Everyone needs a plan for how they are going to handle long-term care (spouses, federal)
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One of my best decisions was purchasing a LTC policy 10 years ago and less than one month before my divorce. I got the marriage discount and my kids benefited from not worrying about their mom.
Oh yeah, TY I forgot about the marriage discount. Good for you. Another reason ours is cheap. You live in a good state for LTCi.
TuborgP and honobob if it is not too much of a personal question can you share with us a few answers to questions people could be struggling with.
1) Did you in purchasing your LTCi opt to cover a high COL area amount like in the 5 to 6k monthly amount?
2) Or did you opt for a lower amount of 3k per month expecting to take some of the cost up with your income stream?
(Note the amount I am asking is the pay out amount and not premiums.)
3) Are your plans employer sponsored group plans?
4) Are you both married and did that factor heavily in your decision?
Thanks in advance.
I know that it will be important for those on the fense deciding on whether or not to pick up LTCi. I advocate picking up LTCi for a good majority of people for many reasons. I do not work for any insurance company so do not think I am trying to sell you anything. The future is uncertain and even if you do have LTCi it might not be enough but it certainly will be better than having nothing should the need arise. Even if you do not opt for LTCi knowing some of the problems people have had and how they dealt with the situations is very helpful.
1. Initial coverage was just under $50,000 a year. That was almost 20 years ago.
2. At the time the price point seemed to make sense. Actual cost in the Bay Area was about $5,000 a month. I was on the cusp of actually being able to cover the expense on my own through real estate investments. If I go in and my plan pays $200,000 a year (5% inflation) I will be adding another $200,000 a year from my investments. I want to be the richest guy in the SNF. I have visited SNF when my Father went in for 5 months. It was because of me that he was able to spend almost 10 years in my home and adult day care. Otherwise he probably would have died in a few years in a facility. In fact at the end he spent about 3 months in rehab and when they could not get him on his feet he was sent to a facility and he died the next day. My policy also pays 50% in home care.
3. My policy is non subsidized employer plan.
4. Divorced guy, no children and bought when single. Most of my Fathers 13 siblings needed care for years that was provided at home by spouse or children. Without that they would have spent considerable time in a SNF. These are people (including my Father) that are not a part of the LTC statistics. Without a policy or the funds a single person is going to be in a bad predicament. I've been to **** smelling homes and was able to get my father into a nice place because he was a paying customer. He was in a shared room only because I had to guess how long the money needed to last. Friends and relatives are more likely to visit if you can stay nearby and the facility is nice. If you are in a bad Medicaid place far from your home you will pretty much be on your own. If nieces and nephews aren't motivated by inheritance I have plans to pay for company. It will probably be local nursing students with maybe a hooker thrown in every now and then.
I suggest looking at LTCi like term life insurance, Buy it shortly before you think your health will change. Your first 10 years will probably be the years that the insurance will most benefit you. If you think it becomes too expensive or your finances grow to the point that you can better pay yourself then drop it. It is NOT money lost.
I also have pensions and delayed SS but I have seen first hand how these lose value over a 20 year period even with some COLA protection.
You have the same outlay, but what you guessed is not exactly what happened. That's not just picking nits for the sake of argument. A recent tripling after 15 years of no increases is very different than having it go up over time in a more orderly fashion. No, I was using your assumptions and assuming 1k in year 1, 2k in year 10 and 3k in year 20. But I was assuming a smoother transition between premiums.
I have been shopping policies with agents (not just using estimators) and started with the intent of buying but really having a hard time justifying it when I run numbers, especially after finding out how little protection there is against rate increases (even "guaranteed rates" have fine print). There is a reason that less than 5% of people have coverage.
Actually it is WAY better than I guessed because the increases were back loaded. But really, I'm looking at my total expense over decades. $30,000 is pretty much $30,000 over 20 years. It will also be a lot harder to ask for next decades increases soon since they just got a big chunk!
Exactly HOW MUCH are you unwilling to pay over the next ten years for what coverage? How smart is it to pay a few hundred extra on a low fixed rate mortgage instead of LTCi when the house, paid off or not is still going to the nursing home?
The REAL reason less than 5% have coverage?
1. Most don't realize that they will not get govt. assistance until they SPEND down and get to the point the govt. takes everything but a $30 allowance.
2. Probably 50% can't afford it.
3. Probably 40% that COULD afford it are too cheap. Penny wise, pound foolish.
4. A good percentage wait until their health eliminates them for coverage.
And not to nit pick but you did have a TEN times factor in your first calculations.
Actually it is WAY better than I guessed because the increases were back loaded. But really, I'm looking at my total expense over decades. $30,000 is pretty much $30,000 over 20 years. It will also be a lot harder to ask for next decades increases soon since they just got a big chunk!
Exactly HOW MUCH are you unwilling to pay over the next ten years for what coverage? How smart is it to pay a few hundred extra on a low fixed rate mortgage instead of LTCi when the house, paid off or not is still going to the nursing home?
The REAL reason less than 5% have coverage?
1. Most don't realize that they will not get govt. assistance until they SPEND down and get to the point the govt. takes everything but a $30 allowance.
2. Probably 50% can't afford it.
3. Probably 40% that COULD afford it are too cheap. Penny wise, pound foolish.
4. A good percentage wait until their health eliminates them for coverage.
And not to nit pick but you did have a TEN times factor in your first calculations.
I probably stated it poorly; I was suggesting it was 50% higher than you were estimating (or at least I thought you were estimating; turns you were actually using figures that totalled the same as actual, but weren't the actual) because I thought you were expecting future increases. Anyway...
I think a lot of is from looking at the odds, also.
About 1 in 4 will really need it at all and over half of them will pass within 6 months. So you have about a 1 in 8 chance of being there over 180 days, which is the elimination period on the cheaper policies, but the 90-day is more popular. Your odds of being in a nursing home over a year are less than one in ten. So there is a 90% probability that all the money you pay is for somewhere between zero and nine months.
http://www.nytimes.com/2012/09/07/he...cost.html?_r=0
Think about this! In 20 years when I MAY need LTC my policy will pay about $22,000 a month So how many months will it take to "break even"?
That is another thing that people don't consider when they make some not well thought self "insure" plan! Medical inflation!
If I die with $100,000 less in my estate years from now it will make NO difference to me. If I go into a nursing home ten years from now the over $160,000 a year LTCi payout EVEN IF FOR ONLY ONE YEAR will have a major impact on my quality of life for ME and those that love me!
I am not sure that I won't get it yet, but the quotes I am getting with the caveats about rising premiums and caps are not very enticing. I am waiting to hear back about a life policy with an LTC rider. I applied and had a physical for it but haven't gotten a confirmed offer yet.
What if they triple your premium twice in the next 10 years? That probably isn't likely but it is something you should consider since you want to protect yourself against longshot scenarios.
I have actually had someone who can sell me an LTCi policy recommend against it. He doesn't like his clients getting mad at him and taking their accounts somewhere else when the rates go up and he thinks it is only going to get worse.
I am not sure that I won't get it yet, but the quotes I am getting with the caveats about rising premiums and caps are not very enticing. I am waiting to hear back about a life policy with an LTC rider. I applied and had a physical for it but haven't gotten a confirmed offer yet.
What if they triple your premium twice in the next 10 years? That probably isn't likely but it is something you should consider since you want to protect yourself against longshot scenarios.
I have actually had someone who can sell me an LTCi policy recommend against it. He doesn't like his clients getting mad at him and taking their accounts somewhere else when the rates go up and he thinks it is only going to get worse.
At this time my policy is well worth the premiums. In fact I can get all my premiums back up to about age 77. How fantastic is that? Plus I can decrease my coverage to DECREASE my premiums. At this time they will still go for 10 years BUT without inflation coverage. For a reasonable decrease I'd give up the lifetime but won't give up the 5% inflation. SO, there is a long way to go before I'd give up much and I think the govt. will not want me to lose my coverage. All the big increases have come from a general consensus that they were underpriced to begin with. Supposedly we have reached proper pricing so there won't be much basis for large increases in the future.
I can understand someone not liking cheap ass peoples "buyers remourse" but I think that is a flimsy excuse for not selling. I'd tell them I think it is a good product but there can be increases and if you don't want to go with the risk/benefit then sign here that I offered and YOU declined. People that did not buy my policy when it was offered are now sad that they did not even with the increases.
I'm not saying everyone has to buy but if you don't make sure it is an informed decision.
Thanks TuborgP and honobob and to Lenora your input and information will be a great value to people here. As for us our group policy would be sponsored by OPM but it is not subsidized or funded in anyway by the government. It is though written with uniformed services members in mind. It is written in such a way as to limit the restrictions for soldiers to get covered. I am very thankful on that.
A good alternative to five star nursing homes is find a good rural nursing home. The help is much better as they do not as many jobs opportunities and by nature rural people are more care giving type. Their overhead is much lower and so are their rates. Only down fall might not be being really close to where you kids live. Something to consider....
I HAVE had my LTCi for almost TWO decades and my increases only happened in the last couple of years. So on average I paid $1,000 a year for about 15 years and then it is going to about $3000 a year over maybe 5 years so I actually have about $15,000 plus $15,000 = $30,000 for two decades. EXACTLY what I guesstimated almost 2 decades early. And I can drop my premiums to about $500 a year IF I give up my LIFETIME INFLATION protected coverage. Amazing how much value they put on that coverage even tho we ALL know the number of people that will need that is about 2, right? Ha Ha And it is ONLY costing me the price of a pack of smokes a day!
Your estimates would have me at almost $20,000 a year! You over shot by $17,000.
I can see why people don't buy when they don't use actual numbers.
In your link they don't tell you what her premiums were. If she was paying $500 then is $2000 twenty years later really that bad? And then she doesn't realize that she has had TWENTY years of protection probably pretty damn cheap.
If there was a government program that would pay your car insurance you bet there'd be people complaining about car insurance hikes. Heck, we have to pass laws to MAKE people buy car insurance. Some people need to be protected from their own poor decisions.
Look for your self and don't give into the fear mongering,
That's FINE for you...but your policy started 20 years ago. Do you think the industry has been unchanged over that period of time? Your experience is yours, but that does not necessarily predict what will be for the next 20 - 40 years which is the period I'm looking at. Also, you have yet to start collecting...how do you really KNOW what it will cover when the SHTF?
It's a helluva lot of money - MUCH more than my car insurance has ever been, much more than my homeowners. I can't even predict how much I'll get billed in the next YEAR for the healthcare I'm supposedly insured for through my employer!
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