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What about long term care insurance?


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This thought came to me as I was involved in the current one about investments. As we age the probability of one or the other of couples having a need for long term care insurance steadily increases. Thanks to some sound advice from a financial planner, we bought our coverage at age 50 and were able to get a policy that was paid up after 10 years. It is important to realize that if one of a couple should need long term care while the other remains healthy and able, you must "spend down" the joint assets before any form of government assistance becomes available. I am suggesting that readers take a look at this article.

Top 5 Strategies for Protecting Your Money From Medicaid

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My wife's husband went to the nursing home and became a ward of the State of Illinois after they spend her down. This was 17 years ago and he was 66. She was left with a portion of their saving and their Mobile Home plus a small pension from her husband.

Five years later I found out these happening that can occur. I feel, my planning had error-ed. Rather than me taking a pension, I took a lump sum. Had her husband took a lump sum when he retired my wife would not have the small pension today.

I don't how the ruling presently in place but when a retirement does occur, the pro & con's of LUMP SUM cash out needs to considered. As far as long term care insurance, what is your illnesses and what state are you be spend your last days.

A good topic and the article tends to indicate big differences between states.

Clay

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There are a lot of discussions on this forum about various forms of insurance.  In all cases it should be understood that the over the long haul, insurance companies pay out less than they collect.

In the case of long-term care insurance, many people never enter a long-term care facility, and others are only in one for a short time. So like any other form of insurance, you are likely to not recover what you have paid in. But for some the peace of mind is worth it. 

You can be assured that the financial planner who gave the "sound advice" makes commissions by selling these policies. And that the insurance companies themselves have been making excellent returns on the premiums paid in many years ago.  Will you get your money back in the long run?  No way to know...

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A friends Dad just went into nursing home in Nebraska. He still can walk to the toilet which saves money. $10000 per month thats right. Very few long term care policies sold 10 years ago will even come close to $10k per month. But most, not all but most folks are gone fairly soon after entering long term care..

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32 minutes ago, Randyretired said:

We both purchased long term care policies about 35 or 40 years ago.  These policies covered  most of the expenses back then.  Today those policies might cover 20% of the cost.

Right on!  Ever seen a poor Insurance agent??????????????

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2 hours ago, mptjelgin said:

In all cases it should be understood that the over the long haul, insurance companies pay out less than they collect.

That is true of any such organization that is for profit, no matter what business they are in. In order to continue in the business of insurance, all companies of any kind must take in enough in premiums each year to pay all claims, all operating expenses and their profit margin. Only government can pay out more than they take in, year after year.

2 hours ago, ms60ocb said:

A good topic and the article tends to indicate big differences between states.

Medicaid is a state and federal program that provides health coverage if you have a very low income. They will work together to provide you with health coverage and lower your costs. As a result there are differences from one state to the next.

2 hours ago, mptjelgin said:

You can be assured that the financial planner who gave the "sound advice" makes commissions by selling these policies.

That would be true if that person also sells the insurance policy. In many cases, as in ours, the advisor only suggests you consider it but does not sell insurance. The advisor who suggest we look into it as young as we were sells securities only but did give us a list of highly rated underwriters.

2 hours ago, mptjelgin said:

And that the insurance companies themselves have been making excellent returns on the premiums paid in many years ago. 

From NerdWallet: "The number of insurance companies selling long-term care insurance has plummeted since 2000. Slightly more than 100 insurers were selling policies in 2004, according to 2020 data from the National Association of Insurance Commissioners. About a dozen are selling policies today."

46 minutes ago, Randyretired said:

Today those policies might cover 20% of the cost.

When we shopped for long term care insurance, most if not all policies had an inflation clause that increased the maximum amount it would pay each year with the formula used to determine that amount being part of the insurance policy contract. In the case of what we bought in 1992 the monthly maximum has more than tripled. 

When my mother was living in long term care, the cost was $110/day but she passed away in 2005 so no doubt that it is significantly higher today That was full care and while at first she was pretty easy to care for, by the last few months she had to be fed and diapered. I don't know for sure just how it works, but in the 5 1/2 years she lived in the home (located in Kansas) the daily cost was never increased. She did not have long term care and when her assets fell to $2000 the Medicaid became primary picking up all that her monthly income did not pay. 

The policy we bought was from a major insurance company that is still in business and who still carries our policy, but like so many others they no longer sell long term care policies. We get an annual statement that states the current amount per month that they would pay and they only pay for a maximum of 4 years. 

Long-Term Care Insurance Explained

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3 hours ago, Randyretired said:

We both purchased long term care policies about 35 or 40 years ago.  These policies covered  most of the expenses back then.  Today those policies might cover 20% of the cost.

Some policies were sold with inflation riders.  We bought ours ~15 years ago and they came with 20 year 5% inflation coverage and no premium increases.  Sometimes you do luck out.

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8 hours ago, docj said:

Some policies were sold with inflation riders.

It used to be that most, if not all such policies had inflation adjustments with no change in premiums. The more that I read about such policies, the more grateful I am that we were convinced to buy ours as early as we did. 

10 Best Long Term Care Insurance Policies for 2021  by state, last updated Oct. 21, 2021

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11 hours ago, docj said:

Some policies were sold with inflation riders.  We bought ours ~15 years ago and they came with 20 year 5% inflation coverage and no premium increases.  Sometimes you do luck out.

The policies we bought were cheap and didn't have the inflation rider.  I guess you get what you pay for.

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Kirk, wouldn't this be better moved to the Health Issues and Medical Insurance forum since this thread is about medical long term care insurance?

We cared for our parents in home hospice as I had medical training and our youngest son and his wife are both BSRNs and will do the same for us. They are also our estate executors and we will likely gift most of our assets to them anyway before that becomes necessary. We can afford our own if necessary anyway. Between the VA, Tricare for life which pays any copays from medicare, and our retirement and SS incomes we don't need that insurance at all.

Excerpt:

"What Is End-of-Life Care

End-of-life care is the treatment someone nearing death receives in the final days, weeks, months or sometimes years of his or her life.

During this time, medical care and support continues regardless of whether the patient’s condition is curable or not. Many receive professional medical care in hospitals, nursing homes, or even in their own homes.

Patients are then placed in either palliative care or hospice care, and the costs are paid by Medicare, Medicaid, private insurance, charities, the individual or other payment programs.

The fact that Medicare pays 100% of hospice costs should be a big inducement, yet many who are eligible do not take advantage of end-of-life services A 2019 study published in the Journal of the American Geriatrics Society estimated 2,700 Americans a day experience non-sudden deaths without the benefits of hospice.

The study said the “utilization rate”is only 52.4%. If you’re not using hospice care or considering it down the road, you’re making a mistake.

Research shows that hospice care improves the mental health of patients and their families, increases survival time, decreases the strain on loved ones and does a better job keeping patients comfortable."

Source: https://www.debt.org/medical/hospice-costs/

Edited by RV_
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1 hour ago, RV_ said:

Kirk, wouldn't this be better moved to the Health Issues and Medical Insurance forum since this thread is about medical long term care insurance?

I suppose it depends on how you look at it. To me, long term care is a consideration for financial planning as you approach retirement. The reason we bought ours was to protect the assets for the one still able if one of us should need care well before the other. It isn't a health care plan but a way to avoid spending ones assets for day to day living. 

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On 10/28/2021 at 3:20 PM, mptjelgin said:

There are a lot of discussions on this forum about various forms of insurance.  In all cases it should be understood that the over the long haul, insurance companies pay out less than they collect.

In the case of long-term care insurance, many people never enter a long-term care facility, and others are only in one for a short time. So like any other form of insurance, you are likely to not recover what you have paid in. But for some the peace of mind is worth it. 

You can be assured that the financial planner who gave the "sound advice" makes commissions by selling these policies. And that the insurance companies themselves have been making excellent returns on the premiums paid in many years ago.  Will you get your money back in the long run?  No way to know...

The problem with long-term care insurance is you cannot make money on the policies.  There is nothing wrong with getting paid for financial advice, but your MUCH BETTER off understanding basic economics and investing.

So companies LEAVE the insurance business either through bankruptcy or other legal techniques to avoid paying on the policies.

Really, if folks are concerned about losing ALL their assets in a long-term care situation...............

Then discuss if you want another government program.  It is a social good.  There are sound reasons for transferring your assets to your children, instead of the government.

Do you want to pay for it with your tax dollars??

Edited by Vladimir
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Kirk the same can be said about medical insurance. Or losing a partner from not getting vaccinated or wearing a mask properly. Those medical issues can bankrupt the uninsured. Medical insurance.

Medicare and my FIL's Military retirement medical coverage, Tricare for life where Medicare picks up the bulk and Tricare pays all co-pays, covered 100% of home hospice for their last days in Louisiana. He had two high priced properties and a lot of liquid cash and that was not even an issue.We had a wonderful company with folks who really cared about their patient like our parents. They were there with visits and advice while they were lucid and when they went into the final week made them comfortable until they breathed their last breath. They were available 24/7 for emergencies and were there daily at the end. More for us than them. Both had lucid moments and woke up in their own bed, in their own home. Lynn or her brother slept there that last week. We had the good sense to have durable power of attorney drawn up for Lynda and took control of their assets about a year before he died as her mom preceded him by a year.

Tricare and Medicare paid 100% of expenses for home hospice. Had we not been full time RVrs when they started having health and his Alzheimer's dementia issues, we would not have been able to move here as easily.

I agree with Vlad in that whole life and long term care insurance are IMO scams for someone with significant assets to protect. They don't need it.

I am moving and my son who knows our work and has been here many times just closed a deal with me to buy our house cash at current market price which is 30% more than we paid two years ago. They will rent it out after we move for three years and then live in it when they return. That puts them close by for home hospice and dealing with our final real and durable goods properties, as he is our executor as well in and for our living and last wills.

We have done home hospice for her folks, and before that, kept her grandma living with use when our boys were in their early teens and then she went to a nursing home as we had "handled" her assets long before, her dad covered that expense which was not much. Nursing homes are not places we want to be, and we are not going to one regardless. Her mom and dad as well as us learned that lesson with Granny. MY 93 y/o only relative my senior in age is being taken care of that way by her daughter and remaining sons.

Most have their retirement and living expenses tied up in their assets. We don't. That is our military retirement pension/medical/medicare/SS and as long as we live we are covered.

So our investments are still house monies from Tesla. BTW our shares of Tesla ewe bought last year @ $350 is now at $1128. It tripled back when it was $1050. In one year. We are well diversified as we have liquid assets ready to invest in Rivian as well as Starlink IPOs, funds, stock, real estate, and even our cars, normally depreciating assets are worth more than we paid for them currently, and for the next year or so.

I agree insurance is not an investment anymore than car insurance is an investment. We had some term when were were under 30 and that was it. We will neither be a burden nor cost the kids anything.

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1 hour ago, 2gypsies said:

We agree!

Hopefully the day won't come when you or your spouse requires long term care beyond what the other can give, thus requiring that you spend down your assets before you can get help to pay for their care. That is where such insurance becomes part of financial planning.

Medicaid Protections for the Healthy Spouse

Quote

In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in assets (an amount may be somewhat higher in some states). In general, the community spouse may keep one-half of the couple's total "countable" assets up to a maximum of $130,380 (in 2021). Called the "community spouse resource allowance," this is the most that a state may allow a community spouse to retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $26,076 (in 2021).

Spousal Impoverishment: Medicaid Spend-Down Rules for Married Couples

Quote

The current national median cost of a semi-private nursing home room is $7,756 per month.

 

Edited by Kirk W
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