My DH was offered LTC insurance through his work. We took it then dumped it. (We will still get a pittance if we ever use it since we did pay into it for the minimum two years.)

One of my concerns was the same as yours: Who knows if the company will exist or will pay out by the time you try to collect? My late mother had a lingering death from leukemia. Her insurance companies found ways to avoid paying any meaningful sums. (The effort to obtain the payments was worth more than the payments.)

I researched how many people of our demographic actually spend time in care. The the odds are small that we'd need institutional care beyond two or three months immediately prior to death. We decided to bank the money and self-insure.

One thing that tipped the balance was the sudden interest by insurance companies in offering this concept. It's their business to know the odds! (I have the same take on reverse mortgages.)

I think any insurance for a specific disease is a poor idea. It reminds me of the sudden death insurance they used to sell in airports.

We had a long debate about this here last year, didn't we?

At the time, I did a little Googling and found that Consumer Reports did not recommend getting it, FWIW.

The cancer insurance I really think is not worth it. Someone asked about that here, too, a while back.

Last year's thread.

Here is a link that might be useful: Link

What do you all think of LT care insurance?

I highly recommend reading the thread that Harriet posted. You are going to find a wide range of opinions. There really isn't any right answer because everyone's situation is different.

I'm just worried this company may not even be there when he (might) need it.

That is a valid concern. One of the things to consider is how long the company has already been in the LTC ins business. What company is your husbands policy with?

We recently took out a LTC policy. Our reasons? First of all, if you are female, there is a 1 in 2 chance that at some point you will be in a skilled nursing facility. For your husband it's 1 in 4. The odds of your having a fire are 1 in 1200. Do you have fire insurance?

Our second reason - the high cost. Right now it's roughly $6000 per month (depending on where you live and the facility). Our net worth is such that a 3 or 4 year stay could financially wipe out the non-institutionalized spouse. If we were rich, we'd self insure because we could afford it.

Third reason - family history of both living a long time AND Alzheimer's disease.
The cost of our policies is $267/mo. But I am 63 and hubby is 59. The younger you are, the less it costs. I figure that if we pay into it for 20 years, a one year stay would more than recoup the costs. I honestly hope we never need it.

Social security does not cover long term care. Neither does Medicare. Medicaid does, but it is for the indigent (a single person cannot have more than $2000), and there are limits on the places that will accept Medicaid patients.

You need to do some research and decide whether it's right for your husband or not.

I do agree that the cancer ins is probably a waste of money (assuming that you have adequate health care ins already).

Anyway, do read the thread Harriet posted as there's no reason to rehash it all out again.

You may wish to take a look at the AARP website with excellent links and a comprehensive overall look at LTC insurance. It is the most thoughtful look at a complex subject and far superior to anything done by CR (much as I like CR and happen to be a member of both).

Here is a link that might be useful: LTC costs and useful links on AARP

Zone 8 Grandma,

You speak of the cost of LTC these days being approx. $6,000./mo. and your premium for the insurance is $267./mo.

In 20 years, that'll be slightly over $64,000. total amount paid out ... which at current rates would pay for your care for less than one year.

The average amount invested will be about $32,000., and if you could invest that at gain of 3% (after allowing for the erosion of annual income by income tax, and of ongong asset by inflation, that would not quite double the asset after those twenty years ... which would pay for your care for about two years at today's rates (actually more, as I built in some allowance for inflation).

But twenty years from now, the monthly rate for care will be a great deal more than $6,000./mo., especially since there'll likely be more demand for care than facilities offering such. You know what demand outstripping supply does to prices asked.

Given your family's experience, your decision may turn out to have been a wise one, 25 or so years from now.

Good wishes for escaping the dementia bullet, at least.

With regard to running short of funds to live on while having a substantial asset in a mortgage-free house, rather than using a reverse mortgage, and I've heard several negative comments regarding them (too restrictive ... and terms favour the lender), I think that I'd rather make a deal at my regular financial institution for a HELOC ... with my being able to draw on it at will, up to a certain ceiling.

They'd likely want me to pay at least interest ongoing, which wouldn't be a great issue, as the issuers of reverse mortgages certainly arrange in their situations for the equivalent of interest to be added to the loan which they gave.

Many won't allow more than 40% of the value of the home to be borrowed, while it's likely that the issuer of a HELOC would allow a higher limit, if interest were being paid monthly. One way or another, that interest is going to have to be paid.

Good wishes for being able to finance your declining years most effectively ... I hope that you started planning for it, and working the plan, at age 25, if not before.

Delaying starting a plan for 5 years at that age doesn't make the grade of the hill that one must climb a great deal steeper ...

... but such a delay of 5 years at age 40 surely makes the grade of that hill a great deal steeper ... possibly so steep that it's almost impossible to achieve a rate of growth that can be expected to achieve one's goal.

Eating turnips as a major component of one's diet (of necessity) at age 80 ain't no fun (I'm not offering personal testimony).

Neither is being required to go back to work (no personal testimony there,either)!

ole joyful

Thank you to pointing me to that thread, I actually did do a search and I didn't see it somehow.

Not sure what to do. Only my DH has this insurance, not me. I am wary because the company just sent a letter increasing his premiums by 100% after just a couple of years("we didn't anticipate how much we'd have to pay out") and naturally there is no guarantee that they will not do this again, perhaps many times over the 30 years or so he could expect to carry this insurance.

I guess it's one of those things where if the worst did happen, we certainly would be wiped out financially, no question. However, the worst seems fairly unlikely. I am a nurse and would be in a better position than many to care for him at home if he were severely disabled when we are still relatively young (ugh). If it happened when we were old, I suppose our house would have to be sold to cover the cost and our heirs would be out of luck.

He's inclined to keep it, and I respect his decision, but I am not sure about spending $1000 a year now which will climb to ??? heights to a company which may or may not do what it says it will do when the time comes. Kind of like earthquake insurance :) If I were confident that the insurance would work as it's supposed to, then I would feel better about spending the money.

joyful,
Your point about inflation is well taken. That's the reason that my policy includes a 5% (compounded) inflation protection rider.

If I were a single person, with the total net assets that we have together, I'd simply plan to self insure. My concern is that care for me could easily wipe out assets that my husband would need to live on (and vice versa).

demeron,
You didn't say who the company is. I'd be concerned as well if the company doubled the premium after only a short time.... You might want to do some research on the particular company. Actually, the truth is, you are more likely to need care more than your husband. As you pointed out, as a nurse, if he needed care, you could care for him (of course it might mean giving up your job). But what about you? If you were diagnosed with Parkinsons, for example (God forbid), could your husband quit his job to care for you?

I work in the eldercare field - so, like your husband, see more of this issue than most. Some of our clients are relatively young (60's) but have been diagnosed with devastating illnesses. Our agency charges them $23/hr just for assistance with the ADL's (Activities of Daily Living).

If your husband is determined to keep the ins, perhaps there is a better company and/or policy.

With odds like 1 in 1200 why DO we have fire insurance? LOL

None of the links or stats tell me what I want to know about MY probable need for 'long term care' or what sort of care that would comprise. (We have a lot of people in skilled nursing homes who only *need* custodial care. But that brings up just who on earth is going to do the caretaking and for what wages -- another topic.)

I'm 67, white (northern European), female, educated, retired, married, healthy, not overweight, don't smoke, have few 'inherited' risk factors. I could live to 80 -- or 100 (or not). I'm financially comfortable.

My descendents do not need an inheritance.

Absolutely, chisue, you are an excellent candidate for self-insurance, and it's good that you recognize it.

My DH and I, are not. My MIL threatens to break down into tears when I tell her flatly she needs to be aware of how her money is being handled (not learn all about it, there's no point in beating a dead horse) because the odds are extremely good - something like 50%, I'd estimate - that she's going to outlive both of us.

With a haemorrhagic stroke at the age of 50 (which turned out to be more serious than anyone told us) my DH's life expectancy was immediately halved, according to general stats. His heart attack factor doubled because of the stroke, which wasn't good news since every single member of his father's family has suffered serious cardiac impairment and eventually died after multiple heart attacks. And he can't tolerate statins, unfortunately!

We are fortunate that our LTC insurance was purchased through PERS, the CA state employees pension fund. It gives them the leverage to negotiate for the most generous terms on LTC insurance (2 ADLs instead of 3, for example), the lowest market rates, and best of all, the carrier can't leave the business unless PERS can find a replacement company. This actually happened a few years ago, and in fact they did raise everyone's rates as a class of business.

As I mentioned in previous posting on this subject, this was something I expected to happen. Mortality has improved over the last four decades to the point where the issue of who is going care for the elderly has really become an expense that should be considered in overall financial planning, unlike previous generations.

No longer do families band together to "keep Mom out of the nursing home" - I remember my grandmother being shipped from state to state, as each of her children tried and failed to take care of her as she aged. She wasn't the nicest person in the world and always liked to make trouble between the husband and wife. But the extended family was shamed by the idea of putting her into a home, until they finally ran out of siblings, LOL. Eventually they had no choice in the matter, and everyone breathed a big (if guilty) sigh of relief.

I took care of my father for a while when he developed Parkinson's. He was still okay but if he fell down, he couldn't get back up without help. Even that small taste gave me a real respect for anyone who is up to the task of caretaking the elderly and disabled! It's really hard, and I expect to see such salaries rise considerably in the coming years.

My DH and I have a comfortable retirement planned, but not so much that one of us needing care would end up seriously impacting the financial well-being of the other. Since our health risks are high, unlike chisue's, that's why we investigated and purchased LTC insurance.

Insurance is the mitigation of risk. It is not the elimination of all risk; that is impossible. There are as many downsides as there are upsides to the question of "how much insurance does one need?". One should do the research, use whatever useful calculators or sound advice is available, weigh the amount of risk you are comfortable with, and purchase (or not purchase) the amount of risk mitigation one can afford.

This thread prompted me to check our insurer for life, home, auto (Amica Mutual), an A rated insurance co-op that I have loved for the 15 years we've been with them. They do offer LTC and disability insurance so I am going to pursue quotes with them. If affordable I could see buying from them as the what-ifs regarding the company's solvency and integrity would be much allayed.

Trying to balance here. We are not nearly so well off as many appear to be on this board. We are among the first wave of the generation graduating with horrendous student loans-- we started out $100K in the hole, and that was a late start due to my DH's protracted education and various bumps in the road. Our own lack of financial education/discipline being part of the equation of course :) I still make stupid mistakes but trying to read and learn has improved our situation a good bit over what it might have been, I like to think. Thanks for the advice and I'll keep you all posted.

Hi demeron,

I feel uncomfortable dealing with your long term care issue, for I'm not at all familiar with the cost factors that might be involved.

However, with regard to the cancer deal, at $50./mo. it's costing $600. per year, so would produce the $5,000. that you refer to as a possible payout in less than 8 years, given some return on an amount invested independently.

As you say, most ill people spend only a limited amount of time in an ICU ... and $50./day would be only a miniscule portion of the total cost of care in such a circumstance.

Looks to me somewhat as though they'd like their bread buttered on both sides ... with only a smidgeon left to put on whatever bread you might come up with.

Sorry that I don't feel competent to offer more suggestions.

ole joyful

It's hard to calculate the odds of staying a long time in ICU. I know very few people who have gone to ICU who have stayed there more than five days - but it does happen at times (my sister ended up there twice, both times for over a week).

I don't think most cancer policies are worth spending on, but if it gives your DH peace of mind, that's not a bad thing, either. Although honestly, with level term life premiums at an all-time low, that same premium could buy a substantial amount of life insurance.

You don't mention your age, which is a factor in purchasing LTC insurance. I would normally agree with your penchant for LTD insurance but if you are working part-time it may not be worth it. LTD insurance limits have tightened drastically, as have the underwriting standards. There are almost no occupations for which LTD will pay more than 60%, and limits are usually calculated on your last two years' tax returns. If you are only working part-time I don't see how this minimal payout would benefit you.

I'm 41, he's 42. I pay for our family's health insurance, subsized by my employer, a hospital, by 700 a month (I pay 700, it would cost us 1400 if DH got it through work). So that's my main concern. I have to see what my SSDI would be but I haven't ever made much, stay at home mom not being a highly recompensed career path.

I'll see what our insurer has to offer.

Quite honestly,
I think both of you are too young to worry about LTC ins. If you were in your late 50's, I'd say think about it. But early 40's - seems too young.

Just mho

Funny, I was just thinking that this thread made me reconsider who will be longest in LTC -- someone who becomes ill earlier in life. I'm used to thinking about LTC in terms of the elderly. Would LTC pay out if one is receiving SSDI?

Would LTC pay out if one is receiving SSDI?

Receiving SSDI wouldn't affect LTC benefits because LTC benefits are not a public program that is needs based. However, someone on SSDI would have a very difficult time making the payments.

Thanks. I was thinking of a scenario where someone is well, employed and able to buy the insurance, *then* becomes ill -- collects SSDI.

*then* becomes ill -- collects SSDI

Well, since SSDI is needs based, they'd have to go through their assets first - I'd think it'd probably be tough to keep up LTC premiums.

OTOH, if they were on SSDI and needed long term care, seem to me that they'd immediately qualify for Medicaid.

In my mother's case, she qualified for Medicaid and SSDI at the same time. Of course her SSDI benefit is paid directly to the institution since she's on Medicaid...

No, Grandma, SSDI, or SSD (Social Security Disability Income) is not at all needs based. It is disability income that you earn by paying social security taxes from your paycheck over the years. The amount you get is based on the income you earned while working and how long you worked. Being over the age of 40, Demeron and her husband will each have to have earned Social Security-documented income in 40 quarters (as in a quarter of a year) in their lifetime of work, earning over the few hundred dollars each quarter to qualify to have that quarter count toward eligibility. Anyone under forty has to have earned proportionately fewer quarters of SS income - the number can be found in SSA (Social Security Administration) publications.

The difficult thing about SSD is getting the SSA to decide that you are disabled. I have heard it said that everyone is turned down the first time, and has to reapply. I doubt this is really true, but I bet it is not far from the truth. The thing to remember about SSD is that it is not meant to be for short-term disabilities. It is really only for when you are pretty much disabled from any ability to work and won't be able to regain ability to work for years, if ever.

SSI (Supplemental Security Income) is needs based. It is what you will get if you apply for SSD and are declared to be disabled, but have not worked enough quarters for you age to qualify for SSD. It currently pays something like $620/mo. If you work for cash, or "under the table" and do not pay SS taxes, this is what you will get. If your worked long enough to qualify for SSD - but would get less than $620 a month because of earning low pay when you worked - you will get SSI to make up the difference to get you up to the SSI level.

What I wanted to add to the discussion on long-term care is that there are options besides nursing homes. My father-in-law went blind one day last summer with no warning. He was 91 years old and had been driving up until the day before he went blind. He did his own shopping and warmed up his own meals. I didnt even enter his room, as his independence was understood, even though he shared our home.

When it became apparent that he could not be left alone, we got paid help in to the home for the daytime, as all of his children and we spouses worked. We started out with an agency. Then we asked everyone we knew for referrals for independent caregivers and hired two ladies on our own. We pay them about $15 an hour, and pay SS taxes for them as employees. Dad has a good retirement income, and about $65K from the sale of his house. We use his money to pay for his care at our home. His daughter and other son come in one or two evenings a week (they alternate weeks of coming twice) and each do one 8 hour shift on the weekends. DH and I take care of Dad from waking until 2 pm on weekends, and Saturday, Tuesday, and Friday evenings. We did have overnight help from a paid caregiver when confusion and a bad sleep schedule made it necessary, and the other son and daughter each stay overnight one night a week. We have a "Daddy" (baby) monitor so we can hear Dad if he speaks in the night and he always wears a whistle he can blow if he needs us. If he is awake, he is not left alone in his room for longer than it takes to go to the kitchen or bathroom. If he is asleep, someone is listening to the monitor, and the monitor is on next to us when we sleep.

We have managed like this since last June, and it has not killed any of us yet. His room is the center of our home, now. He likes the heat at about 74, so we have supplemental heating in his room so we do not all have to bake, and this makes it more comfortable to stay in his room most of the time. He has a hospital bed and a lift chair, his TV, radio, books on tape, table, and the bathroom is right outside his door. It is very rewarding to know we can keep him at home. HeÂd die in a nursing home, unable to learn to manoeuver totally blind when he now needs his hands on a walker. When he is not confused or delirious from illness or fatigue (heÂs been getting steroids for inflamation and radiation for cancer), he is as sharp as ever. In a nursing home he would be in a bed or wheelchair and too disoriented to move himself around.

His income and savings will keep him for about another 2 years at this pace, and after that, we reconsider our options. It is far less expensive to give him "nursing home" care at home than it is to send him to live in one. If we need skilled care, home care agencies send nurses, PT and OT. He has some extra insurance for this kind of care, but so far it has been useless to us. It will pay $50 a day for skilled nursing once BC/Medicare are expended, but we have never reached that point.

Dad stays in his own home (our home, which we have shared with him for two years before he went blind), our dogs are with him all day and give him lots of company and laughter. His caregivers are priceless, especially the younger one. She has patience and good humor to spare. She takes care of our dogs going out, too. She keeps DadÂs laundry done and our kitchen clean. She takes him out to the hospital for his radiation treatment on the shuttle bus the hospital sends. We have been very lucky to find the right people, and to have a wonderfully good-tempered elder to care for. That makes it all work. When his money runs out, then we will have to consider a nursing home, but he gets better care at home this way.

I'm not sure the insurance is a good idea, especially if consumers mag reports that it is not. If your married, they do a division on assets which in my case was very fair. If a couple has less than $19, 000. the well spouse gets to keep it. You even get to keep your income if it falls in a certain range. If you are single and have assets you can dispose of them before the time comes if you have family members you trust. since I am alone, I am not worried about the assets, but my heir is. LOL

Once again I'm looking for stats that probably don't exist in the public domain. Insurance companies must have them.

How many people are paying for LTC insurance; how much are they paying and what is their median age? How many people are currently collecting LTC payments; how much and what's their median age?

Given the Baby Boom generation and increased longevity, I could imagine that this insurance would carry itself for a while. Payments coming in from Boomers would cover payouts. Then what? Just as there are decreasing numbers of workers to fund Medicare and increasing numbers of Boomers needing (or getting!) it...isn't it the same situation?

nancy,
I stand corrected on the differences between SSDI and SSI. thank you for that clarification.

In a previous thread, I posted one's options should they become in need of care in their senior years:

1) Rely on family to care for them
2) Rely on the taxpayers (via Medicaid)
3) Self insure - plan to pay for care themselves
4) LTC insurance

Your dad is indeed fortunate to have family able and willing to care for him.

My situation is different. My son has a disabled daughter - the last thing he needs is a parent in need of care. We aren't rich enough to self insure and I'm unwilling to become a burden on the taxpayers, so the option I chose was LTC ins.

chisue, insurance companies don't make money strictly off policy premiums. AIG's current headline news is a perfect example of this.

When I worked at CIGNA (formerly Connecticut General, then they bought INA and changed their name), each of their 5 separate divisions was given an annual profit margin target to hit. This was called a "zero margin plus xx%". Note this was not a sales number, it was a "quick and dirty" percentage of how much revenue minus division expenses they made annually.

My boss (one of the regional VPs with a shot at the division presidency) got interested in exactly where this target number came from. He learned that what CIGNA called "zero margin" was actually a base 15% profit margin.

CIGNA could earn 15% off its money, through investments and such things as real estate development (for instance they bankrolled Foster City, a landfill development in the SF Bay Area that was considered risky at the time, but is now a desirable mixed-use suburb, selling it after a few years for a hefty profit), without ever writing another insurance policy. Therefore, their divisions had to earn OVER that 15% profit margin, to be worth expending corporate funds for. This is why insurance companies go in and out of market niches - they tend to keep a fairly conservative eye on what their profit margins are on each line of business.

When people are discussing the stock market, the majority of money in it is institutional. Insurance companies are a very large part of that. They are even better than banks at leveraging their money. We used to make jokes about actuaries, but insurance companies realistically suvive on the number-crunching abilities of their actuaries. Like developers in a software company, they are what actually drives the financial corporate engines.

I'm not sure the insurance is a good idea, especially if consumers mag reports that it is not

That's not exactly what Consumers Report says:
Skip buying a policy if your net worth is less than $200,000, because Medicaid will pick up the bill after you exhaust your funds; or if your assets exceed $1.5 million, because you will be able to pay for your own care; or if you cant afford the premiums. Consider buying a plan if by age 55 you have a chronic medical condition, your assets are between $200,000 and $1.5 million and you must protect them for a relative, and if you have no family member to care for you. Even with the support of professional and community home-care services youll need a family caregiver. (9/24/2003)
Source: http://www.consumersunion.org/pub/2003/10/000474print.html

A couple more links that may be informative:
http://articles.moneycentral.msn.com/Insurance/InsureYourHealth/NoLongTermCareInsuranceUhOh.aspx

http://articles.moneycentral.msn.com/CollegeAndFamily/CaringForParents/FedsTargetGrandmasMedicaid.aspx

jkom51 -- Yes, insurance companies are big guns in the stock and RE markets. I was thinking that the LTC portion of the business would be able to carry itself for a long time on Boomer premiums. But eventually the LTC payers of that demographic will decline (just as payouts to them increase). At some point LTC wouldn't continue to be such a sweet niche for a company.

Love hearing about the 'zero' baseline that was actually 15% -- HAH!

Nancy, it's wonderful you are able to work out a system where you can keep your dad with you. As a visiting nurse, I am always so grateful when I come in and know that the elder's needs are being met. It takes generosity and dedication on the parts of the younger members-- sometimes it just isn't feasible-- but when it works out, life is richer and more rewarding at home.

Demeron,
Acey here...

Have you ever logged onto Mr.Long Term Care?
mrltc

I have been in the market for LTC insurance myself, and stumbled upon that site. They have a forum, much like this one, and there are a couple of very knowledgeable posters who might could offer some advice. Some of them sell insurance for their living, but overall, I have found their advice spot on, without selling.

I just bought myself a plan, which offered a "pay it off in ten years" option, which I chose so I could be done with payments by the time I retire.

Most of what I've learned from them say to hang onto the one you have, but with a 100% increase, and if you tell them the name of the company, they probably can offer you a better idea of the value of keeping it or not....same with the cancer policy.

While I was meeting with my Elder Care Attorney last week (wrt my mom, who is in an ALF and draining all her savings --- too young and too much monthly income to get Medicaid --- looking at being homeless), I brought up this subject due to concerns about my future. He agreed that LTC insurance it is a good idea, but "not at our age". That would be mid 40's. He cautioned me to wait another 15+ years before considering it further (based on good health thus far). Many of his reasons were those mentioned here ....

funkill,
The rule of thumb that I've read is that if you are going to get it, do it before age 60. I'm 63, hubby 59. We have identical policies, but because of the age difference, my policy is about $500 more/year. I do wish I had gotten it at 58 or 59.....

I agree that mid 40's is too young if you are healthy.

Trouble with the conventional wisdom of waiting until reaching your 50's, is that if you know a way to be absolutely certain you will have NO serious health problems during that decade, you are way beyond being a good forecaster, you are a wizard!

You really have to look closely at your family history on both sides and be honest about evaluating your own risk factors. There is a huge difference in premiums between Premium and Standard classes, regardless of insurance type.