This is a new topic for me - and I'm learning of all the options. Others may have more experience and give some hints on what to look for in benefits, coverage, etc. - as well as what to avoid.
Hints would be appreciated.
Long-term care insurance IS a tough one. My husband and I shopped a long time before settling on one. And even though we opted for the inflationary clause - I'm pretty certain that IF I ever have to utilize the policy, it won't begin to cover the costs. Those seem to be going up a lot faster than my coverage!
I learned two or three years ago that some companies are experimenting with a new type of coverage. New York Life was the one which contacted me. You pay up front for a certain amount of long-term care coverage and IF you never use it, the coverage rolls over to an ordinary life insurance policy. I thought that had some appeal. I don't have any current information about that sort of plan.
If you're talking about Unum Provident Insurance Company, they're fighting a class action suit charging that they systematically deny claims. Here are fifty or so complaints against them. TIAA-CREF had LTC for a few years, then handed it off to MetLife. We stayed with MetLife and have been very pleased.
Arnie, thank you for contributing to this discussion. I've participated in several Net discussions on LTC and it's quite hard to convince most folks that a good LTC insurance policy can be worth the money. Most insist they will either never need it or say they can afford to do without it. There are certainly those with sufficient assets who can self-insure. But with the high cost of facility care and home health services, I really wonder if all those people actually do have over $3M of liquid assets (usually considered the minimum net worth for self-insuring LTC).
And of course, should both partners need care for any extended period, that would be double the expenditure! Until this country addresses the issue of elderly care in a more comprehensive manner, one has to really ‘crunch the numbers’ to decide whether to self-insure or buy protection.
BTW, there is an earlier discussion thread on LTC insurance in the Family & Friends forum titled “Retirement vs nursing home”. In that thread, on August 23rd I did a fairly long post on what some of the considerations should be in selecting a policy. This is NOT the time to depend on your friendly local agent, unless said agent writes a large number of these policies for at least three different LTC insurers. Most agents know relatively little about these policies and have even less information about a company’s historical record on customer service and claims payment.
Googling “long term care insurance” will pull up several useful documents. A very good one is a government publication, “Guide to Long Term Care Insurance” at http://www.pueblo.gsa.gov/cic_text/health/ltc/guide.htm.
People need to honestly assess their morbidity factors, especially as they reach middle-age. By then it becomes clear what kind of health issues one's elderly relatives have had to face.
Unlike kath, we have LTC through CalPERS and are happy with it. They negotiate excellent terms so there are less ‘gotcha’ exclusions. We got our policies in our late 40’s – a good thing too, as my DH suffered a haemorrhagic stroke less than four years later. He would no longer be eligible for affordable rates from any carrier.
I expected premiums to increase – any glance at the stats about Boomers living longer and thus probably needing care of some kind, is a leading indicator. Despite this, the amount we pay for the two LTC policies is less than the amount of our earthquake insurance. And with our personal genetic morbidity factors, I’m pretty sure we’re more likely to use the LTC benefits than the earthquake insurance. Therefore, we intend to keep our LTC insurance in force. Licensed facility care is extremely expensive where we live due to high labor costs. The past ten years of total premiums paid wouldn’t even equal the cost of a 6-mo. stay for one of us, let alone both.
shepster: You are confusing a simple consumer "$$ in, $$$ out" budget with a corporate aggregate profit/investment/payout process. For one thing, payments on LTC care are not made in total, they are paid in arrears. Secondly, you may not realize that corporate business has always made much higher ROI than consumers do. Sophisticated trading and lending processes favor big money transactions, and insurance carriers are amongst the biggest players in this game.
Anytime a policyholder dies or terminates a policy without using it, the carrier has not only profited from the premiums, they have profited from the 8-23% annual ROI they have made off those premiums over the years. It is up to the actuaries to decide whether a policy is priced to be profitable, weighed against the number of people who will actually make claims. That percentage is lower than you think, especially with those who are budget-driven and are caught flat-footed by class-wide premium increases.
I worked for a large, well-known insurer for over a decade. When they distributed budget money each year to the separate divisions, every division had to be profitable - and the profit margin was a base plus percentage number. The "base" was 15% - each division had to make more than that, every year. The base number was what the company could earn off investments, on an annualized 20 yr historical basis, without ever writing a new policy of any type. Insurers are required to hold sufficient cash assets to redeem/payout policies, which gives them a large pot of $$$ to leverage out.
It is the same principle by which a pension of $70K annually does not require the employer to actually have the total $70K x 35 yrs life expectancy all in cash, up front. The employer funds an account with a percentage amount that builds over time through investments to fund the pension in perpetuity. Same thing with insurers, that's all.
The problem with LTC insurance (besides unpredictable & substantial rate hikes) is that if you opt for the more affordable plans, you are buying something that most of us don’t want – custodial care in a nursing home! A growing number of us (baby boomers) are planning investments in elder living that is more to our liking: elder co-housing. There’s an organization of “intentional communities” (the name for communes that have grown up) that may offer interesting alternatives: www.ic.org
Of course, co-care doesn’t work if we are kept alive, but dependent on lots of medical interventions and other services to manage disability. It's not surprising that some of us are questioning modern medicine’s default of quantity over quality. If we’re “saved” from a massive coronary at 72 only to die at age 95 after 10 years of nursing home care for Alzheimer’s, is that a good trade? I’m healthy and 59, but have a DNR in case I’m offered the blessing of sudden death.
>>you are buying something that most of us don’t want – custodial care in a nursing home! >>
No, you are buying Risk Mitigation. It is no different than buying homeowners insurance or auto insurance. You don't buy them in the hopes you'll never make a claim, you buy them to LESSEN YOUR FINANCIAL LIABILITY in case a claim is necessary.
I emphasize this because many people lose sight of why insurance is important. You cannot remove all risk from your life, all you can do is to mitigate the impact of high-risk upon your financial well-being or life estate, IF something happens to you.
You could be lucky and die when and how you want to - my mother did, for which her children were very thankful. But my father did not, nor did most of my DH's family. You can stick your head in the sand and hope nothing bad ever happens to you and your spouse. You may be fortunate enough to have that come true. I personally just don't want to wager what assets my DH and I have accumulated, that we will be 'two of the lucky ones'. If I can use insurance wisely to lessen the risk that disability to one of us will cause financial hardship to the other, then that's what I'm going to do.
Elder co-housing is not going to solve the issue that arises - how do you stay in your home by yourself? Your co-housing site is lovely and idyllic, but the reality is I would prefer to remain around my family and friends in the San Francisco Bay Area, where modest starter homes hit half a million and CCRCs (continuing care retirement communities) require buy-ins of $150K to $450K up-front, with rental costs of $1500-$7K/mo for apartments.
Communes, cooperatives and land trusts don't work here - there was an article last weekend in the local paper on how the Tenants-in-Common concept has been a total failure in our area, due to factors beyond people's control. They work only where land is cheap and zoning codes permit easy development. Many seniors are fortunate to live in such areas, or move to them. We would move away only if we absolutely had to - and therefore have taken the financial steps possible to lessen the risk that we might have to, someday.
There are many senior residences in our area. But the better ones are not cheap - that's impossible here where land is so expensive. Nonprofits run the best housing/care alternatives. So we use LTC insurance as our risk mitigation because: 1) it will allow us to stay in our home as long as we want to, as we have the option for home health care, and 2) if one of us needs care the other will not bankrupted by the costs for a nice facility.
These days most people do not keel over and die. Most live with gradually declining abilities and skills. My MIL is one of them, you wouldn't even notice her dementia unless you lived with her and watched her puzzled fumbling over small things she was once able to do. Fortunately she has the money to pay for home health care if needed, but she has some friends who are also elderly widows who struggle under such a financial burden.
More important than a DNR is a Durable Healthcare power of attorney, a financial power of attorney, and POLST (Physician's Order for Life Sustaining Treatment) instructions (included in the most recent DHPoA forms since 2008).
I hope we never have to make a claim against our LTC insurance. No different from our hope that we never have to make a claim against our earthquake insurance, which costs over 2x what the LTC insurance does, BTW! Can we go without either one? Sure, and we'd save a lot of money if we did. But if something bad does happen - and bad things do happen to good people, as we all know - we'd be out a very, very, very large amount of $$$ in the end. To us, the risk is worth mitigating. To others, it might not be. That's why each person has to honestly look at their numbers and figure out how great their risk is, and whether it's cost-effective to lessen it or not: never an easy decision, and very individual.
Slow response, sorry.. I was in AZ caring for elderly parents.
It IS important to save for the help that a person will eventually need if they live long enough. But I don’t think giving our $$ to a LTC insurance company is the only way to go.
A family member of mine has a “good” LTC policy, with in-home and partial assisted living benefits. But she has refused to leave the family home. At 90, she lives in her home with a boomer son (who works constantly). She is not yet disabled enough to use her home health benefits. She’s suffering from loneliness, chronic pain and inactivity. She has mitigated her risk, but has what most would consider a poor quality of life.
Elder co-housing/ retirement communes/ intentional communities are not about mitigating risk, but about:
Living sustainably (minimal impact on the ecosystem)
Reducing consumption through sharing
Increasing quality of life through community involvement
Working and playing hard and contributing to the betterment of the world
A group of elders who live in a close community could go in together and hire health/support services that are better suited to their likes and needs (e.g. weekly on-site acupuncturist and vegetarian meals at the common house). They might even figure out a way to barter for those services.
It IS our choice to say, “no thanks” to the life prolonging treatments that extend our lives until we are chronic and disabled. But it doesn’t happen without planning. My ducks are all in a row with documents AND family conversations.
>>At 90, she lives in her home with a boomer son (who works constantly). She is not yet disabled enough to use her home health benefits. She’s suffering from loneliness, chronic pain and inactivity. She has mitigated her risk, but has what most would consider a poor quality of life.At 90, she lives in her home with a boomer son (who works constantly). She is not yet disabled enough to use her home health benefits. She’s suffering from loneliness, chronic pain and inactivity. She has mitigated her risk, but has what most would consider a poor quality of life.>>
It would be interesting to hear what her son's viewpoint would be. On the Gardenweb Caregivers forum, there are so many people who feel caught in the "I would never put my parent in a nursing home as I promised to always take care of them" bind. They are exhausted, anxious, and resentful while feeling guilty about it.
I watched my aunt get ground down taking care of my father who was one of those "I'm not going into a nursing home to die" types. It gave me a lasting aversion to ever doing that to another person - least of all my spouse. We have planned for each of us to be able to continue on with life in the event one of us requires assisted living, home healthcare, or licensed facility care.
I don't belive that anyone has suggested that buying LTC insurance is a necessity for everyone. But it, like all other types of insurance, has a place in one's overall financial planning. To ignore one important aspect of a holistic view on financial planning is to defeat the entire process.
Amongst our peers and younger friends we have often mentioned the idea of community living, in a compound where we could all be together. However, it is just not realistic. Despite everyone being employed and working hard, none of us are in any position to afford to finance a group compound. It will not happen, despite our yearnings. Most Boomers are an independent lot who don't really want to live with others - nearby is good, next door is not always so great.
Here in CA community involvement is like 'herding cats' - you should see the indignant entries about the cost of installing a stoplight at a local intersection that has seen several bad accidents, in our neighborhood listserv. Everybody wants it, nobody wants to pay for it. Where we live, what works is to have the money to pay for what we need and most of what we want, without having to write grant applications or monitor fractious budget meetings to get things done.
The simple fact is, most of us don't play well with one another, when it comes to the details of everyday, minute-by-minute, life. And I've found that those who like to "run with scissors" are not people willing to compromise with those of us who are more cautious.
I have noticed my 82-yr old MIL is much more dependent upon the 'friendly face' of local neighborhood vendors and storeclerks than we are. It gives her that 'warm and fuzzy' small town feeling she seems to need. We are more like other Boomers: our relationships are formed mostly by work, spread across many companies. We don't do a lot of MySpace or Facebook (unless one has a business, then it's a necessity to do both), instead preferring LinkedIn or blogging.
What you are describing about shared services does exist in some areas. This is from a Sept 25, 2009 NYTimes column: ""A number of NORCs (naturally occurring retirement community) do offer this kind of help. Twenty-five states have NORC supportive service programs, according to the queen of NORCs, Fredda Vladeck, who runs the United Hospital Fund’s Aging in Place Initiative. New York leads the list with 54 NORC programs operating in high-rises, garden apartment complexes and neighborhoods of single-family homes; Indiana comes in second. The common mission of the programs, Ms. Vladeck said, is “transforming communities into good places to grow old.”"
Although it may sound so practical as to be a no-brainer, it takes a great deal of time and energy to work this into a national program with assured government funding. And in fact, I doubt it would fly with any of the many headline-grabbing politicos who are rushing aboard things like the Tea Party movement. Who's going to vote for spending more money on a new government program even though it's both a more humane use of funds and will possibly (but isn't guaranteed) save money? I doubt it's going to get any support from either of the Republican candidates currently vying to be the pick for CA state governor, for instance, although it should!
I'd love to think that in 10-20 yrs, when my spouse and I need to simplify our life, that NORCs will be more widely available to help people remain in their homes. We still would probably prefer to move into a retirement community, as it seems the best option for us. The advantage of having LTC insurance is that it gives us an entree into certain senior housing places that would otherwise be just 'out of reach' otherwise.
Frankly, there is nothing sadder than clinging to an illusion. I confess to having a prejudice against the whole "family home" idea. To me memories are internal, not a function of four walls, ceiling and floor. Yes, it is common - my MIL still yearns for her old home where she lived for 38 yrs with her long-dead DH - but had we allowed her to continue living there, it was a simple fact she could not afford to maintain the house properly nor afford any home help if anything happened to her (she has severe osteoporosis and the house was inaccessible except by steep concrete stairs).
It took us years to convince her we didn't want to inherit her home, we had our own and are perfectly happy with it. When the time is right we will give it up without sentimentality - it is a material possession, an asset if you're lucky. It is nothing to cherish or revere; just a bunch of wood, nails, stucco/plaster and glass.
Once the family has moved out, the memories are also gone...which is as it should be. The new owners will make their own memories, equally as precious and equally as ephemeral.
Thank you for taking the time to put your thoughts together in a succinct manner. I too have purchased LTC insurance about 15 years ago, or more. I want to be ready should something happen and not have to go to my only son for his help. You are so right in saying LTC insurance is part of the overall financial retirement planning.
The devil comes upon us suddenly, with no warning. If we knew the thief
was going to rob us at midnight, we would have stayed awake. But we
dont know the day or the hour that we will be caught. That the stoke will
come, and the vital much-beloved spouse we had planned to travel with,
to dance with, to walk and talk with, will become overnight a mute confused
paraplegic in a wheelchair, incontinent, in pain, and on oxygen. Medicare
only lasts 100 days for nursing home care. People can live as husks for decades.
I want the insurance for myself now. It is too late for my spouse.
I remember having a conversation with my FIL one evening. He proudly reported that he had canceled his $50,000 life insurance policy, because "he had never used it."
I was aghast, and no doubt gave him an open-mouthed stare for several moments. Then I blurted out, "You have no intention of ever dying?!?"
Two years later he suffered a major heart attack. Medical science being what it is, he lived another 10 yrs in gradually declining health.Towards the end, he couldn't bend over to tie his shoes without fainting. All their plans for retirement went out the window; he never again went fishing and they stopped traveling except for local drives.
Fortunately their house had appreciated in the RE boom and we convinced my MIL to sell before the market sank. She was house-rich but cash-poor, without sufficient funds to finance an extreme old age, which she is likely to achieve as she's quite healthy and genetically favored. If not for that, she would have desperately needed that insurance money to add to her modest cash assets.
Six years ago we were lucky I was driving the car to work when my DH suffered his stroke at age 50. When I realized what was happening to him I drove like the dickens through rush hour traffic to reach emergency, which is only 15 min from our house anyway (why I love to live in the city, LOL). His stroke was haemorrhagic, meaning they couldn't really do anything for him except lower his BP and watch him for 17 hours in intensive care.
He has recovered 95% - most people can't tell he ever had a stroke, let alone a serious one - but it showed us that you can never tell, as James139 so beautifully points out, when bad things are going to happen to good people. Being unprepared can be a terrible blow to someone who is already grieving and struggling to carry on.
Whether catastrophic insurance is worthwhile depends upon the terms and limitations of the policy. I'd be surprised if it didn't have a dollar cap on how much is paid out, and limitations on what the policy will pay for.
It's doubtful it pays for home healthcare, which is the fastest-growing segment of healthcare services.
Our bottom line was YES.
Based on our financial situation, morbidity and mortality risks, family situation (no kids, few relatives nearby and all of them working, we determined that the disability of one would impoverish the other spouse. Nursing homes now run 80K/yr for well run, nicer facilities. At home care, which is not covered by Medicare, is the fastest growing area of healthcare costs. Medicaid is being gutted by bankrupt states like ours, and can't be depended upon to cover such costs. A licensed, bonded, home healrthcare agency charges $300/day for 8 hrs of care - an enormous sum for the average 2-6 month recuperation from a broken leg or hip replacement, for example.
It is wonderful to able to predict ill health, injury, and accident to yourself, but I'm not a success at that. We use LTC insurance to mitigate our risk of financial devastation. Over 25% of all seniors who file for bankruptcy do so because of medical costs - and that INCLUDES people with Medicare and Medicaid resources.
Unlike most people, we got advice to pursue LTC as soon as possible. We got it in our late 40's for very little. The program is state-sponsored and extremely good, with all the protections possible.
Not only could we not afford and not qualify for the LTC nowadays, the ten years we have paid premiums on both policies, do not even total what 5 months in a good nursing home would cost for one of us.
We hope we never need to make a claim. But we've spent more on homeowners and earthquake insurance, than what our LTC costs us. Our house may never fall down in an earthquake, but it's a sure bet we're going to grow old.
To plan for an old age the way you suggest is to bury your head in the sands. Sorry, but my MIL lives with us and we deal with that kind of attitude every day.
All you end up with is being pathetically underprepared and overwhelmed both emotionally and financially. She has the money (we made sure of that), but dementia is destroying her ability to deal with even her daily checking.
Unlike you, we HAVE done the financial calculations and have found LTC insurance is our best chance of mitigating extreme financial risk. No one ever intends to become disabled or hit by a car or fall on concrete or develop dementia - but guess what? Life happens, and what you plan for is the worst, not crossing-your-fingers-hope-for-the-best.
We would rather be pleasantly surprised by having sufficient protection, instead of pretending to be Pollyanna and "if we don't think about it, it won't happen."
Having LTC insurance means we CAN afford to live well, because we don't have to keep a huge reserve of funds to pay for expensive care for one or both of us. And because we did buy it when we were younger, the few premium increases that have happened are only modest price increases annually - well under what buying protection at age 60 or 65 would cost.
I wish you and others - like my family members, who were offered by our carrier the chance to purchase LTC protection but didn't - the best of luck in the future as you age. Because all three of my siblings would now dearly love to purchase LTC, but being fifteen years older than when we first offered the chance, NONE of them can qualify medically any more for Preferred rates.
What would have been affordable is now out of reach. They are in their 60's and realizing what they face, having seen older relatives and friends struggle with LTC issues. They are terrified when they think about paying for LTC on their own, realizing that with the huge state budget cutbacks, there are fewer and fewer public aid resources.
They are worried, and we are not. That's what we pay premiums for, and it's well worth it. LTC costs us less than the earthquake insurance rider on our homeowners policy, and is infinitely more important.
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