The $100/day or $3000 per month benefit options are affordable for my spouse and myself. But $100/day is paltry when nursing homes cost $250 per day in my area. But if I get $200/day benefit policy, no way can I afford the $5000-$7000 premium per year.

I am wondering if people buy the peace of mind of knowing they have a ltc policy at around $100/day (even with 5% compound inflation), but then will be shocked some day when they need to use it and have to pay tens of thousands of dollars for a nursing home stay of any length.

What's even the use of $100 per day when that means years of giving up $2500-$4000 annually, which makes a difference in what we can do for entertainment and vacations. It's not like we won't miss $2500-$4000 per year or just have that amount laying around.

Help me out on this philosophy of ltc or show me where I am overlooking something.

Typical dilemma...................

At the end of the day, you have to be comfortable with the premiums.

Although an argument can be made either way, I'm one of the few who do not subscribe to the "Something is better than nothing" approach. You're right, at $150 or $200/day out-of-pocket, you could go broke with the co-pay.

Others will have you believe that $100/day is a decent amount for home-care but in reality, if you are ever in a serious LTC situation, $3,000/month may not be the answer. It certainly won't be the answer if you or your wife needed a nursing home.

You have to afford the premium and you also have to have enough in the way of assets to protect. Otherwise, a LTC policy may not be appropriate for you.

What are your ages and what state do you live in?
Arthur

I disagree with Arthur. Something is often better than nothing. I had a close relative who did not buy LTC insurance. They had a little less than $150,000 in savings and an annual income of about $65,000 (between social security and pensions and a part-time job that he had.) Their house was paid for. It was worth over $250,000.

I suggested he buy a policy but he said, "It'll never happen to me." They could have afforded a policy that paid $3,000 per month (with no inflation benefit) for 6 years of benefits for each of them.

Two years after telling me it would never happen to him, he came home from work and had a massive stroke. He was completely paralyzed on his left side.

His wife first used their savings to pay for the care. Then she sold the house and moved closer to me and my family so we could help with his care.

Eventually, they ran out of funds and he had to go on Medicaid facility. The staff was great there, but he had to share a very small room with another man who liked to listen to a very loud TV all day long.

He needed care everyday, for about 6 years.

If he'd had a policy, even one that only paid $3,000 per month, it would have made their money last almost twice as long--and he never would have had to go on Medicaid and he could have received all his care either at home or in a first-rate assisted living facility.

Scott A. Olson

Thank you for the replies.

In my case: Wisconsin residents and I know there is a partnership provision in place that allows the spouse to keep $110K plus the ltc benefits. What I don't know is how the ltc part of that equation is costed. Is it the continually diminishing pool of benefits in the ltc or is it the initial total benefits available at the time of purchase.

husband = 61
wife = 51

We have liquid assets, but no home, in the $750,000 range. This nest egg will slowly diminish over time as small pensions that we will be receiving (I know we are lucky to have them and I hope they don't disappear) and social security do not fully cover our annual expenses. The wife continues to work part-time and makes anywhere from $4k to $20k per year, very volatile business with no set salary. Her two jobs could end at any moment, but so far, so good.

I'm looking at Genworth $150/day, shared policy with 6 years total, 90 day EP, no other features/bells/whistles for around $3,000 per year. I figure at some point about $100k of our OWN assets will be spent for one of us in ltc and eventually if the wife (10 years younger) survives me all of our assets will be spent on keeping her as comfortable as possible. Or if the husband is the lone surviving spouse, all assets will go to care for him. Leaving money to anyone/anything is not a primary goal, though we have beneficiaries specified in our will.

We would each be very involved in caring for each other in any type of illness, so home care is an option and we have no steps in our home or getting into our home. Whoever is the lone surviving spouse (likely the wife) would probably not be able to count on family or friends for care.

With this info, please feel free to give us any type of advice. Thank you for your input, which will help us and anyone else who comes here for help and sees this.

It seems, then, that without LTC insurance, you have $650,000 of assets at risk (assets that would have to be spent down to pay for the care of whichever spouse might need care first.)

Why not just get a more modestly priced policy--one that's designed to pay most of your care expenses, but certainly not all of your care expenses?

I'd forget about 5% compound because the biggest risk to the healthy spouse's financial security is if one of you were to need care in the near term (the next 10 or 15 years).

You can get a good policy with 3% compound or 4% compound for a little over $1,000 per year per spouse.

If you decide to buy a policy for only one of you, the best choice is the 61-year old. In my opinion, it's more important to buy a policy for the spouse who is most likely to need care first in order to protect the assets for the surviving spouse.

Scott A. Olson

Thanks for the info. I had been thinking we need 5% because we don't want the policy to be worth very little way out in the future when we need it. But you are right, way out in the future, we won't need as much money to survive our remaining years. The agents encourage a higher compound inflation.

Scott says:
"I disagree with Arthur"
So................what else is new?

Contrary to what most in the industry believes, I don't subscribe to; "Something is Better Than Nothing."

Can a case be made that having a policy paying $3,000/month will be of help to someone who needs home care or ALF? Yes it can. But, a case can also be made that $3,000/month isn't much of a help for someone in a nursing home that's charging $9,000/month and is also not much of a help for someone who requires serious home care.

I've met too many policyholders over the years who were sold policies with inadequate benefits and would go broke in a short period of time if care was needed.

Long term care insurance is not right for everyone Scott. And, in many cases a policy is sold by an agent with only self-interests in mind.

How many times have you bumped into a policyholder who purchased a group policy 10 years ago with $100/day in benefits and no inflation rider? In another 10 years, you can take that policy and dump it down the toilet.

As I stated in my earlier post, I'm not suggesting that someone purchase a policy that pays 100% of the cost of care, but there has to be a balance, based on common sense, adequet benefits and affordability.

Very often, Something is NOT Better than nothing".
Arthur

Sorry Arthur, but I don't see ANYONE dumping $100 a day into the toilet, EVER. C'mon man! That's $3000 a month of their own money they will not have to spend. I'm with Scott on this one. Something is ALWAYS better than nothing. Everytime.
Bill

Rather than $100/day for 6 years, perhaps $150-200/day for 2-3 years with partnership protection would be a reasonable alternative.

Rick

I have the same concern as well. I noticed State Farm is half the cost at $150/day 5% compound for myself only at 54 in CA for $1200.
You may want to look into it for your state.
I need to cover my wife due to her condition and have signed up for Genworth at $4k both.
In the end this is a very high cost but we need to save our asset at $2M for our children and I think it's worth it.
Only time will tell whether we make the right choice but I agreed some coverage is better than no coverage.
Some insurance like Genworth have return of premium at higher cost. Good luck !

"I need to cover my wife due to her condition"

What do you mean by this statement?

OK....
Scott, Rick, Bill & Superman,

I know a 72 year old lady who just entered a nursing home. She is in generally good physical health but has Alzheimer's and will spend the rest of her life in a nursing home.

The nursing home charges $9,000/month.

She has a long term care policy which will pay $3,000/month for 3 years.

She has an income of $40,000/yr and total assets of $200,000.

Let's do the math:
For the first 3 years, her policy pays a total of $108,000.
For the first 3 years, she pays a total of $216,000, out-of-pocket. The $200,000 wipes out all of her assets and the extra $16,000 came from her income.

Starting year 4, she has no assets and all of her income, less $50/month goes to the state to reimburse the cost of Medicaid.

She paid $2,000/yr for 10 years for her LTC policy.

She's now 75 years old and can live for another 10+ years.

So, I ask all of you experts:
In this particular case, is "Something Better Than Nothing"?

If not the toilet Bill, where would you have suggested this lady put her policy?
Arthur

Simple. She spent $20,000 on the policy. She will get $108,000 in benefits back from the policy. That's a 5 to 1 return on her money spent for LTCI. $108,000 is better than $20,000. It ain't rocket science. Regardless of all the other factors, all we are trying to establish is is that "something", in this case $108,000, is better than "nothing", in this case $20,000.

Arthur, all your numbers are absolutely correct. And it is a shame that her long term care benefits was not enough. But.....$108,000 coverage made exactly a $108,000 difference in this case.

If a man dies unexpectedly, owes $100,000 on his house, and only has $50,000 in life insurance to leave his wife, don't you think the $50,000 will make a difference in her life, even though is was not enough? Dollars are dollars. Having some dollars is better than having no dollars. Why is this so hard for you to agree with?

Bill

Bill,
You still don't get the point..............

Please explain to me exactly what that $20,000 investment in a LTC policy did for this lady?

Just maybe..............
She was better off NOT getting a policy. Without a policy, she would have wound up on Medicaid after 2 years, not 3. So, where is that policy a game-changer? In the end, her $108,000 in benefits did absolutely nothing to change her total finances nor her quality of life. What's the difference whether she goes broke and winds up on Medicaid in 2 years or 3 years?

You say:
"She will get $108,000 in benefits back from the policy. That's a 5 to 1 return on her money spent for LTCI. $108,000 is better than $20,000".

"SHE" did not get back $108,000 on a $20,000 investment. SHE never saw a dime.That $108,000 never even touched her hands. It went directly from the company to the nursing home.

"Arthur, all your numbers are absolutely correct. And it is a shame that her long term care benefits was not enough. But.....$108,000 coverage made exactly a $108,000 difference in this case."

Bill, what exactly was the difference that you claim the $108,000 made in her life? It kept her off Medicaid for another 12 months? Big deal.....

She saw no difference in the quality of her care for those 12 months, she saw no personal benefit in her
life-style in those 12 months. And, with a policy or without a policy, at the end of the day, this woman has no assets and $50 in monthly income.

You still feel that she was better off with a policy than without a policy?

Arthur

Of course, Arthur. LTCi is NOT right for everyone.
Someone who can easily qualify for Medicaid should NOT purchase LTC insurance.

In the case of my close relative, even a small policy that covered half the costs would have prevented them from going on Medicaid. It would have given them more care choices and relieved a lot of their financial stress. The quality of their life for those last 6 years would have been significantly better; and he would not have spent the last two years of his life on a small Medicaid bed, squeezed into a tiny, impersonal room with a very loud roommate.

The problem is that most people (including insurance agents) don't know how Medicaid works and therefore don't know how to determine if LTCi is suitable (or unsuitable) for them.

Scott A. Olson