was popular 20 years ago.  Most carriers have pulled out of the LTC business.  Genworth is one of the leading carriers still selling it.  I think Mutual of Omaha is another.

LTC is age based premium.  It also may depend on underwriting.  The apps usually ask health questions of immediate family as well.  

[Deleted]

May 9, 2017 18:30:11 GMT -5 kittensaver said:

Rob Base 2.0 - you may want to think seriously about stashing away what would be your monthly premium into some sort of interest bearing account (hahahha in today's market) or investment. By the time you're 70 (or 75 or 80), you'll have a nice financial cushion should you need money for care.

That's been my tactic and I should be fine. 

I've heard there are some places that will take you as self-pay for however long your money lasts (usually you have to be able to pay for 2-3 years) and then accept Medicaid after that.  I'm skeptical- I could picture them keeping you on as long as you can pay the sticker price and then either finding an excuse to throw you out (maybe turning the place over to new ownership every few years) or tranquilizing you into oblivion- but I do know one person on another board who said this worked for her mother.  I'd want DS and a good lawyer keeping an eye on them.

[Sharon]

May 9, 2017 21:13:09 GMT -5 minnesotapaintlady said:

May 9, 2017 20:09:03 GMT -5 Rob Base 2.0 said:

I'm not worried about leaving an inheritance (no kids, and if I did I still wouldn't worry about it)....and I have no problems losing everything to get gov't to pay for care if needed......but I don't want to leave my wife behind with nothing.....for example: I understand they can take the house even if it is in both of our names and I need the care and can't pay otherwise......not sure if that is true or not......then where will wife live?

I don't think that's true if there is a spouse living in the house. 

As with all things it probably depends on where you live etc.  My mother's neighbor came over in tears asking if she knew of a good lawyer because her husband who had Alzheimer's was in the hospital and they were recommending he be moved to a care facility.  Someone, not sure who, came up to the hospital room with a bunch of papers for her to sign including a paper to sign over their house so it could be sold to pay for his care.  Fortunately she was aware enough to tell them she wanted someone to look at those papers and didn't just sign them outright. 

The doctor agreed that her husband could return home under her care for the time being, they adjusted some meds etc.  She saw a lawyer about protecting some of their assets so she would not end up homeless. He lasted a couple more years and ended up passing away at home.

She is still Mom's neighbor and fortunately they kind of watch out for each other.  

[dannylion]

May 13, 2017 15:28:16 GMT -5 @athena53 said:

May 9, 2017 18:30:11 GMT -5 kittensaver said:

Rob Base 2.0 - you may want to think seriously about stashing away what would be your monthly premium into some sort of interest bearing account (hahahha in today's market) or investment. By the time you're 70 (or 75 or 80), you'll have a nice financial cushion should you need money for care.

That's been my tactic and I should be fine. 

I've heard there are some places that will take you as self-pay for however long your money lasts (usually you have to be able to pay for 2-3 years) and then accept Medicaid after that.  I'm skeptical- I could picture them keeping you on as long as you can pay the sticker price and then either finding an excuse to throw you out (maybe turning the place over to new ownership every few years) or tranquilizing you into oblivion- but I do know one person on another board who said this worked for her mother.  I'd want DS and a good lawyer keeping an eye on them.

The continuing care community my parents moved to accepted Medicaid for nursing center care if the resident's money ran out.  I forget the exact provisions as my folks had plenty to cover their care, so I just skimmed over what happened when people ran out of money.  I do remember that people moving to the community (into the independent living homes, anyway) had to have a certain amount of assets over and above the buy-in cost.  Also, I remember that if one spouse was in the nursing center and money started running out, the spouse not in nursing care was allowed to keep a fairly significant ($100k sticks in my mind) amount of the joint assets when determining Medicaid eligibility.  This was in Pennsylvania.  Other states might have different rules.  Also, the retirement community was a nonprofit operated by Mennonites, so that also might have had something to do with their policies.   

[Deleted]

$100k sticks in my mind, too, but that's really pitiful. If you want that to last in retirement you can withdraw 4% a year. It might pay for gas and groceries. One reason I'll never marry someone who can't fund his own LTC.

[Deleted]

In my state the spouse can keep the house, the car and 1/2 of joint assets, but there's also a minimum that they can be left with of 115K so if total assets besides the house is under that, they can keep it all. 

[Deleted]

May 14, 2017 22:15:18 GMT -5 minnesotapaintlady said:

In my state the spouse can keep the house, the car and 1/2 of joint assets, but there's also a minimum that they can be left with of 115K so if total assets besides the house is under that, they can keep it all. 

OK, that's not quite as scary as I thought.  So if the joint assets are $2 million, they must spend down $1 million before medicaid comes in.  If that's the case, I can see that changing in the future as states feel the pressure of more baby boomers relying on Medicaid for their retirement care. 

[Deleted]

May 15, 2017 7:01:06 GMT -5 @athena53 said:

May 14, 2017 22:15:18 GMT -5 minnesotapaintlady said:

In my state the spouse can keep the house, the car and 1/2 of joint assets, but there's also a minimum that they can be left with of 115K so if total assets besides the house is under that, they can keep it all. 

OK, that's not quite as scary as I thought.  So if the joint assets are $2 million, they must spend down $1 million before medicaid comes in.  If that's the case, I can see that changing in the future as states feel the pressure of more baby boomers relying on Medicaid for their retirement care. 

Of course, if they have a million to spend down, that would pay for 10 years of LTC.  The average stay is what?  a year or two?  

Unless of course you're one of the lucky ones that goes in healthy with dementia.  This is my grandmother.  She was a Masters Swimmer competing until in her 80's, so very fit and healthy, but she started getting confused and it wasn't safe for her to be living alone.  She's been in for at least a decade now, but she also survived her husband by many years, so there was no worry about preserving assets when she went in.