Long-term care insurance

by Sheep Farmer

My insurance agent recently asked me if I had long-term care insurance. When I told her that I did not, she told me that I should seriously consider purchasing it I am not quite 50, so LTC insurance is not something that I had given any thought to. I went home and started researching LTC. I looked up prices, statistics as to what percentage of the population needs long-term care, the length of time spend in long-term care, etc. I considered the longevity of my own family and that of DH. After much thought and research, I decided that we would be better off putting the same amount that the monthly premiums for LTC would be into an index fund. If we need LTC, we will be to self fund it, and if we don’t need it, then DD will stand to inherit quite a bit of money. What are your opinions on LTC? Have your or members of your family purchased it?

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50 thoughts on “Long-term care insurance

  1. I have LTC insurance, and so does DH. I know it’s confirmation bias (or something), but since my mom used her LTC insurance for 10 years, it seems like a good idea to me. I get mine through CalPERS and DH gets his through Prudential (though they have discontinued the product for new customers.) My policy is just shy of $3K per year and covers:

    Total Coverage Amount: Lifetime
    Nursing Home Daily Max: 100% of covered expenses up to $342 per day
    Residential Care Max: 100% of covered expenses up to $239 per day
    Home and Community
    Care Monthly Max: 100% of covered expenses up to $7184 per month

    5% inflation protection
    Deductible period: 90 days
    Waiver of Premium: Included
    Return of Premium Death
    Benefit: Included

    DH’s policy is very similar, because the insurance agent was brushing us off about the coverage he could provide (“No one provides that! And you certainly don’t need xyz”) until I sent him the docs for my policy and said “Match it or we won’t buy”. I went through the Prudential policy and it does provide very similar coverage, though the cost is closer to $4K.

    We would have done CalPERS for DH but he wasn’t eligible.

  2. At one point, LTC insurance was one of the things on our cafeteria plan of benefits. It no longer is, but I started my plan back then. As I was younger, the rate is relatively low and the benefit indexes with very moderate increases in premiums over time.

    Based on my mom’s experience, I think you need to budget for more than just the “standard” cost of a LTC facility as that does not necessarily get you more than basic institutional care. My mom exceeded her coverage and was paying on a private pay basis. Because she was in the skilled nursing connected to her continuity of care facility, she had a reduced rate of $200 a day. My experience was that to make her comfortable (things like getting a shower at the time of day she wanted one), we were going to need to pay for some additional private care services, which costs about $80 per half day. We were looking at some one coming three times a week and I was going 2-3 times a week. That made the cost roughly $1650 a week for her care.

  3. No one in my family has ever purchased it and only one grandparent needed a nursing home and his home was sold to pay for it since he obviously wasn’t going to be living there anymore. My grandfather maybe lasted two years in the nursing home – he had Parkinsons. The only one of our parents where it would have been a good idea to at least look into is DH’s dad – he has zero assets (not even a house to sell). He’s 71 or 72 now and a smoker so I doubt he’d be eligible anyway.

    My feeling on insurance is I generally insure when I would not have enough cash to pay for replacement value. So we have home insurance because I don’t have the cash replacement value in the bank and we have life insurance because we have three children and the youngest is only 3. In ten years when the life insurance term ends we’d reevaluate based on the amount of our assets

  4. We don’t have it and have no plans to get it. I wish we had had the money and foresight to get it for my parents and MIL 15+ years ago when they were in their 50s. Chances are that at least one will need eldercare. At least on my side we have more people to contribute $/help.

  5. I am weighing this but have not committed yet — I think we have it through work, but I don’t think I have opted in yet. While I am working, I have focused on more pressing needs, like making sure I have sufficient disability insurance, coverage for the kids’ ortho, and the like. My hope would be that I could then pick up the LTC as the kids leave and some of those other costs go down.

    Right now seems like a bad time, because I’ve read that a lot of the companies are in a bit of an upheaval, because the costs of the care have grown faster than the companies assumed they would, and people are living longer, and so they didn’t necessarily collect the premiums they need to cover. My concern here is really the risk involved: if you happen to choose the wrong company, and they go under, you are SOL. So for now I am waiting to see, with a target reconsideration around 55 to re-evaluate and see what has shaken out.

    I do think that in the end I would feel better with this, just to be sure that the survivor doesn’t run out of money. We got “lucky” with my stepdad, because he went so quickly and almost right at the point where he was going to need to stop driving and accept assistance, but with the Parkinson’s, he could have lingered and required more and more support for a decade or more. I know my mom was really concerned about whether the costs of his support would drain her own retirement — sure, at some point he’d have qualified for Medicaid, but then she’d have had nothing left to live on except her own SS. And his mom had Alzheimers and was in a nursing home for a decade or more.

    So, IDK, the law of averages says I’ll likely be better off putting my money into an index fund and self-insuring, where I’ll at least have the flexibility to use the money for in-home care, aides, and other things that LTC doesn’t cover. OTOH, if there’s one thing I’ve learned, it’s that it sucks to be on the losing end of those averages. So a few grand a year toward LTC insurance might be good for peace of mind and not having to worry about being the second survivor with no assets left. Even if it doesn’t end up covering everything, it’s gotta take a big load off.

  6. DW & I have talked about this a couple of times in the last ~10 years. And our conclusions have been along the lines of Atlanta’s…no grandparent of ours has needed more than a short stay in hospital/nursing home/hospice, so based on that track record we’ve decided no. (of course, as all the investment ads have to say “past performance is no guarantee of future results”.)

  7. My MIL has long term care insurance and it takes a load off my mind as the person with whom she discusses finances and desires. I doubt she’ll need it because of her family history.

    I have the same concerns as LfB about the viability of companies offering long term care insurance and the rate of premium increases in a low interest rate environment. I would be the spouse likely to need LTC insurance, based on health and family history, but probably not till my 90’s and that seems too far away to make a bet on now. I seem to take after the side of the family that either dies of cancer or is capable up until the last few weeks before death at old age.

  8. DH and I both have very minimal coverage through work–about 180 days of about half the cost of care. The premiums are about $300 a year total. We self insure the rest. We decided minimal coverage was a reasonable compromise.

  9. The Calpers policies that RMS and her Mom had the Prudential policy her DH have and some of the older workplace policies (which had the premium cap features and no ability to cancel after termination or retirement) are of a type no longer offered, so they are not exactly unicorns, but the last elderly representatives of a species on the verge of extinction. There are some modern variants, namely a hybrid of LTC and life insurance, that have some appeal, but read the fine print and pay a financial adviser who is not working for an insurance company a second opinion fee to review it. Probably the best time to buy is about age 50, certainly no later than 55, and a joint marital policy is the best deal financially, so both of you have to pass the physical, have extensive and fairly squeaky clean medical records, and answer 100% of the questions with 100% accuracy.

  10. I may have done this sloppily, but for fun I punched in the numbers to a “future value” calculator and it looks like $7K over 20 years (I figure I’ll fall apart circa age 77) at 5% interest amounts to $231,461.68. That’s maybe two years of LTC care (at today’s prices) in a nice facility. And since DH has Type 1 diabetes, he may well fall apart in less than 20 years. Cheery thought.

  11. Yeah, we bought when we were 45, before DH’s diabetes had manifested itself (yes, turns out you can have late-onset Type 1). I bet we couldn’t get it now.

  12. LTC insurance was an optional benefit when I worked at BigLaw. I bought a policy for DH and me during the time that my mother was suffering from Alzheimer’s, and my father-in-law from ALS. There’s nothing like spending a lot of time in nursing homes and memory-care wards to make you completely paranoid about what can happen to you, and about how much custodial care (which isn’t covered by health insurance) can cost.

    The benefit I purchased started out at $6,000 per month, but the policy has a 5% annual benefit increase, so the benefit would now be significantly more. After the deductible period (which I believe is six months), the coverage can continue for an unlimited period of time. The policy followed me when I left the firm — I can keep it as long as I keep paying the premiums.

    Yes, the insurance is expensive, but it gives me great peace of mind knowing that it’s there. If we never need it, I’ll consider the premiums some of the best money I ever wasted.

  13. We have a family friend who used the LTC plan she and her husband had to add features to her condo like grab bars, etc. They bought it way back when, and the husband never had the chance to use it.

  14. My plan looks similar to yours, RMS. Also, I think my plan is what Meme called on the verge of extinction as I had taken out my policy then about 3 years later it was no longer offered if you wanted to add it. However, those of us with it are able to maintain it as long as we pay the premiums.

    This whole discussion makes me worried about my girls’ financial future. I am benefitting from (1) a defined benefit retirement plan that includes paid health insurance – same as employees until I hit 65 and then becomes at least my Parts B and D, (2) an almost extinct LTC insurance, (3) a now extinct disability policy that pays the gap between any other disability income and the amount I made at the time I was diabled, and (4) the pre-paid college tution that is in essence a defined benefit plan for both my girls. They will likely have to deal with financial realities that are much less predictable.

  15. Had to cut message short. Spilled coffee on the keyboard. Wish us luck in the drying out now on another device

    I personally don’t have it and don’t want it. Lifetime policies don’t exist anymore and most people who can afford thej premiums need it for a couple of years only, which they can self fund. I think many who feel reassured by it are single women or spouses who have a rational expectation of extended illness of one party followed by a long single elderly life. LfB has incurable bag lady syndrome – what else would you do with Taos house or the wine collection when you can’t use it any more?

  16. what else would you do with Taos house or the wine collection when you can’t use it any more?

    Leave it to the kids?

  17. Well, if modern limited benefit LTC insurance is intended as part of a wealth preservation strategy, it might be entirely appropriate for a family whose wealth is in land and not so much in liquid assets. The question for most who can afford the premiums is whether it makes sense to invest the money and set it aside in a bucket for late life care, or buy a policy that is much sketchier than the ones of your experience. I always poke fun at LfB because she is very well off, yet she once worried aloud about having to clip coupons and shop the day old aisle in retirement.

  18. That was me, I am likely going to have to buy a new MacBook. It is stuck on all caps, so no passwords including the logon work. We’ll see how it does by tomorrow.

  19. Hey, at least I come by it honestly (thanks, Mom). :-)

    Seriously, the amount of stress she went through worrying about my stepdad was rough (and I was the only one whom she could talk to about it, so I got the up-close-and-personal view of how it affected her). Her side of the family is very long-lived, and so saving her whole life and then having it all eaten by his care costs, leaving her with only SS for the next 30 years, was basically her nightmare coming to life — even though reality says that she could afford 10-20 years of private care and still been fine.

    It seems to me that when you have both a tendency toward fretting and disposable cash, it’s a reasonable choice to deploy some of that disposable cash to something that allows you to knock one thing off the fret list.

  20. And I don’t shop the day-old aisle.

    I do buy generic, however. ;-)

  21. My parents have LTC policies, bought many years ago and is like the plan RMS describes. Based on how long my dad’s family lives (and lives with dementia) and bad genes on my mom’s side, it is probably a good gamble for them. It gives them piece of mind. They could self-insure, but my parents don’t want to leave my brother and I with nothing, or worse, have to pay for their care.

    AustinMom, while is true that future financials are unpredictable, your children are benefiting from your defined retirement plan and healthcare, only have to think about their little family unit, and not if mom is eating cat food. At least that is what I think about regarding my parents and my in-laws – they have pensions and retiree healthcare (that would take a state law to be overturned to get rid off), as well as other financial accounts (and LTC) so that I shouldn’t need to worry about them eating cat food.

  22. “I personally don’t have it and don’t want it. Lifetime policies don’t exist anymore and most people who can afford thej premiums need it for a couple of years only, which they can self fund.”

    I agree with Meme.  I think most totebaggers would fall into the self fund category unless they feel strongly about leaving a maximum inheritance.

    “If you have $2 million and up in assets, there’s an argument for self-insuring,” Shebesta said. “You’re still a millionaire if you incur $250,000 in long-term care costs.”

    In the worst-case, most unlikely scenario, if I can afford to pay for a private nursing room for both spouses for ten years and still have some money left over I am fine with forgoing insurance.

    Here’s a place to estimate long-term care costs across the country.

    https://www.genworth.com/about-us/industry-expertise/cost-of-care.html

  23. I took LTC care insurance through work about nine years ago. I got a letter saying it had been discountined but people who already in could stay. It isn’t that much every month so I stayed.
    We don’t have all the long range planning that some (most) of you do. We save though, have taken health insurance for parents. I do feel overwhelmed sometimes by the day to day. Hopefully the kids can make it to college college before the grandparents need care.

  24. FIL bought policies in the late 1980’s. He paid premiums for 25 years but died without using it. I looked over the paperwork that I could find at their house after he died, and it was unclear at what point MIL, who has early dementia but is still able to live on her own, would qualify for benefits. The language was pretty vague, especially with regard to a person who needs some assistance but not nursing home care. The manager of the assisted living facility the family is considering for MIL told me that most of the residents with LTC policies were not able to claim benefits until they moved to nursing home care, but that much depends upon the individual policy provisions. And, she said that the insurers did their own investigations regarding the person’s level of impairment.

    If they had self-insured with those premium payments they would have been much better off, but they bought the policies without asking our advice.

  25. My MIL has LTC but bought it a long time ago and the policy benefits she has are no longer available on the market. Everyone else has paid off houses and assets. Assuming you have sufficient savings to reasonably support you in your old age, the more important thing in my mind is having a living will and letting your family know your wishes and documenting things accordingly, including power of attorney to access the assets. Oddly enough this is a tougher sell with my parents who have sufficient assets. Their wills were don’t more than 20 years ago and I think they desperately need an update and a current, signed power of attorney. Every time I bring it up, there is push back. It gives the caregivers a lot of comfort knowing they are at least following your wishes when tough decisions need to be made.

  26. My FIL refuses to make a will even though MIL has been bugging him. He always says we’ll see. None of us knows what – we’ll see means. When he is in the hospital ? Already dead ? or what. This we know though, since he doesn’t like to waste money, he will not want to be kept artificially alive.

  27. Louise – your FIL is letting the state decide what will happen to his assets when he dies. The health care document is different – if he doesn’t have a health care directive then it will depend on the hospital’s policies (if he is in a hospital at that point).

    We don’t have LTC insurance – it would be too expensive now for what they cover – there are no policies left like RMS’s. I will probably look into one of the hybrid products when I get older – the way they are set up now, they have a death benefit (say $1M) that gets spent down if/when you need long-term care during your lifetime.

  28. For anyone who is seriously considering LTC or a hybrid LTC life insurance product for whatever reason, I suggest 50 as the age to get it. Don’t wait too long.

  29. unless they feel strongly about leaving a maximum inheritance.

    I do want to leave my stepson and his wife and eventual kids something. Moreover, I feel comfortable being more generous with them now, when they need down payments and soon, when they will need college savings (and maybe help with private school? Although I’m hoping public school will be fine). I don’t have to tell them, “Sorry, I can’t help because I’m going to need all my money for my years with dementia. Also I’m going to need respite care when I get sick of pushing your dad around in the wheelchair because his feet have been amputated.”

  30. And, she said that the insurers did their own investigations regarding the person’s level of impairment.

    Of course they do, but that wasn’t a problem. They send out a nurse to do the eval. The first time they sent out a nurse to evaluate Mom, not only did she get approved, but the nurse took one look at Dad with his debilitating arthritis and advised him to apply for his benefits too. He never did, though.

    They sent out a different nurse every few years, but given that Mom really did need help with the activities of daily living, there wasn’t a problem getting recertified. (“Do you know what year it is?” “1948?” “Can you stand up by yourself?” followed by much useless effort, and so on.)

  31. We do not have LTC insurance, but I have mixed feelings about it. My mother’s side of the family has a lot of elderly relatives. My grandmother was the youngest of 9 kids, and only one dies in his 80s. He was the only male. My father’s family is a little more mixed, but several of his relatives lived for many years in assisted living or nursing homes.

    My DH is opposed to LTC because he thinks we can just pay for our care out of savings, and he jokes that he will be dead so he doesn’t care. The reality is that he has a 50/50 chance of living a long life. His mom’s side of the family does seem to die young, but his dad’s side is different and they have all lived well into their 90s. This even includes a tough bunch of great uncles/aunts that were in concentration camps and death marches to survive the Holocaust.

    I really wish that I had thought of getting for a policy for my mother. I just saw my aunt/uncle have to delay their own retirement because they had to pay for almost ten years of living expenses for my grandmother. My grandmother’s savings ran out around the time she turned 90, and she lived to 99. I think there is a high chance that my mother will live into her 90s and she is going to be financially dependent on me because my brother can’t afford to contribute to help with her care. I spoke to her so many times about planning for her own retirement because she knows how long most of her aunts/uncles lived. Most of her peer group cousins are also alive. There are 25 kids that were born to the 9 siblings, and only 2 have passed away even though most are in their 80s and 90s. All of her cousins are older because my grandmother was the youngest sibling. My grandmother lived to 99, but her oldest sister lived to 104 even though she was born in the late 1800s!

  32. Louise, if she makes one on her own, she doesn’t have to show it to him. That might bug him enough to get him to do a joint one with her, on the condition that she tear up the solo version once theirs is finished.

  33. “coverage for the kids’ ortho”

    Ortho as in orthodontia? Is it advantageous for you to have orthodontic coverage?

    I’ve concluded for us that for dental care, including orthodontia, it makes more sense to self-insure and use our Flexible Spending Accounts. I’ve also found that our orthodontist offers discounts and is willing to negotiate.

  34. Overall, I agree with those who looked at their family histories for indicators of the likelihood of requiring LTC.

    “DH and I both have very minimal coverage through work–about 180 days of about half the cost of care. The premiums are about $300 a year total. We self insure the rest. We decided minimal coverage was a reasonable compromise.”

    That’s one way to reduce the cost of coverage. We went the other way, with a long time using care before the coverage kicked in, the equivalent of a high deductible plan.

  35. “Type 1 diabetes”

    Does diabetes frequently cause issues that lead to the need for LTC?

    Our family experiences have mostly been with dementia and stroke.

  36. Speaking of dental insurance, I noticed ours has a feature that encourages going to the dentist for preventative care.

    NOTE: Your plan has progressive and/or regressive coverage. Coverage levels may increase in the following plan year when you use

    The meadowfoam field looks beautiful, but possibly an allergy-sufferer’s nightmare. It reminds me of the time I took my kids to the Brooklyn Botanical Garden cherry blossom festival. It was gorgeous, but afterwards my kids looked as if they had been punched in the face with swollen eyes and dazed expressions. Luckily (knock on wood) I am not affected.

  37. WCE – those fields look beautiful.
    Here we had a rainy stretch this week, so hoping that the weekend will be nice, which it looks to be.
    The Magnolia flowers are peeping out slowly. My favorite time of year because all the scented flowers will be in bloom.

  38. @Finn: So far, yes, the ortho has paid off — we get 50% coverage, and the rest comes out of the FSA. It’s hard to separate it out, though, because it’s just part of the dental plan — I think we could have chosen a cheaper plan without it, but it would have saved like $100-200, so clearly not worth it for us. OTOH, the “100% ortho coverage for the entire family” plan made no sense for us, because the premium was going to be more than the cost of the ortho itself for just one kid at a time, which is what we have.

    @WCE: Meadowfoam makes delicious honey! Tastes like marshmallows.

  39. Our ortho coverage was similar to LfBs. It wasn’t much more than regular dental but covered some percentage. Our ortho gives a 5% discount for paying cash up front, and another 5% if you make all your appointments between 9 and 2. Even if you don’t go with option 2, they still want you to make half your appointments between 9 and 2 because there is so much demand for the after school times, so it’s not that much more of a hassle to do them all.

  40. Does diabetes frequently cause issues that lead to the need for LTC?

    Yes. Kidney failure, circulatory issues, etc.

  41. We have dental insurance which does pay off due to the outrageous cost of cleanings for 3 children per year. Need to look to see if current dental ins. covers orthodontia. Our old plan (when I was working) did not and we just paid out of pocket for my oldest’s expander/braces/retainer but it was $3K something for everything, which didn’t seem that bad. And you got a discount if you paid in full by check.

  42. Insurance nerd alert – many dental plans have switched to 2 or 3 cleanings/exams per year, as opposed to 1 per 6 months. Dentists don’t pay attention to that detail and will just schedule you at a minimum of 6 months. This flexibility is nice when you need to reschedule and aren’t tied to “it has to be after the 6 month mark.”

  43. Lemon, you should feel free to share all the “insurance nerd” alerts that you can!

  44. The dental insurance I have access to is awful. The plan that pays “better” makes you go to a dentist in a box clinic where (at least here) the dentists and support employees have high turnover. The plan that gives you more flexibility, charges premiums and increases your coverage each year until you get the “best” coverage at year 3, where it then only pays out 1/2 to 2/3 of the covered cost. But 3 years of premiums is $900. Ortho on this plan is $1500 max per person lifetime. Heck, Round 1 for DD#1 was twice that. So, no dental insurance here and YTD we are ahead by paying out of pocket and taking our dentist’s slight cash payment discount.

  45. Our dental plan pays $1500/yr for orthodontia so I worked with the provider to split the billings across 2 years for each kid. Resulted in paying ~$1500-$2000 out of pocket each vs $3000-$3500.

  46. Our health insurance covers one dentist visit per year, so we pay for the second out of pocket and get reimbursed from our FSA.

    Our dental care options offered through our employers aren’t great, mostly like what Austin described, where we can’t necessarily pick the dentist we want.

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