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After an exhaustive LTCi research project, I offer the following thoughts for people who do not currently have LTCi and who do not have access to a policy subsidized by an employer, the federal government or a state government. I mean no disrespect to any of you who have already purchased coverage. This post is not intended for you. I respect your sincere decision to do what you thought was right for you and your family.
Here are the top ten reasons I found as to why LTCi doesn’t make sense for most people.
1) New LTCi policies are expensive.
2) Those expensive policies will not completely cover you. Inflation adjusted coverage for a worst case scenario of 5+ years in a $10,000+/month nursing home is prohibitively expensive or simply not available.
3) You have to make a lifetime commitment to the program without knowing the cost. That’s because your total cost will depend on two big unknowns … future premium increases and your life expectancy.
4) You may have to drop your coverage without collecting a dime if you can’t afford the premiums in the future. This scenario has two unpleasant outcomes: i) you won’t be covered when you may need the coverage the most; and ii) you will lose all the premiums you paid over the years.
5) The psychology of playing this game stinks, because you have to live your retirement years wishing and hoping you don’t get hit with premium increases you can’t afford. The probability of worrying about this problem is high.
6) Statistically speaking, most people will never need or use the policy. You and your family will fight like heck to keep you out of a nursing home. And, on average, most people who go into nursing homes don’t stay for very long. Of course some people end up in nursing homes for a long time, but the probability of that is low. If you sit a monkey in front of a typewriter, sooner or later it might pound out the Gettysburg Address. It’s reasonable to bet against the monkey … and LTCi.
7) You may have to sacrifice more enjoyable things in your retirement to pay your LTCi premiums.
8) You don’t need LTCi if you have financial assets over $2-3 million. You can afford to self insure.
9) You probably can’t afford LTCi if you have financial assets under $250,000 to $500,000.
10) Getting your insurance company to pay benefits is not without risk. You must hope your insurance company stays solvent for a long time or doesn’t sell your policy to a financially weaker company. And, you may need an advocate to fight the insurance company to get your benefits, because you will be in no condition to do so.
[mod note: "LTCi", sometimes known as "LTC", is Long-Term Care Insurance.]
Last edited by volosong; 10-19-2016 at 07:47 AM..
Reason: clarification of undefined ancronym/initials
most people do not need nor can afford ltc insurance since they do not have enough assets to protect .
but having said that:
ltc insurance is best for those with at least 7 figures in assets. if you are wealthy you likely don't need it and can pay on your own . it is the 1-3 million range that usually benefits . 2-3 million in an area like ny will not cut it very long . we are in that range and need the insurance .
with costs in the area of 120-140k a year today for an snf , plus the money needed to support the stay at home spouse in a high cost of living area , that kind of spending would likely leave the stay at home spouse impoverished if things went on to long .
seeing my dads wife go broke with him in a snf for 6 years has this a priority in our plan .
do not go by statistics . if you did no one would need fire insurance , auto insurance or life insurance while raising a family since odds are way lower nothing will happen in those category's compared to the odds of needing in home care ,assisted living , facility's classified as not snf's but are not assisted living or snf .
in life there are only 2 choices things happen to us or they don't . statistics do not matter to us humans . it is either us or it isn't that is on the wrong side of the statistic .
odds are miniscule we will die at an early age , insurers know exactly how many people will die a year , but they can't tell us who . so we have to protect our family's and assume it is us .
the statistics are very flawed for a few reasons .
the biggest is in 2000 the Medicaid budget for snf was slashed in half. instead of snf's being used for all of those who could not be cared for at home other facility types were set up for those not fully requiring an snf . all those number of people were dropped from the statistics of who needed snf care .
the statistics are also from a generation ago . baby boomers are not of age yet . not only are there 2x as many but they are living much longer .
we are paying premiums for coverage each year now , not off in the future . my 55 year old co-worker fell off a ladder painting , broke his hip and during hip surgery had a paralyzing stroke.
crap knows no age limit when it comes to stuff happening to you . his wife is now impoverished and on Medicaid .
so the question is , if you have assets , do you really want to play Russian ROULETTE with your spouses financial well being if it is you on the wrong side of the statistic ?
Last edited by mathjak107; 10-19-2016 at 06:32 AM..
My SIL was diagnosed with lung cancer last year. She had radiation and chemo therapy. She died in the 4th month after diagnosis.
My BIL (her husband) was diagnosed with Stage 4 metastatic melanoma which spread to his brain in 2013. He had radiation, chemo, and was in drug trials. He is still alive. According to his daughter, their medical bills have topped 6 figures over the last 3 years. He is having severe late effects from the radiation treatment which includes brain tissue dying, seizures, and blackouts. His right side is now paralyzed. His home was foreclosed. He cannot afford a nursing home. He cannot afford the 24/7 in-home care that is necessary. He has an account on one of those websites that request donations. In the past two month he has received $1,700 through that site before paying the 8% surcharge.
His adult children will receive no inheritance. In point of fact they are trying to cover his bills and to take care of him. His children are under a lot of stress. Care-taking takes a major toll on family members. The stress of paying his bills is enormous. All of this could have been avoided if my BIL had LTCi.
Anecdotes appeal to emotion. Statistics, numbers, verifiable facts appeal to reason. It's not a fair fight. Emotion always wins without acknowledging that emotion is seriously flawed when making decisions.
> 8) You don’t need LTCi if you have financial assets over $2-3 million. You can afford to self insure.
A comment on this
At the 2-3M level you don't really have enough to self-insure for the entire possible cost of LTC. You DO have enough to pay for the amount of LTC usually covered by a policy (mostly 3 year limit). After that- if you end up in LTC for many years- you will still run out.
At this asset level you want a policy that has a 1,2 or 3 year exclusion period AND coverage for an unlimited length of time after that period. Such policies do not exist as far as I know.
yep , we took 350 a day inflation adjusted because we can cover the difference out of pocket . but unless you have 4-5 million in a high cost area self insuring can surely effect the stay at home spouse .
we took 3 years coverage. we really took it for the perks once the insurance runs out .
TOTAL ASSET PROTECTION , NO LOOK BACK , NO INCOME RESTRICTIONS FOR THE STAY AT HOME SPOUSE ONCE MEDICAID PAYS THE BILLS IS WORTH IT'S WEIGHT IN GOLD .
we looked at all angles of having at least some plan for ltc and this was the best alternative for us . not having to keep money set a side protected , always there and safe to self insure with in low return investments has us able to be able to pay the premium with just a percent or so of the gains .
lumping your ltc money in with your portfolio is not a good idea since a safe withdrawal rate assumes principal can go to zero if it has to .
you also don't want to risk a severe down turn and needing the money. that is not what you do with insurance money .
money ear marked for self insuring should not have the carrot on the stick .
there are other issues too with self insuring. as our attorney told us " everyone has a plan until they get punched in the face "
much of his client base are the self insurer's. the stay at home spouse goes in to survival mode and every dollar spent on care becomes a triage situation . generally they now to try to conserve all the dollars they can to preserve life as they know it trying to cut back on the care of the spouse who needs it . now they want help holding on to those dollars .
it is a story that repeats and repeats ..
Last edited by mathjak107; 10-19-2016 at 09:02 AM..
Have to agree with OP ....the culture of fear makes a whole lot of money for others. I looked into it, and if I used it, my gain would have been about $25k. If I didn't use it, my loss would have been about $100k.
Of course, my family medical history is such that no one in my extended family was ever in any sort of long term care (nursing home, etc), save for one relative who was an alcoholic, simultaneous multi-drug abuser, smoker, with, most probably, several mental disorders and was anorexic (thus malnourished). Although another relative is in rehabilitation, but that's due to what should have been a short hospital stay that resulted in negligence. The lawyers are on that.
YMMV.
And in the end, those who buy, tend to try and justify their buying. I'm justifying my not buying.
everyone has to do what they think is right for them or their spouse. the problem is once they get punched in the face the plan usually changes for one of them .
most of those folks opposed to it do not have enough assets to be concerned . I know we were always against it . until we were at a level it became a concern and something we WANTED TO MITIGATE . heck if we paid in premiums until our 80's we would not even have paid in a years worth of money in a snf .
most policy's are priced so you end up paying in 1 year via premiums .
that is reasonable considering the huge open ended risk being taken off the table . especially because of the perks that go with our state partnership plan after the insurance runs out .
remember it is not just about a snf. it pays for in home care and assisted living . all which can run a lot. in home care especially can be important . Medicaid may pack you up and ship you 100 miles away to a group home rather than pay for in home care 24/7 . having the choice to stay in home and get full time care is an important option .
we look at our insurance as ANTI-NURSING HOME insurance . we get 3 years snf or 6 years assisted or in home care
.
Last edited by mathjak107; 10-19-2016 at 09:24 AM..
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