Long Term Care Insurance Question (spouses, communities, payments, relation)
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No, I simply state factually that ROI is not a part of insurance. That is not personal. I don't care if you have any insurance or not. What goes on in your lives does not affect me in any way shape or form. If you don't want the insurance, don't buy it. However, being snarky doesn't help you either.
Thank you for a thoughtful post. If you don't mind, I'd like to ask you a question. If you could comfortably afford LTCi coverage despite its cost, would you buy it?
If you own a house you could get LTCi for FREE!
$150,000 AT 3.5% for 30 years. Yearly payment about $8000. $150,000 invested at 8% (guess your own return over 30 years) realize you have to be somewhat liquid. You have $4,000 a year for LTCi and at the end of 30 years you STILL have your $150,000.
There are no other options other than 11K a month? That seems pretty high. 4-7K around here and actually we ended up with our mother in an adult foster care home - private home with 4-7 people, they pretty much do it all, that was 3K.
There is a big difference between an adult foster care home and a skilled nursing facility. If I was healthy enough for the foster care I think I'd choose full time Carnival cruises!
....it's just too expensive . It was like 500.00 a month to get the kind of coverage that really kicks in a hefty amount for any length of time. If someone can afford comprehensive care insurance they probably don't need it. The really poor don't even bother considering it because its so out of reach. If I substantially changed my retirement plans and really scrimped and lived a hunkered down life, I actually could afford it - but at that price with the unknowns involved and all the bad press about them - doesn't seem worth it. A more limited plan kicks in so little its like why bother? Just spend down your money and be done with it. I.e. the dilemma for the people in the middle.
I agree with a lot of that. The quotes I got for about $210 a month, would only pay for about help the total daily care. So stretch my assets by 50%.
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Thank you for a thoughtful post. If you don't mind, I'd like to ask you a question. If you could comfortably afford LTCi coverage despite its cost, would you buy it?
I'll answer that too.
IF I could:
-- max out my 401K, and Roth IRA...and
-- travel as much as I wanted....and eat out and live the lifestyle I wanted....AND afford LTCI, yes I would get it.
BUT I can't do all that AND afford the LTCI. So, my plan is to private pay by spending down my assets, and when that runs out so be it I guess I'll be on Medicaid at that point. If a person has 2-3 years of assets and the average stay is less than 2 years. Then 'chances are' they're OK. IF, IF it so happens that the money runs out, then it runs out. Some people don't seem to accept -- and can't wrap their minds around the fact -- that that is the decision that others have made. It SEEMS they keep trying to point out --- well what if an what if? The answer is: if the "what if" happens and the money runs out...well then, the money runs out. If it means a person is moved to another facility, or it means a person is moved to another floor, or the person has no more money for extras...then that's what it means.
I'm glad that for the most part we're having a respectful and thoughtful dialog about this issue.
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I'd still like to hear the plan from the people that have considered LTCi but chose to "self insure".
I think at least a couple of people have answered that more than once already.
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Would the same people act this way if a poster was advocating only living on SS and the kindness of the taxpayer low income benefits on a retirement thread?
No I wouldn't advocate a person planning to live only on Soc. Sec. but I wouldn't argue with them about it ad nauseum. Once they explain their decision and I point out why there might be some negatives with that plan....once that's been done a few times and our conversation continues. and after all that they still have their Soc. Sec only plan and have decided....YOU DROP IT!
You've had a great discussion, you've heard each others ideas and thoughts and reasonings. There comes a point where you're not going to change their mind. Their not going into change yours...move on... IF you want to keep learning about each others decisions with NEW points of discussion fine. But to keep rehashing the same old ground is pointless. Accept their decision.....
I just got back home from visiting my 89 years old mother who lives 2.5hrs drive away. She is generally in good health and still puttering around in her garden in spite of being diabetic, has several broken bones which did not heal properly and with deteriorating eyesight due to glaucoma. She does not have LTCi and knowing her wishes and strong will, I am certain that if something happens, her stay in the nursing home would be quite short (if we could even get her there in the first place!).
Anyway, the talk about LTCi, cost and whether it is appropriate to consider insurance as an investment with ROI etc prompted me to open Excel program for some calculations for a hypothetical LTCi cost and payoff for my husband and myself based on our family health history (my PILs suffered multiple mini strokes in their late 70s/early 80s and ended their lives in nursing homes - 1.5 year for PIL and 3 mos for MIL; my father died suddenly of a heart attack few months before his 84 birthday and my mother's health as discussed earlier).
Instead of searching the web, finding some online calculator and punching in numbers, I decided to use the LTCi cost provided by mathjak since we also live in NY. I have been able to maintain my pre-diabetic condition with the family history, however it's likely that my LTCi cost will be similar to what mathjak is paying.
So, here are the numbers which go into my spreadsheet:
1. mathjak's annual premium of $6900 substract $1600 'rebate' from NY state for an annual cost of $5300. I keep the annual premium constant and the payout of $350/day constant and not adjusting for any hypothetical inflation value (assuming that they rise at the same rate).
2. I assume 19 years of payment (starting the insurance at 62 and needing LTC at 80, receiving the benefit at 80 but still pay for the premium while receiving the benefit). The 80-years-old start date is based on my PIL's history.
3. I assume a 10-month stay (based on the average of my PIL and the average 10 months for a male in the study cited in my earlier post).
4. The total premium for 19 years is $106,000. The total benefit received in 10 months is $106,458. So this pretty much breaks even.
If instead of paying the annual premium, I can put it in one of my portfolios which has been gaining 10% per year in the last 20 years. However, considering the current economic downward trend and assuming that I want to be more conservative for this particular pot of money, I use 5% annual return, at the end of 19 years, this portfolio is worth $175,250. After spending $106,458 in LTC (same cost as the benefit in 4), I will have $68,791 left.
Anyway, all of these calculations are just for fun. Some will argue that 10 months stay is the average and what if one needs to stay longer? Based on mathjak's information, the max benefit is for 3 years for the total amount of $383,250. So for this max out scenario, the LTCi seems like a good deal. Both my husband and I are pretty definite about not wanting to prolong our life living in poor condition so it is very unlikely that either one of us want to last that long in a nursing home.
I don't mind being repetitive in restating that "to each his or her own". If you are happy with your choice, good for you. There is absolutely no need to denigrate, challenge or ridicule other people's decision - unless you are not quite sure or have regrets about yours and try to defense it by attacking the opposite's choice ;-)
On my LTCi once I start receiving benefits I no longer am required to pay for the insurance. Is it true that current LTCi makes you continue to pay while you use it?
On my LTCi once I start receiving benefits I no longer am required to pay for the insurance. Is it true that current LTCi makes you continue to pay while you use it?
I'm not BellaDL but we encountered the issue with my mom's policy: a "waiver of premium" provision needs to be in the policy to prevent having to continue paying while receiving benefits. It's fairly standard but everyone should check their policy for it. My mom's older policy didn't have it so we had to make sure she continued paying the premiums.
On my LTCi once I start receiving benefits I no longer am required to pay for the insurance. Is it true that current LTCi makes you continue to pay while you use it?
I have no ideas since I don't have one. Mathjak can provide you with the actual information for his policy (which I 'borrow' for an example). So for my hypothetical calculations above, if you don't have to pay LTCi premium while receiving the benefit, this will reduce the total payment to $100,700 vs receiving $106,458 total benefit
I also don't have any ideas on how much the premium is allowed to raise per year or whether there are any regulations. In the WSJ article which I posted earlier, one person's premium was raised something like 40%!
From little that I have glanced at in few articles, I think that certain types of LTCi are regulated but they usually cost more. There are many variables and many insurance providers. One has to read a lot of documents with all the fine prints before choosing the 'best' one.
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