<p>So financial gurus, what should one be looking for in long term care policies? How much is enough? How much should it cost? When do you get it?</p>
<p>Mom3togo and I have long-term care policies and so do my parents which I unfortunately know a lot of details of. There are no definative answers to the questions you asked … for each family they need to make trade-off decisions that work for them. We created a spreadsheet to fingure out the trade-off points given our rates … the “correct” answer depends on when you start paying, your rate, how long it is until you need to use the insurance, how long you will need the insurance once you are using it, and if one or both will need the insurance … and your overall financial situation. Since the answers to the last 3 questions are unkown (how many will use the insurance, when will you start, and how long will you use it) the final decision is a risk essesment for the future A few thoughts …</p>
<ul>
<li><p>As a couple you can a policy for one spouse, or seperate ones for both spouses. or one that has some shared benefits. We went for the shared benefit one which works out better if only one of us ends up needs extensive long-term care … but actually will work out worse if we both need the insurance expensively.</p></li>
<li><p>The sooner you start the lower your rate will be over the life of your policy … obviously it is a big cash flow hit to start earlier (the insurance will likely be thousands of dollars per year for both of you) … is this a good trade-off? … can you afford the cash-flow hit now? Or should you wait and self-insure for awhile when the risk is low?</p></li>
<li><p>Figuring out how to structure the benefits was a gamble on likely health outcomes for both of us … how long do folks in our family live? … do they die quickly on hang on? … what are the odds of a stroke or Alzheimers? etc </p></li>
<li><p>What are insuring against? Are you just worried about paying the health care bills from the get go (which ultimatly Medicare would pick up after assets are depleted)? Are you trying to protect some assets? Are you trying to ensure the level of care (typically you can afford better care if long-term care insurance is in place)? </p></li>
</ul>
<p>So we played with these factors in a spreadsheet and there seemed to be two decisions that made the most sense … </p>
<p>1) the lowest expected cost answer for us was to self-insure when we are young (50) and pick up long-term care when we are older when the rates are much higher … the savings from waiting 10-15 years pay off the increased rates if start the insurance at 65 if we each live a typical life span and only need the long-term care for 2-3 years. This outcome is not surprising … insurance is paying another company to absorb the risk … in almost all instances not getting insurance has a lower expected cost; it’s the low probably bad event that the insurance is covering. There are two risks with this low-cost approach … if one of needs long-term care before 65 or so and we do not have long-term care insurance we’re screwed (no coverage) … and if one of lives to be very old (like 90+) before needing the insurance than this approach actually will cost more (too many years of the higher premium rate wiped out the savings from the 10 years we didn’t pay at all).</p>
<p>2) the lowest risk apprach … start with long-term care at about age 50 … you get much better rates and essentially cover the whole risk period … but it you need care in the 65-80 age range or so this approach is actually more expensive than the low cost approach … if you started later and then needed the insurance soon after starting then the extra premium eahc year does not cost close to the extra 15 years of paying even a lower rate if you start at 50 or so.</p>
<p>We played around with points in between but ultimately it seemed we should land on one of the two end points … depending on what our prime objective was. Mom3togo and I are not big fans of insurance but when do insure we insure against catastrophic outcomes … for car insurance, for example, we have very high deductables but have lots of liability insurance. In this case we looked at our financial situation and our family histories (lots of longevity but also a lot long-term helath probelms) and we decided to start at 50 to protect our kid’s home and college educations … fortunately we were in position to be able to afford the cash hit from from 50-65 to do this.</p>
<p>That was a wonderful explanation that 3togo gave. Basically, if you know exactly what’s going to happen, then it’s easy to make a decision. But you don’t.</p>
<p>So…for some real life examples. My inlaws insured both of them starting from about age 60. MIL died of cancer never having used it. FIL used it for about 2 1/2 years before passing away. Probably would have been better off saving the money from the premiums and would have had enough for the nursing home care just for him. On the other hand, for some reason, it is easier on the family to know it’s paid for than to use money in the bank for care. You have to know how you’d feel about it.</p>
<p>My parents don’t have LTC insurance. They reasoned that both expect to live long lives. They are both in their 80’s with no sign of needing it yet. They also have the money for a nursing home should it be required. Probably won’t be thrilled about paying out of pocket unless they think about what they saved over the years.</p>
<p>Given those examples my husband decided we needed it. One of those battles I’m not willing to fight so we have it. He started paying premiums at about 55 for himself and 50 for me. The miser in me hopes we need it.</p>
<p>^ great example …</p>
<p>FYI - hot of the press estimates … nursing home care in NH is about $250/day … that’s $7500/month … or $90,000/year. “Self-insuring” against this requires some assets … most folks are only in nursing homes for relatively short periods of time … it’s the long stay thay causes issues … I have an Uncle with Alhzeihmers who has been in a nursing home for about 10 years … that’s the scenario that is a HUGE financial challenge. A second FYI - depending on the policy long-term care insurance could also pay for adult day care or aides coming and staying at the house … it doesn’t have to be nursing home care.</p>
<p>Both my Mom and Step Dad had LTC insurance. Both used it. They both had cancer and were able to stay in their home with round the clock help. As I recall the insurance did not cover the entire amount but it was a huge help. My Step Dad had a private policy and I know it was more expensive than my Mom’s. My sister worked for a public entity and was able to purchase Long term insurance for my Mom through her employer. It was much less expensive and she had better coverage.</p>
<p>^ good point … my parent’s policy pays $125/day or about 1/2 of what a nursing home would cost a day and pretty much covers the cost of day care or in-home help.</p>
<p>The other things that really should be done at the same time is make sure your will(s), health care proxy, power of attorny proxy, and trust stuff is all up to date in case any of this is needed.</p>
<p>Here is an article from Consumer Report that I read recently when I was researching LTC–<br>
[ConsumerReports.org</a> - Long-term-care insurance 11/03: Long-term health care, elderly care, disability insurance plan.](<a href=“http://www.consumerreports.org/cro/money/insurance/longterm-care-insurance-1103/overview/]ConsumerReports.org”>http://www.consumerreports.org/cro/money/insurance/longterm-care-insurance-1103/overview/)
It is somewhat dated.</p>
<p>Among other things they say "Consider buying at around age 65. Although salespeople will try to get you to buy a policy as young as age 40, the coverage may be useless 40 years hence when you need it. New systems for care may emerge that will not be covered by a policy purchased today. For example, 15 years ago, long-term-care insurance did not pay for care in assisted-living facilities.</p>
<p>Between the ages of 55 and 60, buy long-term-care insurance only if you have a chronic condition like diabetes that could prove incapacitating over time. Otherwise, begin at about age 60 to assess whether you need long-term-care coverage, and, if so, buy at age 65. If you buy later than age 70, the policy will likely be too expensive or you may not pass the medical tests needed to qualify."</p>
<p>I decided to hold off for a few years.</p>
<p>mathmom, I got a policy at age 41. DH’s agency had open enrollment when they started LTC coverage and I got the max I could without having to answer some of the more seriously nit-picky health questions. This was a few months after I was diagnosed and we had no real sense as to my prognosis or how long the drugs would work, if at all. Seemed like a prudent route to pursue.</p>
<p>We are seriously risk-averse in the first place, which has turned out to be a good thing as we have been able to weather my medical issues without serious financial damage.</p>
<p>My premium is on the order of $16/per biweekly pay period. It’s going to $21 at the first of the year with a new contract carrier. Coverage includes ~$150/day for in-home care and some other stuff. I am thankful I haven’t had to memorize the details. </p>
<p>Neither of our parents opted to go this route.</p>
<p>We have one child, male. We hope that we will never have to ask DS and his spouse to care for us. </p>
<p>We have fixed assets that are not very liquid and scaring up continued cash needs would be a big problem.</p>
<p>Our parents are still with us, all over 90. Their mental conditions are OK but their physical condition is of course getting worse to the point where we need to give more attention. </p>
<p>Some physical conditions are treatable (diabetes, joint replacement, back surgery) but may exclude you from LTC at worse, or raise your premiums at best. </p>
<p>We got our LTC at age 50. We expect that DS will eventually pickup our premiums, but the alternative will be much worse for him and his spouse.</p>
<p>Thanks for all the things to think about. We have a mix of healthy and unhealthy people on both sides of the family. Happy to hear more if anyone has more thoughts. I feel like I don’t even know what questions I should be asking!</p>
<p>My in law has a Lincoln Life MoneyGuard policy, at the time we checked it out with various sources and it was very highly regarded. The interesting thing is that there is a per day benefit for up to 4 years AND if the insured does not use it they get a life insurance benefit at death. </p>
<p>In this case it was prepaid with a single up front premium and the insured is guaranteed his payment plus 20% minimum as a life benefit or the 4 years at $X per day which would be about double what was paid in. This hedges the what will happen bet</p>
<p>I am deliberating whether to enroll in one myeself. My employer has just made available to us a long term care policy. As fas as I could tell, the rate is quite favorable in comparison to the one suggested to me by my financial advisor. Nonetheless, I think I may decline it. I have trouble imagining my will to live on under conditions in which the policy benefits could be exercised.</p>
<p>You live near NYC - if you live in NY state you should look into their partnership:</p>
<p>[Long</a> Term Care Insurance - New York State Partnership for Long-Term Care](<a href=“http://www.nyspltc.org/]Long”>http://www.nyspltc.org/)</p>
<p>I have been looking into this. It seems like 60 might be a good time to get one. I would think $200-250/day for most areas of the country would be good. </p>
<p>My parents had a policy as part of my dad’s retirement benefits. The company decided they would no longer offer that option effective the start of 2009. Unfortunately, at 75 & 79, the cost of a new policy was ridiculously expensive. My mom has had health issues, so covering her was next to impossible. In May, my mom began to have some very serious health problems, and LTC insurance would have made a huge difference. When I get a policy, I will do it on my own, so that I can remain a customer no matter what … I don’t trust employers to continue to offer benefits beyond today.</p>
<p>Oregon actively promotes LTC, so much that it gives a state tax credit (non itemizers) or deduction (itemizers). </p>
<p>We looked at waiting but I had a cancer scare and I was afraid that I wouldn’t qualify in the later years. We also looked at delaying coverage but at that tiime, the rise in care costs, was more than the rise in insurance premiums. </p>
<p>It is insurance. At what point can you not afford the insurance? When you Need the insurance, you won’t qualify.</p>
<p>Several years ago I did some investigation on LTC “insurance” and actually contribute to a plan. LTC plans are a long way from what you normally would consider to be “insurance.” I guess sooner or later practically everyone will need to have LTC so most plans really just seem to be a way to save and pre-pay for these later benefits. Usually the benefits that you can claim are severely limited and dependent upon how much you have paid into the plan.</p>