18 Replies Latest reply on Feb 11, 2010 3:18 PM by howyou

    Retirement vs nursing home

      I am 59, my wife is 48. When we retire and live off of our 401 k's, if either one of us should need to go to a nursing home, how does one legally defer or avoid paying for nursing home expenses, that will cut into our survivors living expenses? Will they take our 401 k's?
        • Re: Retirement vs nursing home
          You need to talk to an elder law attorney in your own state.  Go to naela.org for names of elder law specialists near you.  What you want to do can be done, but only with a specialist.
          • Re: Retirement vs nursing home

            It used to be that people, right before going into the nursing home, would give away their house to their kids and be broke enough to qualify.  Now there's a certain time limit (you'll have to check into that yourself, but something like 5 or 6 years, I think), that basically if you gave it away the year before you moved to the nursing home, you'd wait that long before qualifying.  You'll have to check with an attorney.

            Here's a better option, right now look into Long Term Health Care.  Suzy Orman, Dave Ramsey and many others really sing its praises.  AARP works with GenWorth and there are as many options as you can shake a stick at.  This only is good if you need help with two or three needs like dressing, eatting, going to the bathroom, etc. but it does cover Alzheimer's, etc. and you can get a policy that starts paying when you need it in your home.  (But do comparison shopping, that's what we did.  You can even find LTHC brokers who will save you time).

            This will prevent you from being dependent on Medicare, will give you access to probably a nicer facility and will allow you to not need the large nest egg, which you theoretically can start giving to the kids sooner.

            Of course, if you're looking for residential living without many services, LTHC won't help.  But the govt. isn't going to jump in and help you with that either.

            IMO, it's going to be increasingly difficult for the govt. to provide services they way they are now and we baby boomers should start considering how we can take care of ourselves without govt. assistance.

            One last mention of LTHC, you'll need to pass a physical and while you are in your current age range it's affordable, even the inflation protected option.  But wait 5 or 10 years and have a major medical situation and you won't qualify at any low cost rate.

            Hope this helps,


              • Re: Retirement vs nursing home

                My wife and I both took out LTH policies with TIAA, but with the CEO changeover to Herb Allison, TIAA  jettisoned LTC and transferred our policies to MetLife. We're very pleased with what we have. It was a smooth transition and there have been no snags or problems.

                As to the AARP being a reliable insurance adviser, I'm sorry to say that they are not. Paul Krugman and President Jimmy Carter have called the AARP an insurance company because they take in hundreds of millions of dollars each year for endorsing products of Hartford, New York Life and in fact most of the major insurance companies.

                Please google and read many many pieces that will support the above. The AARP is coasting on what was once a good and well-deserved reputation, but the truth is, they now shill for the insurance industry. Again, please don't take my word for this. Google and see what many prominent people have to say about AARP.

                • Re: Retirement vs nursing home
                  Everybody speaks as though getting Long Term Health Insurance is simply a matter of prudently choosing to do so. In fact, the trick is being able to get it. My father sold Long Term Care Health Insurance, but he couldn't find any insurance firm who would issue me a policy because I have Sjogren's--auto-immune issues, in other words.
                    • Re: Retirement vs nursing home

                      Had you read my original post in this discussion thread, I did say that I felt underwriting for LTC insurance is very 'tight'; e.g., like almost any other insurance but especially for health, LTC and disability, you need to buy it BEFORE you are diagnosed with any chronic health issues.

                      I'm sorry that you have a health issue that precludes private carriers covering you. All the more reason why I would hope you would support health reform in this country, but that of course is a separate issue from this thread.

                      I have personally known people who wanted to buy LTC insurance but waited too long to get it, and are now ineligible for approval. They 'played the odds' and lost. We played the odds and won, we were fortunate to buy it in our late 40's before my DH and I both developed some health issues that would have made our premiums much higher.

                      It's why I argue on Net forums to get necessary insurance before you need it, if you can afford to do so, to mitigate your risk in future years. No one knows what the future is going to bring, and none of us can ever take good health for granted.

                      • Re: Retirement vs nursing home

                        Calling Dr. Kavorkian. 

                        Who wants to live forever lying in a bed with a diaper on?  That's where my mother is and it is horrible.  She has a setback and is rushed to the hospital from the nursing home.  She gets pumped full of fluids and than back to the home.  It is a horrible way to live.

                          • Re: Retirement vs nursing home

                            The most difficult issue is quality of life as one ages. Very few of the pre-Boomer generation have created their legal and financial documents. I participate in other forums and it's depressing how many Boomers are trying to take care of elderly relatives who are no longer capable of executing a legal Power of Attorney or Durable Health Care/Physician's Order for Life-Sustaining Treatment form.

                            It isn't a question of 'who wants to live forever with a diaper'. Of course no one does! The issue is, what process(es) have YOU as an individual, put into place to minimize discomfort, discourage unnecessary treatment, and ensure adequate palliative care for your old age?

                            First you must take charge of your own health. The advice of doctors is just that - advice. It isn't a command or declarative statement. It's your own decision as to what kind of treatment you will accept and how far you want medical staff to go. Without instructions to the contrary they will keep you alive as long as possible - which these days, as you have seen, can be an agonizingly long time.

                            Many old people seem to have a tremendous fear of death. They say they don't want to live with a diaper on, yet when 'push comes to shove', they grab for any treatment or medicine offered, even when advised it's a crapshoot that it can help them. Medical staff are no better than you or I at predicting who is going to try to cling to life past all hope, and who is going to accept gracefully that the end is near - therefore, they are legally and morally obliged to do everything possible, even if the odds are 10:1 against success.

                            My father was like this, and stretched his death over a stressful and draining three years. Not only did I decide never to do this to anyone I loved, it made me understand how important it is to think about these kinds of issues beforehand, and plan for them.

                              • Re: Retirement vs nursing home

                                Totally agree! When my mother ended up in a nursing home with dementia for 6 years, we all decided to get living wills and power of attorney or whatever it is called to make sure we DIE and not have any life support of any kind and that includes shots of antibiotics for the flu! When it is our time to go...we are going!

                                My father lived healthy and sharp until he was 94, and then quickly went downhill and in a few weeks was dead!   All my other relatives are still happy, healthy and mobile living on their own in their mid 90's and hopefully will until they reach 100.  But none of them or us has long term care insurance. The love Medicare and are happily living life on their own in their own homes. When and if they need help, they will hire someone  to care for them.

                                I have also heard that Long Term Care Insurance doesn't cover much anyway...save your money in a "care" account, and over the years, you'll have plenty to pay for a nursing home if you need it. Average Nursing Home stay is less than 1 1/2 years anyway.

                                Anyway, I do hope Obama's plan actually helps people instead of just costing everyone a lot. Personally, I've made arrangements with my great doctor on a payment plan since I no longer have insurance. He is kind enough to give me free samples of my asthma preventative medicine when he can which reduces costs.


                                  • Re: Retirement vs nursing home

                                    Sharon, you need to do more research in the issue of LTC insurance before dismissing it out of hand. If you live in a low-labor cost area, that's fine. But I do not - nice facilities here cost $60-90K ANNUALLY. Multiply that times my DH and I both, and the costs become crippling. Home health services from licensed, bonded agencies cost $300/day for an 8-hr care. Certainly you can get 'gray workers - cheap immigrant unlicensed aides. But I know several people who have used them, liked them personally, then found out they were being slowly robbed of valuables. The temptation of nice things lying around unused was just too much for someone making $10/hr without an agency looking over their shoulder. Can't blame them for it, but I don't want to have to lock up our nicer things, why have them at all then?

                                    Older LTC policies (pre-2000) usually did not have compound inflation protection nor home healthcare services. The latter is the fastest-growing category of healthcare costs and unless you qualify for Medicaid - we do not and are not likely to, unless we live well into our 90's - there is no government help to pay for it.

                                    We both have a very good LTC policy, because we are not rich enough to self-insure, but not poor enough to qualify for government assistance. Having such insurance lowers the risk that if one of us needs professional care, the other would suffer financially.

                                    I consider past statistics on nursing home/home healthcare usage to be similar to those of investing: past results do not guarantee future performance. Boomers are healthier, more nutrition- and exercise-conscious, and are likely to live longer. But that also means the chances of us needing help in our old age - fewer of us had children, those who did chose not have many children to begin with - are going to numerically explode in coming years.

                                    My niece and nephew, for example, are very concerned about their father's future (age 63). He was doing very well in IT for many years but recently has gotten only contractor jobs, short term projects with no benefits. He's made only minimal provisions for his old age, and now it's almost too late. TIme caught up with him far sooner than he expected. He's a wonderful person, but he's one of many of our peers who have planned poorly or often, not at all, for the next stage of life.

                                    Most people bury their heads in the sand and cross their fingers that they can manage not just death, but disability. We prefer to plan ahead, and mitigate risk in the most cost-effective manner possible.

                                      • Re: Retirement vs nursing home

                                        I find a certain amount of judging going on in these threads.  So many people have been hit hard by the recession, small business owners are especially vulnerable and are lucky to get through the hits their businesses have taken.  A man earning a living through being an independent contractor should be applauded for his resilience.  One does what one must do to put food on the table and hope there is enough left over to put into savings.  These folks need our support and applause for hanging in there.

                                        As for retirement and nursing homes - I think it depends where you live how those choices are handled.  I live in a wealthy community that basically can age in place without worrying too much about healthcare issues.  We will not be able to stay here because of our small business losses during the past five years (from employee theft to the recession).  We have a house in a tiny rural community - but it is not somewhere we want to retire to.  It is too remote - decent medical care is 55 miles away.  It was a family house and we kept it.  The one thing about this tiny town, though, is the large nursing home in it.

                                        The nursing home is part of the community - people are always stopping by to visit with family members.  This is not a fancy assisted living place - but it is very accommodating to residents.  They have their own lazy-boy recliners or dressers and sometimes a cat or dog (the dogs come for visits).

                                        In cities or larger communities we tend to think of nursing homes as impersonal- and they often are.  However, if one is ill, sometimes being in a care facility is comforting.  I have a friend whose Mom is in a home in Iowa and loves it.  She has been there for sometime.

                                        Different regions of the country, different towns treat people differently.  My heart goes out to all those struggling to make it through this tough recession.  It's no picnic out here day to day, but we will all make it through - and a few kind words along the way help.

                                        However we make it through retirement is also to be applauded.  So many are lonely and frightened these days and the more we embrace and cheer each other on we can at least remove a part of that loneliness and in its place put hope.

                                          • Re: Retirement vs nursing home

                                            Thank you Muppie.  There is a fair amount of lecturing and judging on this site.  I agree most people do the best they can.  We are all in different places -- financially and other ways.  I have read emails where people send in a simple question and end up getting lectured because they didn't appear to have planned their retirement 30 years ago.



                              • Re: Retirement vs nursing home

                                Although it's a little late for you to be doing financial planning, better than never! I second that you need to talk to a good elder care attorney, or at the very least, find an elder care social worker.

                                The rules for Medicare's "look back" period have changed from 3 yrs back to 5 yrs. Most states, but not all, changed their own guidelines to follow Medicare. This is why you need a good local advisor, for much will depend on the state you reside in.

                                In many cases one can do a division of assets when one spouse needs to enter a nursing home. The rules have to be followed to the letter, so when you talk to an advisor, take notes and make sure you understand all the issues.

                                I'm a big believer in LTC insurance, but underwriting is currently very "tight". For your wife it won't be that expensive (although women get charged more because of their greater life expectancy) but your policy could be costly, depending upon your health. I used to work for an independent CFP and quotes for clients who were over 55 were pretty expensive. Hardly anyone at that age could qualify for Preferred rates; most were Standard or rated in some way.

                                LTC insurance needs to be researched very carefully. It's a Wild West in that marketplace, and many policies are essentially worthless. It is one of the most complicated products to buy, with a lot of "gotchas" that can catch the ignorant/unwary. If you happen to live in one of the few states that has a LTC Partnership program, it's essential any LTC policy you buy be part of this program (carriers can offer non-Partnership policies cheaper). It will help protect your assets by crediting your estate “$ for $” for any benefits paid.

                                Always make sure any LTC policy you are considering is a tax-qualified plan. You can read about the TQ benefits in an article (part of a 3-pt series) that Dan Melson authored. The full title is "Long Term Care Insurance: Non-Tax-Qualified versus Tax-Qualified, and Partnership" so you can Google that and I'm sure it'll come up. I ran across it on a Web search one day and thought it was an informative read. It’s from 2006 but still an excellent starting point.

                                Be aware that the two most important options on an LTC policy are expensive, but without them the policy may not help you when you most need it. Those options are (1) compound inflation protection (NOT simple inflation protection, which is cheaper), and (2) home health services. Home health services are the fastest-growing segment of healthcare costs as more people try to stay in their homes, and thus it is critical that any policy you select include this benefit. Usually it’s offered at either a 50% or 100% level of daily benefit; 100% is best but not always available from all carriers.

                                It’s up to you to decide when you want benefits to kick in. If you select zero days deductible, the benefits start immediately when you file a claim, but on the downside this is the most costly option. Usually they offer 30 day and 90 day options, which lessen the cost but mean you are self-insuring yourself during this time. For example, on a 90-day deductible: you file a claim so they can start counting the days. The cap is lifetime, so if you self-insure for a couple of months from an injury, then the next time you file a claim (even years later), you have to self-insure for only 30 days, and after that the carrier begins paying.

                                You also need to decide how long you want to purchase benefits for. Periods vary by carrier, but are usually 2 yr, 4 or 5 yrs, or lifetime. Some carriers like Met won’t even offer lifetime any longer, and of course it’s the most expensive coverage option.

                                HTH, and good luck to you going forward.

                                  • Re: Retirement vs nursing home
                                    The reason for the law requiring that a certain amount of time pass between the signing over of assets and Medicaid picking up the tab for the nursing home was because people with more than enough money to pay their expenses were, instead, signing it over to their heirs and letting the taxpayers foot the bill. If, after paying our legitimate expenses, something is left over, well, that's great but we should, first and foremost, pay our own way to the extent that we can. Otherwise, the taxpayers end up footing the bill and that's not fair either! P.S. Our children are not always better off for inheriting money!
                                      • Re: Retirement vs nursing home

                                        1.) It is important to distinguish between Medicare and Medicaid. Medicare is for everyone; unfortunately, it does not cover long term care for anyone. Medicaid does cover long term care, but only for those who have low income and little in assets beyond their home. Unless you plan to become almost indigent, you will need to have access to a substantial amount of money, or to long term care insurance to pay for a several year stay in a nursing home. An "average-length" stay (~2.5 years) in a private room in a "median-cost" facility (~$74k/y) costs almost $200,000. Costs have been escalating faster than inflation.

                                        2.) Although I don't particularly approve of AARP becoming a front door for insurance products, I did find that the AARP/Genworth Long Term Care policies offer the important options (3% and 5% compound inflation index, 75-100% available for in-home benefits), and that they are competitively priced, especially if you can take advantage of the very broadly applicable 35% "Couples" discount, and the 15% "Good health" discount.

                                          • Re: Retirement vs nursing home

                                            I can never understand this inequity.

                                            If I have lots of money, I will have no problem.

                                            If I have never worked and have not paid any tax, then I can get medicaid.  Therefore, long term care is taken care of.

                                            If I have worked hard all my life, paying taxes, including medicare tax, I can get medicare but not long term care.  Therefore, I have to sacrifice everything I own to get it. 

                                            Does that mean that I would've been better off had I not worked at all?

                                            Can someone explain this to me?

                                              • Re: Retirement vs nursing home

                                                It is helpful to understand that long term care needs have changed radically within two generations. My parents were ashamed to put their mother into a nursing home, despite the fact she was troublesome (liked to create problems between husband and wife; she was an unhappy and neurotic woman). None of them could stand having her in their house more than 2 or 3 yrs, so she was shipped from house to house. Nursing homes were 'where you went to die'. Neither of my parents (I'm a Boomer) wanted a nursing home death; fortunately they were able to avoid it and die at home. Neither had any savings to afford the better quality assisted living facilities which were being established.

                                                However, with the breakdown of extended families and the dispersing of those members across state and even country borders, the times are a'changing, as the song goes. We cannot assume that the younger generation, or some unwed sibling, is going to be around to take care of one of us in our decrepit old age. Most of them aren't even nearby or within easy access, and all of them have their own issues of making a living in today's difficult economic environment.

                                                Medicare was passed in 1963 over the objections of Republicans because so many seniors were filing bankruptcy due to high medical costs. Long term care was not an issue at the time, because (1) most elderly were taken care of by family; and (2) longevity was just beginning to increase past the 'normal' retirement age of 65.

                                                Longevity has taken a huge leap in the last 50 years, and it has outpaced our legal and healthcare systems which were never designed to take care of large numbers of people in the age bracket 80-110 yrs (the fastest growing group by age in the world are the people over 80). The days of a retired person living no more than 10 yrs past 65 are receding fast; my MIL is 82 and quite healthy, with a very good chance of living another 15-20 yrs.

                                                Medical care is improving longevity by such leaps and bounds that would have been unimaginable back in the 1960's. Every child born in a single month, has a slightly longer life expectancy than all the children born in the prior month. People who once died of their first cardiac attack, their first stroke, the first bout of cancer, now can live decades longer after what was once a killer medical episode.

                                                We are now seeing the first generations of people who can actually die of old age, rather than from that single catastrophic medical episode. But those elderly need care, often to a degree that no family member can provide safely.

                                                There is beginning to be a huge divide between facilities that take Medicaid and ones that don't. The care and services of better quality facilities is easily obvious once you've visited a few of them. Note that even in better quality assisted living/convalescent care facilities, residents are expected to use up their own resources first. Then, as they spend down their assets, the facility will apply to Medicaid for assistance as necessary. But many good facilities will not accept you as a Medicaid patient if that's all you start with.

                                                My MIL was very sad to leave her home of 36 yrs. But she was house-rich and cash poor, and the home needed constant (and expensive) maintenance. Having sold it she is now financial stable for almost any eventuality, even if she lives to triple digit-age. For our part, we have very comprehensive LTC insurance, and plan to sell our paid-up home within the next 5-10 yrs which will free up more cash to add to our 'cushion'. I've already started looking into local assisted living facilities, even though we're 15 yrs away from needing them. There are some beautiful ones around, but they are most definitely not for public aid patients! The Medicaid facilities we've seen are pretty depressing.

                                                We have set up my MIL's finances, and our own, to be able to fund both a comfortable retirement as well as home health care and licensed facility care, as needed. After all, what else is our money for except to take care of ourselves as best we can? We worked hard, and our money is our own.

                                                If there's anything left for heirs, that's nice, but that will never be our first priority.

                                                  • Re: Retirement vs nursing home
                                                    jkom51, thanks for your excellent, useful essay. One addition would be that the current financial crisis has raised the specter of weak finances at continuing-care communities that previously seemed secure. Alas, even if you're willing to put the proceeds of your house-rich assets into your future care, you now have to find a way to vet the finances of where you're "investing".
                                              • Re: Retirement vs nursing home
                                                I certainly agree.  Too many people seem to think making the taxpayer take care of their nursing home expense is okay.  Inheritance is not a right.