Long term care insurance

Parent Cafe
1

<p>I am wondering how useful it is to have this insurance. I signed up for this benefit 10 years ago when I joined my recent employer. Over the years, the benefit was outsourced and payments were made by quarterly billing instead of payroll deduction. Either way, the premium was paid by the employee. Recently, I lost coverage because when I missed two payments back to back. I am usually aware of payments but this was an infrequent bill and fell through the cracks during a very stressful busy time filled with some personal events and business travel. When I became aware, I sent the payments but they returned them, canceling the policy. </p>

<p>Anyhow, in order to continue coverage, I had to re-apply. Since, I have RA and seasonal asthma, they denied me. Now I am upset, to say the least, because I paid 10 years worth of premium and I have nothing. I had these conditions for years when I initially signed up but there was no evaluation required at the time. I stated that I am employed have not been sick a day during the past 10 years nor ever been to the ER for any of these conditions but I guess they feel that it is a risk anyhow.</p>

<p>So, I wonder if it would be prudent to pursue this or if I have any other options. I hate that I am losing 10 years worth of premium.</p>

2

<p>Perhaps appeal the loss of coverage due to non-notification of payment due?</p>

<p>There are several threads on this topic. Might want to search “long term care insurance”. I ended up with a Genworth policy, after a lot of research.</p>

3

<p>This type of insurance concerns me. I have heard many insurers under estimated the cost and have had severe cost increases with many customers no longer able to afford the coverage.</p>

4

<p>I also started LTC insurance where I work quite a while back. And they also changed the contract (rates went way up).</p>

<p>It’s up to you whether to pursue or not, though. LTC is a gamble. You’re gambling that you are going to live into very old age and will need long term care. The company is betting that you will get hit by a bus and that they will never have to pay out.</p>

5

<p>It would be useful to name the companies involved. </p>

<p>Most of the websites don’t have any estimates on the premiums or benefits. Just something to direct you to a salesman (I mean agent). John Hancock does have a premium estimator on their site, but it seems to limit benefits to 5 years worth. I guess that’s worthwhile, but I’d like to see the cost for lifetime care. The whole point of this insurance is to protect your estate. If you don’t have anything to protect, you don’t need the insurance because the taxpayers are going to pay for you.</p>

<p>To the OP. If you think you are truly done with the company, write a letter to the insurance commisioner in your state, and word it in a respectful way. I would think that your biggest complaint should be that cancelling policies after long periods of premium payment is different for long term care insurance than it is for other policy types. Its not the same calculus as it is in cancelling someone’s car insurance. You should ask if you could be reinstated, or whether you could receive a refund of your premiums since you never got close to the age when a claim is likely to be paid. </p>

<p>You might write to the CEO of the company first. In a few instances, I’ve found this to be very effective to resolve disputes. You write a respectful, short letter explaining what your problem is and what you want, and then call the company and ask for the CEO. When you get his office, or as far up the chain as you can get, you ask if he has a fax number. Usually you’ll get it. Fax your letter and then you’ll usually see some action.</p>

<p>I think I’d go the CEO route first, and the insurance commisioner route after that if its not satisfactory.</p>

<p>Good luck.</p>

6

<p>OP–do you have the option to pay the back premiums for the original coverage? Some companies will allow that. If you did not receive notification of for non-payment for LTC insurance they can NOT drop you and have to offer you to pay the back premiums–that is a safeguard put into place for people that may experience memory issues down the road but that doesn’t need to be the reason for non-payment. With your health issues I would investigate getting this reinstated ASAP, unless you are financially well off enough that you can afford to pay someone $200-300/day to come into your house and take care of you when you can’t because of your arthritis–or more if you have to move into a nursing home.</p>

<p>There have been a lot of rate hikes with various carriers and many have stopped offering polices as a result. You want to make sure you are with a very financially sound company for policies like this. We have Northwestern Mutual for our policies.</p>

<p>Also, there are some VERY nice tax breaks for having these policies so look into that too.</p>

7

<p>Steve the NWML agent is the one that told me about the pricing of original policies. He said that NWML was uncompetetive for years because their policies were priced much higher. He said that NWML is now competitive because the other insurers had such significant increases.</p>

8

<p>tom1944-we were told the same thing. The year we bought our policies, John Hancock (I think) had a 68% rate hike. Our policies go up a little bit each year but they are designed that way. I think they have gone up from $70/month to $75/month over the past 5 years or so. We were in our early 40’s when we got them so our rates are pretty low. The design of the policy is such that we will convert them to fixed rate policies around year 15 or so when the adjustable rate and the fixed rates are about the same. After that we won’t see any rate increases unless we increase coverage levels, which is also an option in our polices. We have a 5% annual increase built into the policy and have some options to add more if we need to.</p>

9

<p>

It’s useful if you end up in a LTC situation, otherwise it’s not. The difficult part is figuring out if you’ll end up in an LTC situation. That’s why it’s called ‘insurance’. They’re betting you won’t; you’re willing to forego the cost in the event you will.</p>

<p>It’s a good question though and not one easy to answer. On the surface the answer would be ‘yes’. But looking at it more deeply, one really needs to understand the costs, the actual benefits, and the likelihood of receiving any of those benefits. </p>

<p>It’s compounded by the fact that there are many different types of plans available so where answer might be ‘yes’ for one it might be ‘no’ for another.</p>

<p>Another factor is how much you have available in financial resources. If the benefit would be, for example, up to $100K, but you have (or would likely have by the time you’d likely take LTC benefits) $1M including house equity, 401K, savings, etc., then that $100K isn’t that significant relatively speaking. But this equation slides with the value of the variables.</p>

<p>Yet another factor is what other people you have available who might be able to support you in a care situation. A lot of people end up relying on family members and/or in home professional care people to not incur the costs of going into an assisted living situation (which is pretty expensive). Others don’t. This can also be driven by the nature of the illness but I’ve known people who are way beyond when they could trigger LTC but still stay at home and don’t trigger it. </p>

<p>Since you won’t know the answer to the first and most significant question, i.e. whether you’ll end up actually taking benefits on the insurance, I think the best thing to do first is to evaluate the different plans out there. I’d focus on known companies who’ve been around in the insurance business a long time and evaluate the several plans available from each of them. Don’t assume they’re all the same because they’re not. Besides the cost of the insurance, the actual items they’ll cover varies as well. When you do this evaluation something might jump out at you. </p>

<p>Whether you’ll qualify is a different story. If you’re currently working for a company they might have a way you can at least qualify on the group plan even if you’re the one paying all of the premiums.</p>

<p>Insurance companies will definitely drop someone if they’re not paying the premiums. In your case you missed multiple payments in a row over the course of ‘half a year’ which is pretty significant. Were you sent reminders? I was pleasantly surprised when I was called by an LTC insurance company through whom my mother had an LTC policy. They actually called me and said she’d missed a payment but that if we get the payment in right away the policy wouldn’t lapse. I contacted my mother and she made the payment. Obviously she must have given them my contact info and the insurance company (Transamerica) did the ‘right thing’ and didn’t use it as an excuse to drop her (and at this point she was a very high risk from an insurance perspective). This situation gets worse in many cases as the individual declines and starts forgetting to pay different bills and might even forget they have LTC insurance. This can lead to them being dropped just at the time they’d about be ready to trigger it. Make sure you know this area for your parents and when you get to that stage make sure your kids know about this area regarding you.</p>

10

<p>Another thing with LTC insurance is that you need to meet THEIR criteria for disbursal of funds for long term care. This usually means that you have to have several deficit areas to qualify for benefits. YMMV depending on the provider and your coverage.</p>

<p>The policies we were originally looking at had an asset protection feature as well but ONLY if we did not move from this state. There were additional restrictions as well.</p>

11

<p>

Exactly. It’s not like one can just decide they’re going to start drawing from it when they feel they want to due to what are considered ‘convenience’ items. It usually has to be what you say, multiple needs in areas the insurance company stated are needed in order to trigger it.</p>

<p>One needs to pay close attention to the fine print in these LTC policies and not assume that they’re all the same.</p>

12

<p>Read the criteria before buying. Some are pretty reasonable and not impossible to achieve. LTC was a godsend for us with my dad. I wish he’d understood the policy better as we could have used it when my mom was ill b It paid out for 2 years.ut he misread the plan terms and chose to “hold onto it” and never used a penny of it :(</p>

13

<p>thumper1–that is not quite true. The qualifications for LTC payouts are pretty standard, not being able to do 2 activities of daily living, feeding, dressing, transferring, toileting, etc. What is different is who determines that, some dr at the insurance company or YOUR dr. THAT is what you want to look into with your policy. </p>

<p>Again, like all insurance, everyone hates making the premium payments…until they need the insurance.</p>

14

<p>My mom always had the option for it, even as a retiree. She thought she wouldn’t need it. She is now on gap-medicaid-we had to sell her house, car, empty bank accounts, etc for the $300/ month that she lacked from her pension to cover her nursing home. LTC would have given her options in her care.</p>

15

<ol>
<li>I’d write a letter to your state insurance commissioner asking for assistance in getting the policy reinstated. Keep it to one page, but include the policy number and name of the company and name of the policy.</li>
<li>Our Genworth policies (underwritten, but available to us through a professional society) have not had a premium increase in the 9 years they’ve been in effect. I could get one tomorrow – and I expected to see one a year or two ago – but it hasn’t happened yet.</li>
<li>I handled LTC claims for MIL. They were picky about the details, and fussy about who performed the work (her policy allowed them to okay the aides, and over the years they got pickier about aide qualifications) but the $2500 a month it provided was the difference between her being able to stay at home or her having to go into a nursing home. She died peacefully in her own bed, which is precisely what she wanted. </li>
</ol>

<p>The LTC company sent around an RN or Social Worker(?) to see in MIL was qualified by not being able to independently handle at least two activities of daily living. She couldn’t handle four of them, and we learned that we probably should have applied for benefits a year or more earlier. They sent an RN out every six months to recertify her as still needing help. Once she was on benefits, the waiver of premium kicked in, so she was no longer paying premiums.</p>

16

<p>We have a Genworth LTC policy. They asked us to name a person (close relative or friend) who could be notified if a premium was missed. We occasionally get a reminder letter asking us to update that name in case it has changed. I think that’s a great idea. If we ever get too old or ill or forgetful that we forget to make a premium payment, they’ll notify our son.</p>

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<p>Elder law atty here chiming in. My job is helping families facing the exposure of a lifetime’s worth of savings and their houses to the costs of care. I do not sell LTCI (and therefore have no vested interest in suggesting it), but it is absolutely the first thing we discuss as a long term care planning strategy IF the client has a house and at least $150K in cash assets, AND (2) paying the premium will not mean that the client cannot also continue to enjoy his/her life as before purchasing the policy. In other words, if having the policy means no cash available for vacations, or groceries, then forget LTCI. But if the premium payments are do-able, our general feeling is that this can be the best investment you will ever make. I analogize it to your homeowner’s policies (only more costly): you pay the premium every year, and then pray that you never have to make a claim. Because if you do, that means a tree fell on your house or someone died in your front yard (or you have Alzheimer’s or broke a hip). If you don’t make a claim, the next year you get a new premium bill, and again you hope you don’t have to make a claim. Positive spin: every new premium bill means that you have made it through another year in good health. If you do go on claim, most policies provide that premiums then stop and it is time for the company to pay you. This is why the product is so strenuously medically underwritten: the company wants to make sure you are not going to have a stroke 2 months after you have made only one payment: once they accept you, they own you unless you don’t pay. I have seen cases where the insured paid for only a few years (say, paid $20-30K in premiums) and then stroked out, and the company was on the hook to pay out literally hundreds of thousands of dollars to the insured to cover private care, assisted living, etc. Best money the insured ever spent!</p>

<p>In order to prevent possible lapse for non-coverage, most if not all companies ask the insured to provide contact info for someone else who will be notified if the insured fails to make a payment. And it does work. My mom recently missed a payment on her policy because she was (ironically) in rehab after a fall. The company sent me a notice, I told Mom, and she sent out the check the next day. Save! </p>

<p>To the OP: the notification situation may be different for an employer-provided policy than for an individual policy. We usually counsel people to purchase individual (v. group) policies if possible, so I am not familiar with the non-payment provisions of a group policy. Sorry. If you have the actual contract, pull it out and read it before you start writing letters. You may also want to contact an insurance advocate in your area who can help you with your claim for reinstatement.</p>

18

<p>Curious about your policy with Hancock.i have one also , a 10 Pay.
Have not heard of one that pays premiums as decided over 15 years then turns fixed.
Was it a private or employer policy, plus any other information.
Thanks.</p>

19

<p>Thank you for all your valuable replies. Originally, when I took the policy, it was at the advice of the HR rep and the premium was affordable. Having no experience with senior care at that time, I was not sure whether this was a good amount but that was what was offered. I went back to review the policy and it turns out, it only pays $100 per day for a total of $200K within 5 years. Someone pointed out earlier that it would cost around $200 - $300 a day to have someone come to your home. So maybe, this is not a good policy afterall. The insurance company is CNA/Continental Casualty. I will definitely sit down over the next few days and read the entire policy. </p>

<p>Since the invoices were mailed on a quarterly basis, I only missed two payments. January and March. I know it sounds like a lot but there were exceptional circumstances. I could have assigned my husband to get a reminder, but that would have been pointless as he was going through the same stuff with me. It just got lost in the pile of junk mail. Most of my bills are monthly and paid electronically so it is the only one that fell through. Life happens, I know this was my fault but I would think after 10 years, they might make an exception. I mailed them the two missed payments but they did not accept them . It seems that it is their way of weeding out people who might file a claim in the future. I am still in my 40’s and pretty active, so realistically I do not expect to use this coverage until I am in my 70’s or beyond. I know that it is unknown, but I have seniors in my family well into their 70s living well on their own, even with diabetes, arthritis, etc. </p>

<p>I like the suggestion of reaching out to the CEO. I will certainly look at that option.</p>

<p>My company is now offering Genworth, so I can compare and hopefully, I can get in during annual enrollment if CNA turns out is not good enough to fight for.</p>

<p>My worry now that I am really analyzing this is whether this insurance is considered an asset. I expect that by the time I use this service, if ever, I would have spent down any 401K and would only have a small pension and SS (if that still exists). What if I do not have enough $ at that point to pay the difference between the insurance benefit and the actual cost for home care. We don’t know what that cost will be. Is the insurance is considered an asset and therefore, I would not qualify for Medicaid, if sadly it comes to that? or will Medicaid cover the difference? Could this happen? I understand Medicare or private insurance will only cover up two three months of nursing care and after that you have to pay out of pocket, which is where the insurance or Medicaid (if you have no assets), kicks in. This is so hard to figure out as there are so many unknowns.</p>

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<p>Unless you have one of the cash value life insurance products that have a LTCI feature and could be liquidated for cash, regular LTCI is not an asset under Medicaid rules. If the policy is paying out, then the monthly benefits are considered income (which is treated differently than assets). Many people with LTCI in pay-out mode are indeed able to qualify for Medicaid as well. I have a case right now where my client has been in a nursing home for several years. His monthly nursing home bill is $12,000. Between his regular income and his LTCI, he receives approx $7000/month. We have just submitted an application for Medicaid because his assets have now been reduced below the asset limit (he has privately paid over $200K to the nursing home!). Once approved, he will still be paying the $7000/month, but Medicaid will cover any difference. LTCI can also be very helpful to help people who have transferred assets to cover the costs of care over the five years following a substantial transfer (the “look back” period). In other words, LTCI and Medicaid are not one or the other. They often go hand in hand.</p>