Anyone else here who is at the stage in life where either you or a family member is considering the future need for some sort of assisted care insurance?
I’ve done a lot of Google searches, read articles, and talked with salespeople, and still find myself sitting on the fence over buying the insurance.
It’s very expensive, and in most instances the premiums can increase drastically.
If anyone has actually used this insurance I’d love to know how it’s worked for you.
This forum has a wonderful spread of ages and experience in all of life’s adventures. Figured I’d ask here where I’ve never failed to get good responses.
Thanks,
oldfred – getting older
Replies
You don't need it if you don't have much in the way of savings -- let the guvmunt take care of you.
You don't need it if you're worth, say, $2 million or more -- that much will allow you to vegetate in a nursing home for a long time.
You do need it if you have, say, a coupla hundred thou in savings. Nursing home care can eat through that much fairly quickly, and the guvmunt won't help you until it does.
Partly this also depends on whether this is an individual or couple, or whether there are dependents. Less necessary for an individual (unmarried, no dependents), where the loss of savings won't affect the lives of loved ones.
Thanks for the reply
Those are about average for the figures I've seen. Puts a lot of people in a gray area. From what I can figure, the premiums for a couple would use up most of the after tax income on two hundred thou. (assuming a conservative investment vehicle for the principal)
You're right. There are a lot of variables
One of the sites I googled said most people cancel the ins. before they get to use it because the premiums increase beyond affordability.
Is there a way to disperse or protect assets so they don't need to be part of the "spend down" process?
Various tricks. A good consultant knows about them, but a bad one can cost you a lot and get you into trouble.First, pre-pay funeral expenses. Pay off debts, especially non-secured debts. Buy stuff you know you'll be needing in the not-too-distant future (new cars, home repairs, etc). In some cases carefully selected life annuities can be worthwhile (but this is very tricky). Giving away money is also an option.But be very careful!! Not all "shelters" are equally protected, and the "spend down" rules have been changed recently to greatly increase the "look-back" period during which money dispersal (especially gifts) is considered to be bogus. A knowledgeable consultant is a must, or at least a perusal of a recent book on the subject by a trustworthy author.
So convenient a thing it is to be a reasonable Creature, since it enables one to find or make a Reason for everything one has a mind to do. --Benjamin Franklin
We have had policies in effect for 8 years now. Our first was not researched properly (my bad) and cost us after about 3 years. Started low but increased as a class in our state as permitted. We failed to see a low ball pattern and when we cancelled it was just 'write it off to bad experience'.
We have replaced it with a firm that seems to have had a lot more experience in realistic numbers. Premium patterns can be researhed for a given area or class. Not cheap, but we are committed to it in our budget for the long run. Ten years' worth of premiums for two will just about cover the costs of reasonable care for one for about one year in the 'average' scenario. It helps protect what we have worked for so that we don't have to spend it down for inadequate government coverage and we won't burden our kids/grandkids with costs.
You don't have to be "old" and terminal to use it, either. A good policy will provide coverage for working folk who may need temporary assistance. Find a policy with a replenishment feature that allows you to put back in after the need has passed.
It's not for everyone. There may be better financial vehicles for your funds but this has worked for us and our situation. Research carefully, find a financial advisor you trust and buy early enough in life that the rates won't be prohibitive (late 40's - mid 50's if you can).
Yes, it is a pricey priority. But check the costs of not having such a program vs financial and family situations. There aren't any guarantees. Peace of mind means different things to different people.
Best of luck
bum
...The unspoken word is capital. We can invest it or we can squander it. -Mark Twain...
Be kind to your children....they will choose your nursing home.
...aim low boys, they're ridin' shetland ponies !!
bum, Thanks
Somehow, I thought I might hear from you. (maybe it's the "old" in the moniker?:) )
Too late for us to buy early. In our early 60's we're looking at over $4,000/ year for 3 yrs. coverage for me and 5 yrs. for DW.
My calculations about match your figuring that ten yrs. of premiums for two would cover one year for one of us. ( by investing the total premiums now and hoping for a normal return in an index fund.) Also playing with the thought that what we will have to pay on taxes on withdrawing our IRA's might be written off toward nursing care so that would be a "discount" in a sense. (it gets complicated) That's all "fantasy figuring" so who knows......
Biting the bullet and signing up might just be worth the piece of mind you refer to.
I'm hoping we'll hear from some readers who know of people who have had to collect on this ins.
Thanks for your well worded reply - hope you both pay in for many more years :)
oldfred
FWIW..
Both my parents are now gone, but at about the age of seventy and well into retirement they seriously looked into what you are looking at .
The decision was that they could take the premium payments and invest it & probably earn enough off of the renewed investment and their ongoing retirement income + SS and do far better than the insurance plans.
Dad had a great retirement that covered med. insurance as part of it so they were in a good place for that aspect.
He lived till 86, she till 93 and still had a bit left for a inheritence for kids/grandkids.
Good to know they made the right choice.
Probably good we don't know the future, but darn, there are some tough choices out there.
I've worked on three assisted living complexes in the last 8 years.
Here on long island, NY the monthly cost is about $3600. for a single person.
Just curious what it costs in other parts of the country...buic
Assisted living in the Chicago area ranges from $3k to over $7k per month at a nationwide "chain".
That fee is just to occupy the room. Anything else is extra. There is also an "initiation fee" to get into the room. Some places keep this fee. Employee pay at this place is partially commission based, so there is a lot of incentive for the extras.
Another "retirement community" has a $300,000.00 buy in (for the smallest unit), plus a monthly rent and anything else is extra. When the resident dies, the heirs receive the buy in, less 10%, and without interest. The condo is never owned by the resident.
There is big money in old folks care.
Yeah,, on the order of $4K/month in the Louisville, KY area, IIRC.
So convenient a thing it is to be a reasonable Creature, since it enables one to find or make a Reason for everything one has a mind to do. --Benjamin FranklinYe
I've only checked one in my area (Maine Coast) and it's just over $5K for one person. There is such a range in the definition of "assisted living" that it's difficult to compare prices.
I'm guessing you'll get the chance to work on more complexes. The Boomers are coming, and the retirement communities are expanding rapidly up here.
"There is such a range in the definition of "assisted living" that it's difficult to compare prices. "
Do you mean from state to state or facility to facility in this state?
The definition itself is actually very specific and set by the state here in Maine, but I do think local facilities "interpret" it with latitude
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Hmmmm.....
I was generalizing and probably chose the wrong wording. I honestly don't know enough (yet) to be specific. Shot from the hip :)
After spending 20 years as a stockbroker/Certified Financial Planner, and hearing all of the lines from sales gurus about long term care, my opinion is:
It is a purchase based upon fear. Fear of not beaing able to leave anything to the kids, fear of rotting in one's excrement because of inattentive staff, fear of this, fear of that.
My MIL had to get a policy because her mother was in a home for years and didn't want to be like that. (Surprise! A LTC policy won't change that!) She spends a big chunk out of their income to pay for this service that she may not need.
The Fear of not leaving things to the kids is really the basis from the elderly I have discussed this with. And further examination into their finances shows this is baseless or false assumptions. In my MIL's case, the LTC premiums are preventing them from moving into a more appropriate assisted living center (which they would not qualify for yet under the policy's restrictions).
I really found this desire to leave things for the kids to be the most irrational, poorly appreciated approach for these people to take. They believe if they leave a pile for the kids, it'll bring everlasting love. What a crock! The cases I saw from the beginning to the end were the most tear jerking I've seen.
Older people will starve themselves or eat cat food so their kids have something. Yet when the parents go, the kids fight over the scraps to hurry up and take a cruise, buy electronic equipment, or put it up their nose.
My educated, professional opinion is to visit a fee-basd Certified Financial Planner and ask him (her) whether your asset base and health needs such a policy. And if it does, really research which policy provides the type of services you may need.
Frankly, from what I was seeing, these are mostly unnecessary commission generating programs which the insurance companies make out handsomely.
Excellent points.
Our lawyer told us that no matter how carefully one writes a will, that person wouldn't be happy if he/she could come back and see how the inheritance actually gets used.
I agree with the CFP approach. The challenge is to find one.
Thanks
oldfred
Edited 2/27/2007 10:40 am ET by oldfred
I don't think that "leaving something for the kids" is the issue so much as spending down the "cushion" they have. Someone at age 75 getting $1500/month Social Security may struggle on that amount but live comfortably with an extra $500/month drawn from $50K of savings. Plus that savings will take care of auto repairs and other unexpected expenses. Take away the savings and their standard of living nosedives.
So convenient a thing it is to be a reasonable Creature, since it enables one to find or make a Reason for everything one has a mind to do. --Benjamin Franklin
Dan,
I'm serious. Sit down with an old timer and ask HIM or HER that question.
I have. Thousands of times. 99% of the time, leaving something for the kids is their most important financial goal.
Old timers went thru the Depression. They know they can get by with little because they've done it. They also know their kids have not.
Your point about additional saving is big. But mine about those savings being larger without the ongoing premiums needs to be considered when evaluating the individuals WHOLE picture. And the WHOLE picture is what really matters.
Don't get me too wrong. I have a LTC policy on me - only cause the wife bought me a Harley and doesn't want to change my diapers should I fly off the side of the road and split my skull. We don't need the policy. It's there because of her fear of cleaning up after me.
Well, I've dealt with a fair number of folks in this age group too, and am edging into it myself. For the most part the ones I've dealt with figure they've done enough for their kids and don't need to leave them large estates. What they are afraid of is losing their home and their independence."God forgive me, but an old person without money is pathetic." -- Simon & Garfunkle "Bookends".
So convenient a thing it is to be a reasonable Creature, since it enables one to find or make a Reason for everything one has a mind to do. --Benjamin Franklin
Great points Dan. Pete, thanks for the insight.
Yes, fear was probably the real emotion and a large part of our decision. We just preferred to think of it as "being prepared".
Our rationale was we had just seen three friends go down and also out in a couple of cases. All in their early 50's. One you could almost anticipate but two were total surprises. Their experiences and how their families reacted were our impetus.
Shortly after that the DW had to have a hip replacement and a bit later I needed by-pass surgery. Don't get me wrong, here, we love our children, but, could see that our best bet would be to provide for ourselves and try to not "need" their help, so to speak. It was to preserve what we had worked for, for each other, to anticipate a certain level of care, not to leave anything special to the kids/grandkids. We do that as we can afford it now....The unspoken word is capital. We can invest it or we can squander it. -Mark Twain...
Be kind to your children....they will choose your nursing home.
...aim low boys, they're ridin' shetland ponies !!
(But I agree that the economics of the whole thing is iffy. Damned if you do, damned if you don't.)
So convenient a thing it is to be a reasonable Creature, since it enables one to find or make a Reason for everything one has a mind to do. --Benjamin Franklin
That fairly well sums it up!
We have a small six bed place here. I think because of island costs and smaller ( six beds) vs lage the overhead is a bit high so it's more like five grand a month for private pay but the govt pay for sponsored is about what you report for costbut to be clear - assisted living is a lot less expensive than a nursing home.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
I've not used mine <knock wood>.
I started with a small ($1 million) policy with an $11/month premium back at 40; I've let the policy "creep" in the six subsequent years a bit, coverage is up to $5 million max, onset date of month 13 of care (I've an interim policy for week 6 through 60 of care); premium is up to $28/month now--so, I'm very happy with the price so far.
Now, will I still be happy after hitting a couple of "milestone" ages, like 50 or 55? That, I just don't know. I know I feel better having the coverage than not.
I try to "shop" for better insurance at least once a year (which thends to be about how often I get buttonholed by an agent); I've changed accidental, and intermediate a couple of times. I've noticed that, for medical coverage, longevity in a policy does not seem to affect the company's attitude about rates at all.
Capnmac, Thanks
Looks like you got a good deal
I have a BIL who signed up at an early age with relatively reasonable premiums. My sister did not and now finds them to be more than she feels she can afford. (says her kids are going to set her out on an ice floe in the Penobscot River when the time comes.....:)
We're at the point where either option is an expensive gamble. Going to keep crunching numbers and reading.
oldfred
24/7 in "your house" care costs $300K/yr plus medication.
If you have to ask about the premiums, you cannot afford it.
Is that a 24/7 RN?