Thanks - that's a helpful summary of the issues to consider - all of which I think I've read and heard over time. I am also going to ask our CFP since he knows our financial situation.

Much as I like CR, there's a few things I'd disagree with in that article. It is absolutely true that there are insurers who have terrible service and claims history - Conseco had four subsidiaries and every single one of them was awful. The PA Dept. of Insurance eventually arranged a settlement with Conseco and its subs, who then collectively exited the LTC business. The policyholders were definitely hurt in that instance.

However, the OP gives the basic info that she may not be insurable in an underwritten plan. That is critical information. Underwriting is extremely 'tight' for both disability and LTC insurance. When I worked at an independent CFP's office, he believed in LTC insurance for all his clients so I pulled a couple of quotes every month. In at least 50% of the time, these people who were mostly in their 50's and 60's and could afford an asset-based managed portfolio (e.g., their net worth averaged $1.5M to $8M), couldn't find LTC insurance at a price THEY could afford. The CFP was always careful to deal with the better quality, well-rated carriers - he didn't believe in going with a lower-priced insurer who couldn't be depended to remain in this business segment.

We were fortunate to be advised to buy a tax-qualified LTC plan when we were in our late 40's. This worked out for us personally as my DH suffered a stroke at age 50, just a few weeks afer his birthday. He's fine, but by underwriting standards he is barely insurable at this point. I would not be able to find him a policy that cost singly what our two policies cost in total.

Ours is an older policy that pays only 50% of daily benefit for home health services, but new policies almost universally pay 100% for both licensed facilities and home healthcare (which is the fastest growing segment of healthcare). We have a 90-day elimination, because it's affordable for us to self-insure for 3 months. What we can't manage would be long-term costs, as we live in a high-cost labor state (CA).

I'm a believer in compound inflation protection, but I'm not sure where CR got the reference to 4x basic premium cost. All the quotes I pulled, it doubled the cost almost exactly. Without it - and most older LTC policies don't have it - the policy is virtually worthless.

I think for the OP the important questions to ask the CFP would be:

- what's Prudential's commitment to the LTC business historically? Met Life, John Hancock, and Lincoln Benefit have the largest blocks of business and decades of customers. How does Pru stack up?
- is the definition of disabled the 3 ADL definition of Medicare, or the 2 ADL definition better carriers offer? There are six standrd ADLs used for evaluation of disability.
- what's the record of customer complaints against Pru's LTC business? State dept. of insurance records will have this, usually accessible on the web.
- confirm that this policy pays 100% of daily benefit on home healthcare, which is more likely to be used than licensed facility care.
- how much is a 5% compound inflation benefit added to the policy?

If that $74/mo premium is for you, that's a very good rate for $250/day. Women have higher premiums than men because they live longer, so Pru has capped their payout with a lifetime limit that works out to 5 yrs max.

If you can afford it, the alternative would be to take a $200/daily benefit, especially if that bumps up their lifetime cap. However, if you add the compound inflation benefit it can quickly use up your lifetime cap if you hold the policy for ten years or more.

Your CFP can help you, but only you can estimate your morbidity factors and decide what type of policy would work best for you. Good luck to you as you make a decision on this complex insurance product.

thanks jkom - you always have such good info. The $74 per month would be for me - of course they clearly state they have the right to change premium rates in the future but only on a class basis. I'll have to ask some more questions about how long the price stays at this level. I will pose the questions to my CFP but here is a bit more info in response to some of the questions you listed.

- is the definition of disabled the 3 ADL definition of Medicare, or the 2 ADL definition better carriers offer? There are six standrd ADLs used for evaluation of disability. THIS PLAN COVERS FOR TWO OF THE SIX ADLs

- confirm that this policy pays 100% of daily benefit on home healthcare, which is more likely to be used than licensed facility care. PAYS 50% OF THE NURSING HOME CARE BENEFIT LEVEL FOR HOME/COMMUNITY/ASSISTED LIVING CARE

- how much is a 5% compound inflation benefit added to the policy? I CAN INVESTIGATE THIS BUT WHAT THEY STATE ABOUT INFLATION IS THAT YOU ARE OFFERED THE OPPORTUNITY TO INCREASE COVERAGE EVERY THREE YEARS - DESCRIBED AS A PERIODIC INFLATION OFFER - NO ADD'L HEALTH INFO REQUIRED

Ahh - one more thing in response to what you said jkom - if I choose a lower plan like $200 per day then the lifetime maximum drops to $365K.

All carriers have the right to increase premiums on older blocks of insureds if done as a class. As I strongly feel that current LTC premiums are probably too low for reserving against future claims, I expect to see price increases incur and continue going forward, even for policyholders with older policies.

However, if you are starting with a low premium, then even a 25% or 40% increase is not going to be a large sum, especially for the peace of mind a good policy can give you.

For example: my DH and I have separate LTC policies. Total annual premiums were originally about $1800 for both of us.

A 20% increase 5 yrs ago brought a premium increase of $360 total for a new premium of $2160/yr for the two policies. This means in 10 yrs we have spent $19,800 for LTC protection on both of us.

We have just received a letter saying a probable 15-25% increase will happen in mid-2010. Assuming the high end (approval is needed by the state dept. of insurance) the increase will be $540/yr total, for a new combined premium of $2700/yr.

If we assume the new premium stays the same for at least the next 5 yrs (who knows what will happen?), we will have spent $13,500, upping our total expenditure over a 15 yr period to $33,300.

We have 5% compound inflation protection, so our current $212/daily (50% for home healthcare), paying $76,320/yrly for each of us, will increase each year even though our premiums have remained relatively stable.

Because of the low starting point, the insurance remains affordable for us. If I were looking for an LTC policy now just for my DH, I would consider myself lucky to find a similar policy for less than $4,000/yr on him. In such case, a 25% premium increase would make it much harder to absorb into a fixed-income budget.

By comparison, we pay almost $400/month in earthquake insurance  and our chances of using the earthquake insurance are actually less than the odds that one or both of us will make a future claim on the LTC insurance. We have in fact suffered a sizable premium increase on the earthquake insurance already, although the policy is barely two years old.

To get back to what you are being offered, assuming you can confirm that Pru is committed to the LTC business (and by commitment, I mean past history, not current marketing campaigns), the price seems pretty reasonable if you are certain an independent underwriter would not take you as either Preferred or Std rating.

The 2 ADL disability definition is good, and 50% home healthcare is better than nothing. Do realize that this means LICENSED BONDED agencies, not the off-the-street-but-cheaper home aides that can be hired.

In view of the reduced cap for lower daily benefits, you would want the largest daily benefit offered, especially with no compound inflation rider offered. Pru is following Met LifeÂs lead in eliminating the unlimited benefit period and I expect virtually all carriers to follow suit soon. We have an unlimited benefit period and although I donÂt think the current carrier will change existing policies, I acknowledge the risk that at some future point our policies may also get converted to a 5-yr cap.

Be careful to confirm the details of that guaranteed coverage increase  it probably comes with an additional premium increase; e.g., theyÂll charge current market rates which may have gone up considerably in the interim. They may not turn you down, but itÂs a way to charge additional premium without the company having to apply to the state dept. of insurance for a class premium increase.

If your CFP is licensed with any LTC carriers he can run a very quick quote for you based on a quick outline of your current health problems, which will tell you almost immediately if you are in fact a ratable risk. As said before, if you are truly uninsurable the disadvantages of the lifetime cap and premium increases (after youÂve run budget simulations going forward) may be viewed as manageable when weighed against the advantages of asset protection and peace of mind.

If you can at all afford it, I would buy protection for both of you, BTW. Good luck as you figure this out, and IÂm glad you have an advisor to help you run the numbers. It is a very complex decision!

Okay - got with the CFP today. I sent him all the info I rec'd on the plans. He is bullish on the plan for both me and DH - said Prudential is one of the better ones for LTC and felt the rates were very reasonable. Knowing my medical history he felt I would be uninsurable or if so, only at a much higher rate. He also felt we should get it for both of us even though DH is quite healthy - his only problem is mild asthma. I get the impression from this and prior conversations with him that he thinks LTC insurance is something you should get if you can afford it - particularly if you do not have family you can count on to take care of your needs if you become unable to take care of them yourself.

So I will call the representative and talk a bit more about rate increases - that's the thing I wonder about. If you die before age 64 you get your premimums back - which sounded like a good deal to me. You also get a pro-rated portion back after that time but it quickly diminishes to zero. If you quit paying you also get some limited coverage based on how much you've paid in. Those things made it sound more palatable to me - thinking about how you might never use it.

>>Those things made it sound more palatable to me - thinking about how you might never use it.>>

With the exception of life insurance, EVERY insurance policy is purchased with the hope that one will never have to use it, LOL. It doesn't matter what kind or who pays for it (employer or personal). It is risk mitigation, and relatively cheap at that. Ask anyone who's had to pay their COBRA health insurance premiums after being laid off - LTC is a lot less expensive on average.

My DH is now pushing his retirement date forward to the end of this year. We've been advised that dental insurance is $75/mo for each individual - that's almost as much as our LTC premiums. He has retiree medical benefits, under an HMO plan that costs $1100/mo for the two of us. If it wasn't paid for by the employer we certainly couldn't afford it on our own.

Yes, I buy insurance with the hope that I don't use it. But more important I look my financial risk of being uninsured.
For me, and many others, financial ruin does not await me if I need long term care.
95% of the need is custodial care, that can be achieved in my home with day care or live-in for meal preparation, house cleaning and medicine reminders. Do I want to pay a premium for years for this care? No I can better invest the money and have more available in the future should the need arise.
This is the same way I looked at dental insurance and decided I didn't need it. Same with earthquake and so on.
I appreciate that some will need it and some just want to pay for coverage so they needn't worry about the expense, but not everyone needs insurance for LTC.

You said "I sometimes think we should get LTC insurance since we have no kids", I don't understand that. That is exactly why I don't have LTC. Having or not having the insurance does not affect the care you get in a care home. If you have no kids to leave your money to, you can pay your own bill until your money is gone, then you go on medicaid. You will get the same care on Medicaid as you did paying your own bill. The only exception I can see is, if you pay your own way, you can have a private room until you go on medicaid, I don't know if insurances allows a private room or not. If you don't have insurance and one of a couple goes to a care home, you do a division of assets with SRS and spouse remaining at home gets to keep the home, a car and half the money. I see no reason to have LTC.

maime - the thing about having no kids relates to having no kids to help us care for our basic needs when we can no longer care for ourselves - should we live that long. Both DH and I helped our parents extensively which allowed them to remain in their own homes and spend little/no money to have people help them with their basic needs.

I personally feel a sense of responsibility to plan to take care of myself for the rest of my life rather than planning to have taxpayers take care of me through Medicaid. I know some people have no choice but at this point in my life I do. I really admired my father in law who paid out of pocket for nearly all of my MILs nursing home care after a limited LTC policy expired. You could see some of their kids freaking out that their inheritance was being spent - which none of them needed. His first responsibility was to take care of his wife - not his adult children - and he did it with dignity and independence - a role model for me.

My understanding is that Medicaid only covers nursing home care at this point - not in home care - and I'd prefer to avoid the nursing home if possible. This could all change of course by the time we are all that age. Likewise I evaluated and selected a nursing home for my mother for a brief rehab period following an accident and quickly learned that not all take Medicaid patients. The one I chose for my mother - and the ones I would have chosen for myself did not.

All of this has made me much more conscious of what choices I should be making now to make sure I have choices later. I know I'm the type who will be fretting over every cent I spend once I retire - no matter how much money I have saved. I think an LTC policy would alleviate some anxiety for me if the time comes that I need it - even if all indications are that I might be able to afford to self insure.

My CFP knows my financial situation - he recommends it - and he's not selling it to me. That is a factor I'm considering in my decision - which I still haven't made. I have until 11/20 to decide.

Yes, many places will not take medicaid, and watch out for the look back period.
If I needed nursing home care, I'd would want my own room. The people I've known in nursing homes, could have been cared for at home with an attendant. I understand some people need hospital care, but that is very rare.
I will hire a live-in to care for me, I have extra bedrooms.

maime: "You will get the same care on Medicaid as you did paying your own bill."

I don't believe that is true. There are private pay only nursing facilities that have a much higher skilled nursing staff to patient ratio. If you are relying on Medicaid, you have to go to a facility that accepts Medicaid and to whatever facility happens to have a bed available.

gibby: "I have until 11/20 to decide."

Gibby, if you need more time to decide, the easiest (and safest) course of action is to sign up by the deadline, and then if you subsequently decide that you don't want LTC, you can just cancel after having only paid a couple of premiums. But if you don't sign up because you are unsure, and then you subsequently decide that you do want LTC, you may not be able to get it because of your health issues.

That is the exact situation I was facing last year when my employer had a one-time open season for LTC. I, too, am in my early 50s, but am basically uninsurable because of previous health issues, so I signed up figuring that I could always cancel. My wife, however, is in perfect health so I did not sign her up at that time. She could easily pass a physical if necessary. However, our CFP also recently strongly encouraged us to get her signed up now as well.

bethesda - that's exactly what I was thinking. I'll sign up and I can always bail out later if I change my mind.

I did a thorough check of the care homes in our area and there were two non-medicaid, one cost $6,000. + a month and for that I am sure you have more attention because they probably have more staff, but no better care. I don't know what the other one charged but I do know they had just gone non-medicaid and had one patient that just wouldn't die. They thought she would never die so they could give her expensive bed to a private pay person. There are also the private homes owned by a corporation. I would never put a loved one in one of those. Abuse could go on a long time before it was reported. The best care homes I found was in the small towns on the outskirts of our city. One even had private rooms and charged what medicaid would pay. I put my husband in one of those. As far as needing help when I can no longer drive and do for myself, I have already checked into that and have a list of who to call. And about tax payers paying for care, my family has never used any social service ever. We have paid our way all our lives and it was comforting to know it was there if we needed it. If I end up in a care home, I will pay as long as I have money then medicaid will step in. Would you rather I live in the streets or live with my daughter in law who would spend my money, abuse me if I was demented then toss me away like trash.

If you have ever thought about CCRC's, I went to an interesting presentation by one of the best in our area, run by a non-profit organization. Like most, there is a 'buy-in' up-front amount one pays, amount depends on how big an apartment you want. These are independent living units only.

The residents were vital, alert and interesting (we met about 20 of them as table hosts and Open Tour hosts). Although the same age as my MIL, a world of positive difference in energy, hobbies, and activities. The facility was impressive, with beautiful amenities.

The monthly rent one pays was dependent (and your choice) on how you were able to finance assisted living and eventual convalescent care, both of which are provided on-site. People without LTC generally chose the higher-payee option: they paid more for their independent living apts but then the cost for assisted living and convalescent quarters remained the same amount.

People with LTC insurance could opt for a lower monthly rent, as their insurance would start paying for the extra assisted living/convalescent care costs. It was a considerable savings, in fact, over the first option.

Again, we live in a high-labor-cost area. Home healthcare is not cheap here. We know several elderly friends who have been robbed by unlicensed but cheaper home aides who have been satisfactory in the quality of the care provided, but just can't resist the temptation of valuables lying unprotected.

Making the decision to buy LTC insurance is not an easy one, and is always a highly personal decision. Someone wanting to lessen their risk, whatever that risk is, compared to someone who is willing to take more risk - there is no unilateral right or wrong here.

maime - like I said, I realize some people have no choice other than to take advantage of Medicaid for nursing home care. And they should certainly do that rather than live in the streets - that's what it's there for.

Thanks gibby. I am one for thinking ahead and making plans for "what if". I have even made plans for keeping myself out of a care home. If I am diagnosed with something like ALS or AZ, I will take care of the problem myself. I will not go through what my husband went through and what my Mom is going through now.

maime - did your DH and mom have ALS or AZ? That would be very tough indeed. Some family history stuff I've received indicated one of my grandparents died from ALS but then another thing said he had MS. Either is bad and no one is left who really knows but the idea of ALS is rather haunting.

My plan for both of us (spouse and me) is to stay at home together with care.
The problem comes in if one has already died and the one left gets AZ, then one cannot mange their own care. The plan would still be to stay at home, but have one child manage the caregiver and finances. I would still pay, not financially burden child, but that child would need to manage caregiver and finances.
Still no need for insurance, but plan would be same with insurance.
There is always the need for a competent adult. I don't know, does anyone not have an adult to call on in this situation?
Maybe with AZ, if one doesn't know the difference it doesn't matter as much.

My very smart mother purchased LTC thru her company when it was first offered and maintained the policy after she retired. In April 2000 she was diagnosed with lung cancer. Treatments did little to abate the disease and she could no longer live in her home which was 4-level town home. I stayed with her, helping her as much as I could. If I could have carried her up and down I would have.
When we could no longer manage, we contacted the LTC (John Hancock) who came out and did an eval. No problem - we found the closest (and newest) assisted living facility. It was quite nice, she had two rooms to herself. I pretty much lived there with her until she died in Nov 2000, one week shy of her 70th birthday.
The burden of having to come up with the $$ probably would have sent me over the edge. She probably could have afforded it herself, but who knows?
As soon as it was offered at work, I signed both me and my husband up (Prudential). We would certainly lose everything if either one of us were that disabled. I only hope we never need it.

My husband had Alzheimer's four years and 9 months before he died and my mom has dementia. My husband had a terrible time in care homes because he fought the help when they tried to change his clothes or bathe him. He was put out of 2 care homes and the 3rd put him in the hospital. When they do that they do not have to take them back. His next stop would have been a mental hospital which they now call a behavioral center. My Mom is still at home and she knows she has a problem so she doesn't leave her yard. She cannot read or understand TV, so she just sits there and stares at the walls or sleeps. I mentioned ALS because my friends Mom had it and she found that care homes rarely take one into their facility because of the care they need. Full time home care is out of the question for most people it is about $20 an hour, more than a care home costs.

maime - I'm so sorry to hear about your mom's quality of life and how hard it was for your DH. It would be very hard to see your loved ones struggle like that. My mom smoked a ton and I kind of think part of the reason she wouldn't even consider quitting was that she didn't want to live "too long". Though I had no way of knowing I think she would have thought her life ended at just about the right time. Likewise DH's father was taken suddenly when injured in a fall - he was still quite vital in his 80's but in some ways I think he too would have preferred that to a long, slow deterioration. Some situations are so heart wrenching.

We just purchased LTC through Hancock, and A++ rated company, for DH and myself. We're in our early 50s, good health, and no kids or family to care for us when/if the time comes so we have to rely on outside services. Truth be told, most families don't want to care for other members in that way, anyhow, but do it because we feel obligated. It's a tough and sometimes thankless job.

I think the plan being offered to you is a good one (from what you indicate), and frankly, and the premium is great. I researched this subject for 6 months before finally purchasing it and there's not one bone in my body that tells me I shouldn't have. As someone else suggested, being that this is a one time offer to you, I'd grab it, continue with your research and then decide if you want to keep it or not. At $74/month, it's not worth passing up because of a time limit. You'll kick yourself in the arse later if you do. Also, make sure you get the 5% compounded inflation benefit so your benefit is worth more as time progresses with inflation. Itll cost more, but a "must get", IMO. You should consider looking into coverage for your DH as well.

People get car, life, homeowners and other insurances that are used when needed, and certainly should a dehabilitating tragedy unrelated to elder issues happen sooner than later, just like the other insurances, you'll be happy it's there to cover the costs if your circumstances warrant. It's all a gamble, but if you learn about LTC, the majority of us will need some kind of LTC before we die. For how long, who knows! People are living a lot longer today and with that comes more health issues as we age. Moreover, women tend to need it more than men because we generally live longer than men and also we are the home care aides for our spouse. When/if our time comes to need such care, no one may be there for us other than outside sources. And, if the woman needs the care before her husband, the man will opt for a home care nurse before taking on the challenge of caring for his wife. I've seen it happen a few times.

Another plus with our plan is that hundreds of thousands of our asset dollars are protected that Medicaid can't touch so we/I/he can continue to live comfortably. Usually they'll deplete all assets except for the last $2K. You may want to see if you have similar protection in that regard.

I linked you to a LTC company rating site where it explains the ratings. Looks like Prudential is rated well (should be an A or better). I'm sure there's alot of info on the Prudential site as well.

So, as you can see, I'm a believer in LTC and if only more people would gain knowledge about it and then make the choice based on that, I'd be thrilled.

Ah...I'd forgotten a couple of important points and Debi2006 brought one up in her post, above. Find out whether the Pru plan is tax-qualified. Pru sells both tax-qualified and non-tax-qualified plans; the latter is cheaper but you DO NOT want a policy that is non-tax-qualified.

A tax-qualified LTC policy will enable you to receive benefits that are not taxable. This is different than "partnership" LTC plans, which are only sold in certain states. I googled and found an excellent explanation of tax vs non-tax qualified LTC plans, and linked it below.

You should investigate partnership plans as well. If your state does not allow them, however, the point is moot. Debi2006's reference to protecting assets is applicable only to partnership plans.

Gibby, thanks for the kind words. It was very hard to go through. My sister is almost 80 and she hides her smoking from us because she knows it foolish and probably killing her. When she said something to me like "I gotta give this up", I told her I wouldn't if I were her. She would be miserable for the time she had left to live. No point in quitting now.

Deb I hope this isn't to personal, forgive me if it is. I love learning about stuff like this. I am curious about your assets that they would be exempt. The only way I can think of assets being exempt is if it is in an irrevocable trust and I'm not sure about that. Our money man tried to get my husband to put our savings in one like that to protect me if I outlived him. I would draw so much money a month as long as I lived. My husband looked at me for an explanation and I told him if either of us needed the money for any other reason we can't cash that trust in, it's gone. He looked at me as if to say, "is he nuts". Needless to say we kept control of our money and I sure have enjoyed it. Traveling, new home paid for, new car paid for. People say I am lucky and I say no I am smart.

Taken in Kenya

Here's an example of the asset protection directly from my policy info pertaining to the state of PA where I live.

It's called dollar-for-dollar asset protection with a Partnership Policy. For example, a person whose qualifying policy paid for $300,000 of care would be entitled to keep $300,000 in assets if they need to apply for Medical Assistance in the future. No one knows what the cost of care will be in 10, 20, 30+ years, especially if we NEED a nuring home or assistant living care.

How does a Partnership Policy differ from other long term care insurance policies?
A Long-Term Care Partnership Policy provides the added benefits of offering those who own them a way to protect their assets, dollar-for-dollar, in the amount of policy benefits paid out on their behalf in the event they ever need to apply for long-term care benefits under Pennsylvanias Medical Assistance program. Additionally, a Long-Term Care Partnership Policy has beneficial tax treatment and requires inflation protection features that protect younger purchasers from increases in expenses caused by inflation. For most people, the benefits of a Partnership Policy are likely to cover all the care they will ever need. However, because of the unique asset protection feature, you wont have to impoverish yourself if you run out of benefit coverage and still need care.

Let's say in 20 years you go on claim and with the 5% guaranteed compound inflation rider, your benefit is now worth $1M. Whatever it's worth at that time is the asset protection you have that Medicaid can not touch if you need to tap into Medicaid for more financial assistance.

People are required to spend down their assets to a significant level ($2K or something) before they quality for Medicaid to pay for any of their LTC.

Speaking with my agent, he said it's an automotic benefit for those who buy LTC as long as your state supports the LTC Partnership, which most do now a days.

So, in a nutshell, your asset protection amount increases as inflation kicks in.

Oh, it's an insurance policy, had not heard about one like that. When my husband went in I did a division of assets with SRS and I got the house, car and half our remaining assets. He died just before we had reached the half way mark in our assets. I didn't begrudge a dime of what I spent on his care. Now that I am alone there is no worry about there being any more left for anyone.

maime, the idea of lTC asset protection is not necessarily for the benefit of heirs. There are many small comforts that Medicaid does not pay for, for which it would be useful to have $$ to make one more comfortable.

My 'warning bell' about LTC insurance is that so many companies are hawking it now. They know the averages. They know it's a wise investment -- for them. I suppose the aging baby boomer population is one reason for the upsurge in LTC policies.

The Consumer Reports article, although it is six years out of date, says 83 is the average age at which an individual (no gender specified) enters a *nursing home* -- that's a skilled nursing care home; no stats on assisted living, etc.

Medicare covers SNC for 20 days post-hospitalization and subsidizes Days 21 - 100. (Some 'benefit period' verbiage ensues). Medicare-supplement policies also provide some coverage -- for SNC, home health care, assisted living, and hospice care. Sometimes a patient is hospitalized, goes to SNC, goes home or goes back to hospital, and round and round. (I don't know at what point care is deemed LTC, and I've seen that system of hoops 'manipulated' many times.)

The CR article says that 90% of nursing home residents stay in 5 years, but the average stay of current residents is 2.5 years. (Not sure why the two different figures, nor what the stats are in 2009-2010.)

The fact that health care costs are allowed to soar in our crazy nation is irrelevent in this discussion because the insurance policies can raise premiums to compensate.

DH and I are 68 and 71. About 15 years ago we subscribed to a LTC policy offered through his then-employer. We opted out at the end of two years after examining the benefits/costs. We only stuck with it for the second year because the policy promises a small payback on what we'd paid in -- if we ever require LTC. We self-insure now.

BTW, maime, I am a trustee of an irrevocable trust. I have complete power to do whatever I wish with the assets. I don't quite understand why you rejected the idea, nor how you are financially ahead for having done so. Could you (or anyone else posting here) please explain?

Just to clarify, Medicare will only pay for 60 days of convalescent care if the patient is admitted directly from the hospital under doctor's orders. You cannot go home, even for a day, and then go into a facility and receive Medicare reimbursement.

Many people are able to self-insure. Most middle-class cannot; a simple analysis of your local labor market and facilities costs will give you the starting point for analyzing your ability to self-insure.

Medicare does not pay for home healthcare under any circumstances. Medicaid, which is paid 50% by states and 50% by the Feds, is constantly under attack by budget cutters. In our state, 130,000 elderly and disabled people almost lost their home health aides just in our county alone, due to budget cuts. Only a ruling by the State Supreme Court stopped it, but although service will be continued it will be halved. People who received assistance twice a week, for instance, will now only have an aide once a week (these aren't full-day aides, BTW; it's just a few hours of assistance daily).

Chisue and I have always been on opposing (but civil, unlike some of the discussions in Hot Topics, LOL!) side on this issue. I agree with her that not everyone is a candidate for LTC insurance. But some people should have it, and I'm one of them.

I cannot afford to self-insure. We can afford to take early retirement, but under no scenario can we afford to pay for several years of nursing home care and/or home healthcare services (which cost more than facility care) for even one of us, let alone for both of us. We will not risk beggaring one spouse to pay for the other, when a relatively minor expense can offer unlimited years of protection. My father had Parkinson's - it's painful for me to watch Michael J. Fox, it reminds me so much of how my dad struggled - and it took twenty years for him to die, 15 of those were bedridden. It ruined his sister's life and devastated her own retirement, taking him in and taking care of him. Not something I want to do to my own family, which is why we bought our policies. I wish we had partnership LTC plans, but as I've said, my DH isn't eligible for any kind of affordable policy despite the fact he's only 56, with his stroke history.

Hi, jkom51 -- I totally agree with your decision! Didn't mean to indicate LTC wasn't right for *anyone*, just that it doesn't make sense for DH and me -- given our ages, the state of our health, our economic situation (and our lack of desire to leave 'an estate' LOL). You know I highly respect you and appreciate your willingness to share your knowledge with us here.

Something I AM considering for our use 'somewhere down the Pike' is assisted living. There are several nice places near us (Chicagoland) -- both 'buy in' and 'rent'. I may get into discussing that one of these days. Don't know that it's for us, since we've never been interested in 'Senior' or 'Gated' communities -- like to be around people of all ages.

You may remember from what I've posted before that my late mother was conned by a 'buy in' setup where the nursing supervisor turned out to be a convict (with no nursing or management degree or experience -- hired by the for-profit organizers, who in turn had established the home hiding behind a bunch of well-meaning, but doofus ministers in the community where they built).

***Gah! Did I really write that endless sentence?***

(Do YOU understand what forum member 'maime' was objecting to in the proposed trust?)

Thank you, chisue - I always enjoy and appreciate your posts. No, I didn't understand maime's trust objection, but then, there are many different types of trusts and certain irrevocable types, such as an ILIT, are indeed 'untouchable' once established, although usually it's not until the original trustor dies.

You might find this article on CCRCs interesting - I've excerpted it, below. I've also looked into these facilities but it sounds as though one does need to do quite a bit of research first:

Recession Hits Senior Communities
WSJournal November 8, 2009

"Linda and Dick Omohundro had already decided to downsize and move to a smaller apartment when they heard about a new retirement community being built in nearby Hilliard, Ohio.

But this summer, Erickson's bankers foreclosed on the project because they feared the company wouldn't make its debt payments. Construction stopped. Last month, Erickson filed for bankruptcy. "I never dreamed that would happen," says Mr. Omohundro, who had already made a deposit.

Erickson quickly refunded deposits. But ripples from that failure are spreading through some of its other properties, such as Sedgebrook in Lincolnshire, Ill., which must restructure its own debt.

The situation at Erickson and other continuing-care retirement communities -- often known as CCRCs -- shows that choosing such a community shouldn't be based on which has the nicest dining rooms or golf course. In many ways they're the equivalent of signing a complex leasing agreement and insurance policy.

Here's what you need to consider before settling in one of these developments:

CCRCs go bankrupt. But there are other potential money drainers as well. They have complicated contracts that keep the door open for fee increases, cuts in certain services, loss of deposits and eviction. Some even leave loopholes for sending residents to nursing facilities outside the communities.

For starters, it's crucial to understand that an entrance deposit typically doesn't "buy" a piece of property in the traditional sense. It merely gives you the right to live in the community. Carefully read the contract for the terms under which that deposit is returned to you or your family after death.

"If it says the entrance fee is refundable, look for the asterisk," says Jason Frank, an attorney in Lutherville, Md. For example, he says, some CCRCs can spend a deposit to cover fees when they exceed the resident's income.

Many CCRCs deduct from a deposit the cost of renovating a space after the tenant has moved out. And at Erickson, the deposit refund can be reduced if the replacement tenant pays less.

Probably the most difficult task is getting a handle on a CCRC's financial health.

The first step is asking for copies of complete, audited annual reports and tax returns for the past several years. "If somebody won't provide them, I wouldn't even talk to them," says Hyman Darling, an attorney in Springfield, Mass.

Many CCRCs issue bonds and make additional information available at emma.msrb.org, a database maintained by the Municipal Securities Rulemaking Board. Take any information gathered to an accountant, attorney or other professional well-versed in reading financial statements.

Do some sleuthing of your own as well, says Mr. Darling. Ask residents if the quality or quantity of services has changed. Has the community started adding fees for services that had been free or dramatically raising existing fees? Ask former residents or family members if deposits were returned on time and without difficulty. (Ask the CCRC for references.)

And get a read on vacancies. "If people start leaving," Mr. Darling says, "that can just exacerbate the problems."

The National Senior Citizens Law Center, www.nsclc.org, has a checklist to help evaluate CCRCs. "

If we had invested our money in the irrevocable trust we could not have gotten our money back, the person trying to get us to do that told us so. I want control of our money, I am the one who was responsible for what we built up by urging my husband to save and by me keeping us out of debt. We did not need LTC insurance and now that my circumstances have changed I don't need it. When I realized my husband would have to go to a care home I saw an estate lawyer to see what would happen to me financially. He said I would be alright. I would keep the house, car and half our money up to a certain amount. I went to the SRS the day after my husband was admitted and started the process. The rep confirmed what my lawyer had told me. I got to keep control of our money, I got to live off what I called my husband's half of the money. It was called a "spend down", when I spent down to X amount of dollars he went on medicaid. My income would have been based on my monthly bills which would have only cut my income about $500. My car was 5 years old and I knew it would not last the rest of my life so I bought a new one out of "his" money after checking with SRS. I did not begrudge one dime spent on my husband's care. He died before he went on medicaid. I paid $4,000.+ each month for 9 months.

I have heard people say I can't put my spouse in a care because I can't afford it. That is untrue. If you have less than $20,000. in savings you get to keep it all, the income works in the same way. The person goes on Medicaid right away. I also have heard of people who won't use the division of assets, but in most cases they didn't want to admit they didn't know about it. They paid for the care home out of their pocket and ended their own life in poverty. We pay in taxes that support people who live on assistance all of their life needed or not. We have paid for this service and I won't feel guilty for using it. My estate will go to a college for scholarships and I will not go to a care home unless I have a stroke and have no control of care. In case that happens I have a Comfort Care Document to assure I won't be kept alive with meds.

maime -- Thanks for your reply. I *think* I understand! LOL Yes, when you fund a trust, the funds stay within the trust. I only know my own experience, where although the funds are IN a trust, I have complete access to them.

My late mother made a revocable trust a few years before her death from leukemia. When she died, the trust became irrevocable. My DH and I are trustees of her trust, with full access to do anything we wish with the assets. When the last of us dies, our DS becomes trustee of his grandmother's trust, to do what he will with the assets. (Of course, DH and I could have 'squandered' the assets before that! So, we do have control of whether he 'inherits' a lot or a little.) One probable advantage of such a trust is that, although my mother's trust paid estate taxes upon her death, it won't pay them again until DS dies as last trustee. The premise is that delaying taxes is a good thing. Of course, if tax law changes and the eventual tax is even stiffer... You can't 'manage' everything!

DH and I each have a revocable trust, each composed of roughly half of our combined assets. For instance, each of our trusts owns half of our residence. Our trusts become irrevocable at our deaths and our DS becomes trustee, followed by his DS.

I think you are correct that some people avoid using the Medicare benefits they are *entitled to* because they fear the family's entire estate will be depleted -- instead they deplete it themselves, paying for care.

jkom51 -- Thanks for the WSJ article on CCRC's. (See, I learned a new term!) I hadn't seen anything on the Erickson problems in the local press. They seem to have pulled back on promoting Sludgebrook (DH's term), but I thought that was due to the economy in general.

I'm not sure we'd want 'buy-in' assisted living, although there are several long-established ones in the area. The economic underpinnings of these elude me. It seems to me a lease agreement place would be safer, but I haven't innvestigated any.

I would have added something to the WSJ's piece about what to look for -- in addition to the dining facilities and golf course. If you're buying care, you *must* take a hard look at the nursing care parts of the place. Ask to see credentials and job descriptions for staff. Observe the area at different times of day. Few states, counties or cities have stringent public health regs, and no staff to inspect places or enforce rules if they do have them.

You can pay much less for a nice condo or hotel and catered meals. You are paying a premium to be guaranteed *nursing care*. Asses the quality of what's on offer before you need it. You could be 'in care' a long, long time. Or,it could just seem like a long time if it's low quality. Or, given that the institution's best economic interests are served if you are NOT there a long time...they may not kill you, but you may seek superior care elsewhere. (Once 'Elvis' leaves one of these places, he's lost his investment.)

Sorry, I've wandered far from the original topic of LTC.

Well, we may have wandered a little OT but the two issues of LTC and assisted living care are certainly related, so hopefully this info was of use to the readers.

Maime, I figured your situation was similar to what you posted. So yes, your funding an irrevocable trust would certainly be a permanent situation you could not back out of. You received good advice and took it, kudos to you! Chisue's family situation was very different; hers sounds like it involves both an RLT and a Bypass Trust.

This thread is an excellent example of how figuring out what insurance and financial planning a person will need, is so difficult, because everyone's situation is essentially unique. 'The devil is in the details', as the old saying goes!

I really enjoy discussions like this. My father died in 1960 so my Mom was a widow with a 13 year old daughter. It was such a shock to us all it made me wonder what I would do if I were left with my two sons and no means of support. I started making plans then. Number one on the mental list was staying out of debt as much as I could. I was poor as a child and didn't want to go there. I knew I would be ok on SS as long as they were both minors, so I planned to get some training after they both were in school. When the children left home I started thinking of retirement. I pushed my husband to save more, the company paid 50 cents on the dollar for the company IRA up to 8% of his income, did that. I took care of the money and paid off the mortgages in half the time required. When we retired I was shocked, our income went up because we weren't saving anymore. We were rich as far as I was concerned. I realized what a lot of retirees didn't "a bird in the hand is worth 2 in the bush". I stayed away from the stock market much to my nephew in law's dismay, he actually got mad at me and ridiculed me for not turning our money over to him. My sister lost $50,000. in the market. I did some thing else most seniors can't do, I shifted from the saving mode to the spend mod. I am now on another kind of "spend down", an enjoy yourself spend down.

Good for you, maime! I'm really glad to see that you didn't STAY in the 'safe zone' once you didn't *need* to. That mindset is hard for some to shed. (Depression babies, etc.)

Often people on this forum talk about not living beyond your means. That's well and good, but it's kinda dumb to live far *below* your means too.

We won't be here forever. We get a lot more pleasure out of seeing our families have a little more while we are alive. We won't be able to do that once we're gone, and I don't think it's a good thing to live in 'Chancery Court', counting on an inheritance.

Thanks for the support Chisue. I am a realist and I had a bucket list before the bucket was invented. LOL

I learned a couple more things about this today - talking directly to Prudential. Through my group plan there isn't a choice to have automatic inflation protection so you get a choice to opt for it every three years along with a premium increase.

For a relatively low add'l fee there's an option for "non-forfeiture shortened benefit period" where if you pay in for at least three years and you subsequently decide you don't want to pay in any more you retain benefits in the amount of whatever premiums you paid in. That seemed like it would be worthwhile so if you decide you can't afford to pay in any more - or don't want to - you get the benefit of whatever you paid in.

So I think I will probably go for this - I can afford it now. What concerns me is that it may become cost prohibitive in the future - if so I can opt out and get my money back in future benefits as long as I stick with it for three years.

I worry about any contract that locks you in for a certain length of time. I don't think I have every done that and won't ever.

Maime - this does not lock me in at all - I just have the opportunity to get my premiums back in LTC payment even if I decide to stop paying into the plan after three years. I can stop paying anytime I want - I just don't get anything back if I pay in for less than three years.

gibby -- There was a reduced-benefit clause in the LTC policies we took, too. I was wrong when I wrote that we took them 15 years ago. It was 20! Also, we had to pay in for TEN years, not TWO, to (possibly) get something back. We'd paid in $11,000 in premiums at the end of ten years. This was a group LTC policy from Hancock, offered to us by my DH's then-employer.

After ten years we became eligible for reduced-amount benefits. Each policy will pay $45/day for *skilled nursing care*, to a lifetime max of $82,000. The verbiage on any other type of care is obscure with lots of hoops and mazes. Looking at it now, I think we will have aided tbe taxpayer -- seems to me these benefits would reduce the cost of our care to Medicare.

If I'd had any doubts about problems collecting on the policies, they were sustained when it took me six months to get a letter from Hancock stating that each of us had actually qualified for this reduced-benefit coverage. We eventually received single-page letters, undated and without signatures, with a lot of 'may qualify' and 'could be' phrasing. Their legal department could send us packing without breaking a sweat.

Our situation is different than yours as to probable need for the policy. I'm glad you'll take that opt-out clause. You might want to see a letter stating exactly what YOUR reduced benefits will be, specific to YOUR policy and YOUR premiums, before you sign up.

chisue does that $45 a day mean care home nursing? Home nursing if you pay for it starts at $20 an hour here and my husbands care home was $100 + per day, usually running $4,000. + every month. I can't make sense of insurance policies, and never have been able to.

maime -- I agree, it's almost impossible for the lay person to decipher these policies. I have little confidence they'll actually pay!

My late mother bought some Banker's Life health insurance that the peddler assured her would pay X amount for her care in a skilled nursing home. One policy did and one didn't. There was a technical 'out' for them.

I know how expensive care was in 1978 and also when my MIL was in a nursing home. It's not getting LESS expensive! However, if we turn out to be 'average' we won't be in one more than a few months at 'the end'. If it's longer, we'll just have to pay for the years until we can't. I hope to be dying by then, and be eligible for hospice care. I sure don't want to be where they want to keep my body going regardless of legal intention papers filed.

The somewhat ambiguous letter from Hancock says they'll pay $45/day towards care in a skilled nursing home, up to a lifetime amount of $82,000. The letter doesn't specify LTC.

If you don't want them to keep your body going, it is very important for you to have a Comfort Care document. Living will covers being hooked up to machines, CC document covers meds. For example: If I get pneumonia at a very elder age or in a care home I do not want antibiotics or any other meds to keep me alive. I only want pain pills, if I am starving or not drinking water they are not suppose to interfere.

maime -- What you are calling a 'comfort care document', my attorney calls 'intention instructions'. Same thing. Needs to be on file with primary care MD. I need to look at them again to see that they are up to date, given changes in state laws.

I am not sure about where it should be other than with the POA. She takes over when I no longer can make decisions for myself. If you went into a care home they should have a copy, but the POA can take care of that. I gave her a letter to remind her of what I want regarding a care home, including a list of homes I found to be caring. Also when my attorney made up these documents for me I asked if he could put in the POA document that the POA's power could extend to pay my outstanding bills and he said yes.

>>What you are calling a 'comfort care document', my attorney calls 'intention instructions'.>>

You might wish to Google for the POLST form, the Physician's Order for Life Sustaining Treatment. It's a simple one-pgr that is more specific about what level of palliative care you want. The form is accepted in all 50 states.

In my part of the country it's Comfort Care.