Can You Afford Long-Term-Care Insurance?

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If I have alzheimers disease and land up in a nursing home, how do I know I'm getting th care that I need?
Or for that matter, if I do not have family or friends, who's watching?

Shirley Sacks of NY 2:45PM January 14, 2009

Why did you not gave a approximate quote on the cost and check list for the folks who really sould consider, such as widowed, single, etc., or are the considered a given.

Ms concerned of CO 12:25PM December 15, 2008

Ian of WA, what about inflation coverage?
Also, different policies cover things differently. It's not quite as simple as you imply.

Bill of MS 2:33PM September 02, 2008

I am particularly interested in the inflation protection geared to the consumer price index vs. a 5% compounded over a 25 year period. I would appreciate any comments- does anyone know what CPI is used to assess this kind of inflation protection. Thank you.

R.Gregory of 8:17PM July 21, 2008

Today (July 15, 2008) the annual LTC cost in a nursing home in Florida is baout $72,000 to $120,000. Taking 120,000 as the basis, the amount of LTC coverage is calculated as follows:
1. Social Security pays about $26,000 per year. Once you are in the nursing home, you have no other expenses other than nursing home and nurshing home medical cost. Medical cost is coevered (doctor's bills, hospitalization, prescription, etc) would be coevered by medicare insurance plus gap insurance.
2. If one has pension from the company, assume gnerally 36,000 would be a good estimate that would be avaibale until you die.
3. Thus the total needed coverage is 120,000-(26000+36000)=62,000. Thus one needs a LTC for 62,000/year, that is equal to roughly 5000/month coverage, that is about $160.00/day coverage. If you have good 401k savings, and you collect just the interest from the 401K fund, you might easily can get another 36000 per year. Now the actual LTC coverage comes to about 80.00/day. The premium for $80.00/day coverge is very affordable.
4. Before you decide how much LTC coverage you need, calculate the total amount of money you get while you are admitted into the nurshing home. The sources are social security, pension, and withdrawals from IRA or 401K. If the sum of these sources is greater than the prevailing nursing home care cost, then you do not need the LTC; if it is less, determine the shortage and buy LTC to cover the shortage. Withdrawal from IRA or 401K should not exceed 3% per year, assuming the IRA and or 401K is invested in a conservative diversified portfolio. That way,even after the death, your kids would get some money to take care your final needs and every one will be happy.

Walter Lobo of 11:51AM July 16, 2008

A blanket statement of LTC cost as being expensive is misleading at the very least. Although not as cheap as Term life, one must consider the alternative of not being insured for LTC. Start with the probability of those needing LTC itself. I don't have a link to provide but have heard it is 50% or more once one is 60 or so. Next we assume what cost to incur if not insured for LTC. Consider if auto insurance was not mandatory. In an accident, how many of you can afford the repair cost and the possible liability if there was a lawsuit? Does your auto premium then seem cheap relative to the risk?
As for cost trends on LTC, it has gone down compared to a few years ago. Sorry, no supporting link. If you feel that buying LTC may be a wasted expense as with most insurance when you don't file a claim, consider a death benefit rider. That source is me because I know that either I will file a claim to use my LTC protection or a death benefit claim will happen when I go. The whole idea is peace of mind.
You really don't want to reduce yourself to poverty before you can access Medicaid coverage. Lastly, letting Medicare cover you is like being sent to a community hospital. I prefer better health care even when I am sick, so why should I settle for low level long term care when I am dying, which is what typical LTC is. I know I deserve better.
By the way, with the shaky stock market the way it is, I think my premium towards LTC is a better return than seeing my retirement funds dwindle away.

Mike of CA 11:37AM July 16, 2008

My wife and I puchased LTC when I was 55 now I am 60 with medcial problems beyondmy limits)and my wife was 47 (now she too have medcial problems), premiums were and still managable. We purchased 220/day coverage with 90 day elimination period for a life time benefit with option to increase on an annual basis based on CPI index at our choice. Our current total cost per month is 225. It appears to be a little more than what should be, but we are fortunate to purchase them 5 years ago, today, we would not have qualified for the coverage due to medical conditons. These policies totally lifted any burden or liabilty on my children. I find it much more comfortable with peace of mind. People who can afford and have less in retirement savings should consider the LTC because the economic condition in the United States is going to get worse and time would come people have to depend on their own resources for senior life. I recently looked at the Medicare premiums, for a good policy, they are not any cheaper at all. Bottom line, LTC would save one a lot of headache and provide peace of mind.

Walter Lobo of 11:31AM July 16, 2008

Gary Crystal Insurance (877-822-5678) made long-term care insurance so easy to understand. My agent, Gary Crystal, also helped me understand that when I'm 8o years old, just 6 months of long term care would cost more than all the premiums I paid over twenty years. A friend of mine paid over $500,000 for her mothers care because she didn't have any insurance.
This is the best investment I ever made.
Gloria

gloria of CA 9:51AM July 16, 2008

I disagree with this comment in the article - "Both long-term-care expenses and insurance are so expensive that almost all middle- and low-income households rely on Medicaid for nursing home care after they spend down their assets to a level at which they qualify." The insurance is not so expensive, it is the fact that 90% of folks don't have insurance and thus have to spend down their assets. Consumer reports says if you have assets of $200K you should have the insurance. Given that is not much more than the median home value, that means most people should have it. Less than 20% of your disposable income? What is disposable? Again, less than $2K to protect yourself from getting wiped out is a bargin. Of course, if you wait until you are in your 60's or 70's you will pay $3K, 4K, or much more. You got to get it as young as you can within reason.

Mike of TX 12:37AM July 13, 2008

Sarah,
What is your source re "only 1 in 5 can afford LTC insurance premiums?" I've never seen that before. If policies are purchased in the early 50's, which is the best time to get it, a very good policy can be obtained for $1-1.5K a year. Not chump change, but not out of the reach of anyone in the middle class or higher. It would also depend on whether there are still kids in college, but generally I believe it is far more affordable than people think. I love Ian's comments. Keep it simple, shop around. There are just 3 simple parts to a policy -1. The total coverage: think of it as a checkbook with a balance and a maximum monthly amount you can withdrawal. You pick the balance and you pick the rate of withdrawal.
2. The growth rate: If you are under 65, you likely will need a compound growth rate that will grow your balance and rate of withdrawal by a certain percentage each year. There are several inflation options from which to choose. The faster the policy grows, the more expensive it can be.
3. The deductible, which is typically stated in days. It is the number of days you receive care before the policy begins to cover you.
That's it. Beyond that there are various options, most of them fairly useless bells and whistles, but you might find a few make sense for your situation and budget. Again, call around and get some quotes, don't by from the first agent that comes to your home. you also may be able to purchase it directly over the phone from some companies. Anyways, the best advice for consumers for anything is SHOP!

Mike of TX 12:30AM July 13, 2008