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I have until tomorrow to decide if I want to drop my coverage to preserve my premium rates for federal employee LTC insurance. Anyone have suggestions or opinions? Premiums increasing $150 a month for both. Husband is older than me (70) but in better health. His premium is increasing more on a dollar basis, but mine is increasing by a higher percentage. My gut is to suck up the rate increase and keep coverage the same. The coverage we have now pays $210 a day for a max of five years, and a dollar limit of about 338K. If we keep premiums the same, coverage drops to $128/day with a max payout of $234K. Thanks in advance for any suggestions.
I recently received a brochure of local Elder Care facilities, CCRC, Assisted Living, Nursing Home, etc. 2016 prices. These facilities all charged in excess of $275/day for Nursing Home level care. Check prices in your area but the increase in premiums may be cheap if either you or your husband need to use these services.
Much depends on your individual financial circumstances. How much is protecting your estate worth to you? How much estate do you have to protect? Can your spouse rely on children if one of you is forced to spend down assets?
Put another way, LTC insurance is more of a tool in estate planning than pure insurance, IMHO.
LTC insurance has turned out to be a real mess in these days of low investment income. The latter has hit insurers hard, leading to the price increases.
You should also review your policy to see if it has any "gotcha" that might reduce its value to you.
So this is hardly an exhaustive analysis, but if you don't maintain your coverage at current levels you will be saving $1800 per year (not paying the increased premiums), and you would lose $82/day in benefits ($210 - $128), If you divide the $1800 by $82, it works out to 22 days. So, in rough terms, it only takes spending 22 days in a nursing home where you have to put out $82/day (out of pocket) to end up spending more than the premium saved. It is a pretty short period of time to recover your increased premiums. Not sure what your financial resources are to absorb the premium increase, but I's probably pay it if I could afford it.
Much depends on your individual financial circumstances. How much is protecting your estate worth to you? How much estate do you have to protect? Can your spouse rely on children if one of you is forced to spend down assets?
Put another way, LTC insurance is more of a tool in estate planning than pure insurance, IMHO.
LTC insurance has turned out to be a real mess in these days of low investment income. The latter has hit insurers hard, leading to the price increases.
You should also review your policy to see if it has any "gotcha" that might reduce its value to you.
No value to us for protection of assets. No children. Estate largely going to charity. Biggest concern for both of us is staying out of skilled nursing facilities as long as possible. Quality of life.
So this is hardly an exhaustive analysis, but if you don't maintain your coverage at current levels you will be saving $1800 per year (not paying the increased premiums), and you would lose $82/day in benefits ($210 - $128), If you divide the $1800 by $82, it works out to 22 days. So, in rough terms, it only takes spending 22 days in a nursing home where you have to put out $82/day (out of pocket) to end up spending more than the premium saved. It is a pretty short period of time to recover your increased premiums. Not sure what your financial resources are to absorb the premium increase, but I's probably pay it if I could afford it.
Helpful, thanks to you and the others for responding. Helpful info for us as we think this through. I think we are going to absorb the higher premiums. We can afford it for now. I think we can reduce coverage in the future if we need to, but can't easily increase it.
I have until tomorrow to decide if I want to drop my coverage to preserve my premium rates for federal employee LTC insurance. Anyone have suggestions or opinions? Premiums increasing $150 a month for both. Husband is older than me (70) but in better health. His premium is increasing more on a dollar basis, but mine is increasing by a higher percentage. My gut is to suck up the rate increase and keep coverage the same. The coverage we have now pays $210 a day for a max of five years, and a dollar limit of about 338K. If we keep premiums the same, coverage drops to $128/day with a max payout of $234K. Thanks in advance for any suggestions.
What will affect your quality of life more, $300 a month now or the loss of $338,000? I have CalPers LTCi lifetime policy. I assumed $10,000 premiums the first ten years and double every decade. I am approaching my third decade and just started paying $4,000 a year. So probably $70,000 in premiums over 30 years for a gold standard policy. If I never use it it has provided the safety net to invest more aggressively.
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