Who knows about Long Term Care Insurance?

Parent Cafe
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<p>OP, lots of good info here. Just to clarify – LTC pays if you need help with the Activities of Daily Living. It usually doesn’t matter whether you’re in Assisted Living or at home. The ADLs are defined by each individual company, but usually include dressing, bathing, toileting, etc. So if you’re in Assisted Living, but don’t need help with those, then LTC will not pay. If you’re in Assisted Living, and you DO need help with those, it will. In other words, it’s not where you’re living that determines benefits; it’s what kind of services you need. And the insurance companies are not generous in interpreting “need.”</p>

<p>Also, it’s possible for someone to be very sick, even dying, and yet if they’re able to dress themselves and take a shower, they won’t qualify. Or if you’re relatively mobile right up until the moment you keel over at age 90, you’ll never see a penny of the benefit. And HImom is right; LTC will NOT pay if you need help with cleaning, cooking, or errands – if you can still dress yourself and take a shower, no benefit. </p>

<p>LTC is tricky. It has been a gigantic help to my parents; if they both live to the end of the 4-year benefit period, it will have paid out more than a quarter million dollars (against about $40K in premiums). But they got theirs in the early 90s, when it was cheap. If premiums had only gone up by the rate of inflation since then, LTC would be a no-brainer. But when the insurance companies first started selling these things, they had no idea how much care these people would need. Now they do.</p>

<p>The cost-benefit analysis is really difficult on LTC, because it’s so hard to know what you’ll need 20 years down the road, and because the current cost is so high. It may turn out to be a life-changing benefit. Or it could just as easily turn out to be a very expensive mistake. Unfortunately, there’s no way to know.</p>

<p>celesteroberts brought up the question of inflation. IMO if you’re going to take the LTC plunge, you might as well pony up for the inflation rider. If you don’t, then the value of all that expensive coverage will slowly dwindle away by the time you may need it.</p>

22

<p>Lots of good information here. Another significant consideration is the financial strength of the Insurance companies you are considering contracting with.</p>

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<p>Yes, as with anything that you MAY wish to collect benefits from decades after you initial investment (like annuities, life insurance), financial strength of the company you are buying from is CRUCIAL. Makes no sense to pay premiums for decades and then have the company who got your money fold before you ever get to use the benefits you’ve been paying for.</p>

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<p>Let’s back way up: the purpose of LTC insurance is to (a) prevent one spouse from depleting all of the assets, thus leaving the other, healthy spouse impoverished and potentially homeless; or (b) preserving an estate so that you can leave money to your kids. </p>

<p>ONLY do this if you can comfortably afford the premiums, but cannot comfortably afford the cost of long-term care. To be overly simplistic: does it make sense for your family to spend $100,000 to potentially avoid $1 million in LTC costs when you and your spouse are 85?</p>

25

<p>^^ There’s a: (c) being able to afford to stay in one’s own home longer or to move into a nicer ALF or SNF. </p>

<p>From talking to a number of people in that business, there can be a noticeable negative difference in the facilities that accept medicaid versus the facilities that don’t with fewer people staffing them, less well maintained facility, perhaps a lower skill/experience level of the people working there, etc.</p>

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<p>Thanks so much for all of the thorough and thoughtful replies. It is indeed a lot to digest. Any thoughts on how Obamacare may or may not have any affect on long term care?</p>

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<p>GladGradDad: true. </p>

<p>BlueJay: the CLASS Act was repealed: it was such a financial disaster that the government couldn’t afford it.</p>

<p>My suspicion is that LTC will never be a part of government health care: too many people don’t want the inevitable grody living conditions (see GGD’s post #25), and a lot of other people would see it as a way for wealthy people to give more money to their kids. Well, it might happen, but then expect the estate tax to start at a much lower threshold and take an even larger percentage of money.</p>

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<p>Not LTC, but a different way to protect yourself…</p>

<p>For those who are still working, see if you can purchase Long Term Disability Insurance. It will pay a percentage of your salary if you become unable to work due to disability. Luckily my H had that because he became disabled in his early 50’s, but gets a large percentage of his former income until he’s 65.</p>

<p>Hint: If you pay the premiums yourself, the monthly benefits are tax free. If your employer pays the premiums then the benefits are taxable.</p>

29

<p>We bought LTC at 55. It has an inflation rider. Won’t cover everything, but is meant to significantly suppliment our savings if we need LTC. I figured if I need it, I’ll be glad I have it. If I don’t need it, then although the money was “wasted” I’ll be extra glad I don’t need it.
I hope I don’t need it – by living to a nice old age and healthy!</p>

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<p>Chilling. Even those of us who have purchased policies may not be able to maintain them. [Long-Term-Care</a> Insurance Leaves Customers Groping - WSJ.com](<a href=“Long-Term-Care Insurance Gap Hits Seniors - WSJ”>Long-Term-Care Insurance Gap Hits Seniors - WSJ)</p>

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<p>I am in the estate planning field and am not a fan of LTC insurance. The situations where it actually pays off are rare, in my experience. I agree with the poster (too lazy to go back and look) who said to look at it as “bequest” insurance. The average length of time in a nursing home is something like 3 years. Most people either have the assets to handle that (savings, sale of home, etc.) or, if not, will be able to get Medicaid when their assets run out. I know an insurance rep who started focusing on LTC business and got very rich. He’s now retired with two homes, one here and one in Europe. I doubt his clients will ever see much benefit. Seems to me that the real winners in the LTC world are the insurance brokers.</p>

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<p>Needing assisted living is where it really pays off, since Medicaid does not generally pay for that. Make sure there is a provision for cognitive impairment, otherwise it’s too hard to qualify.</p>

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<p>DGDzDad, LTC isn’t for nursing care. It’s for assistance with dressing, bathing, etc. while NOT in a nursing facility. For those many people who aren’t sick enough to be in a nursing home, but who aren’t able to care for themselves – which is most assuredly not a rare situation – LTC is a godsend.</p>

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<p>Actually LTC insurance can pay for costs in a nursing home, if the insured meets the criteria - generally inability to perform at least 2 of the 6 activities of daily living (ADLs), depending on the policy provisions.</p>

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<p>Read terms and definitions VERY carefully. For different contracts, there are caring numbers of activities you must not be able to do to qualify–some two, three, or even four. If you take a VERY long time but can do them, you do NOT qualify. Personally, I prefer to have the assets and decide when I or loved one wants or needs help and hire the help instead of an org deciding. If you self insure, you can decide you need help for errands, cooking, cleaning, etc, even tho you can still do most or all the specified ADLs. </p>

<p>So much also depends on your overall finances and priorities. We are satisfied with our choice and it works well for us. We have enough to self insure and prefer to do that and retain control.</p>

36

<p>I can’t read the WSJ article. It is for subscribers.</p>

<p>[Long-term-care</a> insurance sticker shock for retirees - Encore - MarketWatch](<a href=“Opinion and Commentary - MarketWatch”>http://blogs.marketwatch.com/encore/2013/07/02/long-term-care-sticker-shock-for-retirees/)</p>

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<p>

DGDzDad: Gotta ask - does HE have LTC insurance for himself? (I’m guessing the answer is ‘no’)</p>

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<p>I looked into LTC insurance and decided it actually isn’t insurance: it’s a forced savings plan with minimal insurance features. In other words, if you fund it, they’ll pay it, maybe.</p>

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<p>NJres, I’ve found that if you paste the WSJ headline into the Google search bar, it will bring up these articles in their entirety ;)</p>

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<p>It’s a bad decision financially. As others have said, the insurance companies are making tons of money on this, so obviously, it does not pay the consumer. However, it can bring peace of mind and if that’s worth it to you, go for it. </p>

<p>My husband’s parents had it and neither used it. She went into hospice and he died of a heart attack. But my husband insists on it and it’s not worth arguing about although the sensible money management part of me knows it will not be a sound financial decision. If he dies before me, I’m cancelling it and saving my money instead.</p>