Is long term care insurance a good idea?

Question

Is long term care insurance a good idea?

Follow

Share

I am a caregiver for my husband . Worried if something happens to me, how I will get care. Should I buy long term care insurance?

Financial Planning Long Term Care Insurance Paying for Care Spouse

16 Answers

Most
Helpful Newest
First Oldest
First

LTC insurance is very costly when you reach a certain age.
You certainly can explore it, but there are many reasons not to get it as there are TO get it. It will raise your monthly income, oft times making you ineligible for Medicaid when you need it unless you access Miller or OIT trust. And it will not, even with your SS, be enough to cover good ALF or MC.

You will have to explore this issue thoroughly and I would suggest an elder law attorney with a list of assets and facts in hand to find out how best to move forward.

Helpful Answer (4)

Reply to AlvaDeer

Report

Why would anyone want Medicaid if there's a way to avoid it? It depends on the state, but many have very strict estate recovery programs. A friend I talked to yesterday said that while her elderlaw/estate planning attorney (actually the same one I have) was able to purchase Medicaid-compliant annuities for to preserve her funds, she won't be able to pass down the entire value of her house to her children when she dies, but she can stay there until then because her husband needed Medicaid for about a year. Medicaid will only allow her children what ever remains after selling the house. Another woman I know was still working when her husband needed Medicaid to pay for part of his care. She had to contribute about $700/month from her salary every month. I'm eternally grateful that I could keep my husband off Medicaid. We paid his long-term care expenses for six years, four months.

(0)

Report

See 2 more replies

At 73, I'm sure LTC insurance is way too costly. See an elder care attorney about various options you have, and the status of your finances, home ownership, etc.

Good luck.

Helpful Answer (3)

Reply to lealonnie1

Report

The best time to purchase it is before you reach age 59. The premiums increase at certain age milestones.

Look on Nerwallet.com or Bogleheads.org for better information from more appropriate sources.

Do you have a PoA? This is the most practical thing to put into place first. You should have all your legal ducks in a row so consult with an elder law attorney to get it done. If you don't, you'll become the ward of a court-assigned 3rd party legal guardian, like so many other elders. Don't let it happen to you.

Helpful Answer (2)

Reply to Geaton777

Report

See an elder Care Attorney.
While Long Term Care Insurance is a good idea if you can afford it often by the time we realize it is a good idea you either can't afford it or you have preexisting conditions that make it impossible.
An Elder Care Attorney can set up Special Needs Trusts or have other ideas that would help.
And because it is me...
Is your husband a Veteran? If so he may qualify for benefits through the VA. And depending on where and when he served it might be a little or a LOT.
And the VA will now pay spouses to care for the Veteran so that might help a bit. Contact your local Veterans Assistance Commission or your States Department of Veterans Affairs. Or you can contact the closest VA and ask to talk to a Social Worker.

Helpful Answer (2)

Reply to Grandma1954

Report

Not always. I was more than healthy enough to get long-term care insurance at age 63, I had to pass a phone interview with a nurse, but that wasn't too difficult. It's not the best long-term care policy, but it's better than nothing. It started at coverage of $3K/month for 36 months, but with an inflation rider it's now up to about $3.3K/month and it increases every year. I decided to get it for me a couple of years after my husband became a private-pay long-term resident due to frontotemporal degeneration at age 59. I realized we'd use up so much of our assets to pay for his care that I'd need to protect myself. Premiums aren't that bad: only about $2,600/year.

(4)

Report

Dad bought momma a Long Term Care policy when she was 61 and we have been using it for the past six years. It covers every bit of her assisted living fee of a little over $6000.00 a month. I don't have to use her SS or dads pension to pay for her assisted living. She still has some left over that she is using. Now we did have to pay for it. Her premiums were over $2000.00 a year and she paid until she turned 85 which at that time we were paying almost $4000.00 a year.

Helpful Answer (3)

Reply to akababy7

Report

God bless Dad for doing this more than 25 years ago! Those unlimited policies are no longer available and now cost many times what your parents paid. We maxed our payments into our 401Ks when we were working and then rolled them into IRAs with a good manager. We may have lived more frugally than our neighbors, but we have the funds to provide care for ourselves without driving our kids crazy.

(1)

Report

You can look into a Hybrid Life Insurance policy with a LTC, or, Critical Illness rider. If you had to file a claim, once verified, it will be useful, however, it will reduce your death benefit. But if you are healthy, it might be a lower out of pocket cost to you, than a standalone LTC policy.

Helpful Answer (4)

Reply to MandoBlues

Report

Personally I really like hybrid policies, but, they are going to require a significant sum of $ for the policy to be in place. Hybrids are kinda perfect if you are getting a buy-out from your job or sell a big $ house and downsize so either way getting a nice mid6 figure something to put into a hybrid as a 1 time single premium paid so it’s cost doesn't at all affect your income.

Something to consider is that hybrid policy factor in for assets for LTC Medicaid as hybrids have a cash value, which Medicaid will want cashed out. Unlike Term life insurance which does not. If that hybrid and your other resources are not enought to truly cover private pay for 2-3 yrs then it may not be best plan.

(2)

Report

If you get or have a LTC policy get the details on accessing those funds long before you need them. I’m just learning now how cumbersome the process is. I’m in Ohio and I’ve had a LTC rider on a life insurance policy for many years (with a huge well-known insurance company.) I’m 76 and realized this past September I was going to need assistance at some point soon.. During my first call I was casually told it was “ as easy as pie” to access those funds when I needed them. When I called in early December to begin the process, they said they had to mail paperwork to me. In late December, I called again because nothing had arrived. They had a record that I had called in early December but nothing had been done. This representative apologized for the first call being blown off and promised to put my case on the fast track. She explained she turns the case over to a third-party who handles the process and they will call me. After a week of receiving no call, I called again. They assured me they had turned it over to the third-party. Several days later I received a call from the third-party who explained the process and didn’t know anything about expediting the process or putting it at the front of the line because of the early December debacle. This third-party is sending paperwork that has to be filled out by me, a doctor, and the caregiver. There also is a visit by a nurse. Once everything is completed, it gets evaluated by a “team” who determines if I’m eligible. At that point, there’s a 90 day wait before the payments begin. I’m guessing the process will take more like six months and I’ll never see those funds forLTC. The policy draws on my death benefit so the death benefit eventually will reimburse the funds that have been used for the actual care. I guess this is a cautionary tale to plan ahead…way ahead.

Helpful Answer (2)

Reply to Jacelam

Report

If you choose to get one - know the policy inside and out - know WHAT they will do and WHEN and how much.

My grandmother recently passed away - but prior to that my mom and I pulled out her LTC policy to see what we could do to offset the 24/7 caregiving mom was doing, and the fact that I was the only person she (my GM) would allow to help.

My grandparents had been paying on the policy for a very long time. And it was supposed to pay $120 a day towards having assistance in her home - specifically to give mom a break.

Fine print....she had to pay out of pocket for 90 days BEFORE they would begin to cover that $120 a day. And worse yet, the 90 days only counted as days that someone came to her home to help. So for what we needed (which was one day a week) it would have been 90 WEEKS before the plan would have kicked in.

I can see it being helpful if she was moving to a SNF to offset the cost within 3 months of private pay. But in our situation, it was going to be virtually useless because it was going to be almost 2 years before she qualified for the help.

Helpful Answer (4)

Reply to BlueEyedGirl94

Report

The 90 day waiting period is a common feature. I think they constructed it that way because they (insurance company) assumes the person has an incident where they are hospitalized followed by a three month rehab period. The workaround is to open a claim as soon as they are hospitalized and to use the rehab period, which is mostly paid by Medicare, to fulfill the 90 day waiting period. Most plans state that a period of hospitalization followed by rehab qualifies to count towards the 90 days.

(3)

Report

I'm presently dealing with a long-term care policy from John Hancock. My husband bought it many years ago. The claim process is tiring and not easy, even though I usually don't mind filling out forms. Submitting the forms, invoices and receipts is done online, and they require a certain format. They also have limits on how large a file they will accept online. I find it very cumbersome, though it looked easy at first. It takes away a good bit of my time that I'd rather be spending with my sick husband.

Rather than having a LTC policy, I'm in favor of establishing a savings account using layered CDs. Never touch the money for any reason and let it accrue money, which automatically gets reinvested into the CDs. It takes a minimum of managing but requires purpose and resolve.

Think of it this way. If you pay for a LTC policy, you send them premiums which they invest. They make money on your money for years. Hopefully they'll invest well and will still be around when you need them to pay for your care. But you can invest and make money for your old age all by yourself, leaving out the middleman insurance company, who wouldn't be in business if they weren't making money off of you. Let yourself make money off of your money. Makes sense to me, and no one has ever told me why that's not a better idea than buying a policy.

Helpful Answer (3)

Reply to Fawnby

Report

It’s not a better idea because most people cannot possibly save enough even if using CDs or investments. But, if you cannot afford the LTC premiums then your idea is a great plan to maximize what you do have. Some people plan to use the sale of their home and other savings. Your plan along with the sale of a home, and monthly SS and other income could be enough to cover partial home care or three years of faculty care if you are single or widowed. That plan becomes much more complicated if you are a couple. The surviving spouse could face a lack of resources for their care.

(0)

Report

BLG2024: Retain an attorney.

Helpful Answer (0)

Reply to Llamalover47

Report

There is more than one kind of insurance that will offer LTC benefits. “Regular” LTC insurance may be prohibitively expensive, but there are other options. Don’t buy without talking to an elder law attorney and a really good insurance agent—or several agents. My husband and I wound up with a type of life insurance with an LTC rider that converts the whole thing to LTC if needed or functions as a life insurance policy if not. The price was much more reasonable than the regular LTC policies that were presented to us at first.

Helpful Answer (2)

Reply to mom2mepil

Report

I would be very very careful buying one of these policies. Friends mother had one. It required the care facility to have a full time R.N. on duty. There are few of town, but the one in town that had one was very expensive and the policy with her income was not nearly enough to cover it. So long term care policy went unused.
Our financial advisor told us not to buy one as it was not worth it, but to use our own savings. Also I don't know how many of these policies are going to pay 14k a month which is what skilled nursing costs here. Many people will need to access Medicaid.

Helpful Answer (3)

Reply to Pjdela

Report

LTC insurance is not for everyone, but it can be a helpful tool. The average AL in my area costs $7,000/month. The average SNF costs $9,000/month. Neither include supplies like adult diapers and chux, etc which can run $400 to $500 per month. So - you can plan that care in a facility will cost at least approximately $85,000 to $120,000 per year or more. Home care, for at least $25/hour, costs less than a facility ONLY if you need just a few hours each day - maybe 40 hours per week. 24 hour home care is out of reach for most people and facility care is actually cheaper than 24 hour home care.
Most middle class people cannot possibly save enough to cover these costs for more than two or three years if they can even do that. Trying to self-fund LTC requires very disciplined saving and investing- just to pay for old age - never mind normal retirement costs. A married couple faces real financial strain, and possibly ruin, when one spouse begins drawing down on their assets to pay for care. Often, there is no chance of qualifying for Medicaid because SS and, possibly, pension payments keep the person from qualifying. The trouble is that your monthly retirement income might make you ineligible for Medicaid, but yet is not near enough to cover the monthly cost of AL, SNF , or home care. That is where having an LTC policy can make a difference and be a big help. The combination of it paying a good portion of the cost of care along with other income can make at least the first two years of care paid mostly by the policy rather than out of savings and investments. If you have investment accounts, and they do well, you will build up more $ on the principal instead of spending it down. This takes financial planning and careful reading of the policies being sold. It also takes timing. These policies are very expensive to buy when you are beyond your fifties or early sixties. The premiums go way up in your 80s and 90s but by then you will probably be using it. If you die before you use it then I suppose you could say it was a waste. But, if you don’t die it can help you maintain your savings and quality of life longer. Like someone said on this thread, “who really wants to go on Medicaid?” So. my opinion is if you can afford the premiums, it is worth getting. Unfortunately, not everyone can do that. Should we have another government funded program to help people pay for LTC insurance? That would cause quite a debate in todays climate.

Helpful Answer (2)

Reply to jemfleming

Report

Don't forget that insurance is a FOR PROFIT industry. Their job is to make the product look attractive and and manipulate things to keep your money. My cousin (now 94) had LTC insurance. Her insurer would not start the clock until she needed 24 hour care. Her daughter went crazy taking care of her for months while they fought for coverage. Then they found out it was a limited policy and only good for 3 years. It guaranteed that the company made a profit even when they had to pay.

Helpful Answer (0)

Reply to DrBenshir

Report

Typically the LTC policies “start the clock” when the person is unable to do two or more ADLs (activities of daily living). All policies have lifetime dollar caps and limits on the amount of years they cover. It would not be financially possible to sell policies that pay for 24 hour care for an unlimited amount of years. Even with limits, many insurance companies have gotten out of the LTC business because people are actually living long enough to use the policies. They lose if you live. I am no fan of big insurance, but am glad that the policies are still available from some. It is a big financial decision and, in many ways, a crap shoot. None of us have a crystal ball. It is just important to have some kind of plan. Counting on a family member to figure it out is not a plan.

(0)

Report

Yes. It's more expensive the older you get, but when I think how much it has paid for with my husband's care, I don't know what we would have done without it.

Helpful Answer (0)

Reply to sbartolone

Report

A family member had an LTC policy she needed to use for her husband during his two year illness. They had the policy for many years. Although I don’t know specifics, she shared with me the policy was helpful only a little. Lots of hoops. She regrets all the premiums they paid for many years. She felt their money would have been better invested elsewhere.

Helpful Answer (0)

Reply to Duderino54

Report

Is long term care insurance a good idea?

16 Answers

Recent Questions

Popular Questions

Related Questions