Retirement Planning: LTC Insurance

[winnieandwine]

I'm curious whether long term care insurance is part of your retirement plan.

With the move and new jobs, I updated our budget with our annual retirement contributions to forecast our retirement portfolio as we age (assuming current contribution rates hold steady and there is modest growth). How the hell am I supposed to guess how much money I'll need per month in retirement (which could last 5 years or 30)? If we live in a paid off 1 BR condo in Chicago and are healthy, $90k/yr (post-tax) would allow for dining out, trips to the park/museum/free concerts, plenty of travel, and gifts for the kids/grandkids. But if one of us develops PD or early-onset dementia, we'd be spending $150,000/yr (post-tax) just on LTC for that person. we'd still need to keep up a residence for the healthy spouse. If we both need LTC, we would need $300,000/yr. that could quickly deplete any amount of money we might save. and reality will likely mean we fall somewhere between the two scenarios above for a number of years -- maybe requiring increased assistance, home aides a few hours/wk, etc. 

basically, it seems like a no-brainer to me*, but I know this is a complicated issue. what are your plans with regards to LTC insurance?

*unless you are low-income and/or plan to spend down assets to qualify for medicaid? this is what I assume we would have to do for my parents if they needed LTC. 

[iheartbanjos]

Absolutely, but I won't purchase until sometime between 55 and 60.

We've also had the conversation with both sets of parents. Mine have it and DH's do not.

[VillainV]

It's not really part of my retirement plan, except I have a policy that I will have paid off by the time I'm 60, so I'm paying for it now so I don't have to pay then, if that makes sense.

[niq]

I looked a little at pricing when I was shopping for life insurance, it was 3.5x the premiums for 1/5th the payout. I'm 36, I don't know how that factors into things. I figure we're better off taking the premiums and investing them.

Many life insurance companies will sell you a rider that lets you draw on the policy if you are terminally ill or disabled to the point of not being able to get through the day. - I think it says something like you need another person's help to do at least two daily activities. It beats nothing.

[sillygoosegirl]

Jan 22, 2016 19:28:54 GMT -5 @foodielicious said:

Just be aware most plans nowadays only cover 5 years or so of LTC. I expect that will only get worse.

This is the part that makes it seem scammish to me. Yes, most people don't live very long once they are in LTC, but if we are assuming that, our retirement nest egg would last longer than 5 years even spending $300,000/year on LTC. And that's without counting investment or social security income.

I would be most interested in the kind that covers the first spouse to become sick (or 10 years divided as needed between spouses instead of 5 years each), as the scariest scenario to me is where one spouse requires a lot of care at a relatively young age, and the other lives to be like 100.

[aurora]

I voted yes, plan to buy, but I admit I've never gotten into the details of selecting a policy. I've alway planned to start learning what's out there when I'm around 50 and make the decision after that.

I agree with sillygoose that the scariest scenario is one spouse needing long term care when relatively young and then th other living much longer but it doesn't seem like there's a good way to insure against that.

[winnied]

I really don't know. My parents don't think it's a good deal and have selected not to do it. My aunt and uncle have it, which my aunt has needed the last 2 years, but it was paid for by the university my uncle taught at his whole life.

[sillygoosegirl]

So does the sick spouse qualify for Medicare LTC if the joint assets and that spouse's retirement accounts are gone, but the healthy spouse still has retirement accounts?

[niq]

Jan 23, 2016 21:07:11 GMT -5 sillygoosegirl said:

So does the sick spouse qualify for Medicaid LTC if the joint assets and that spouse's retirement accounts are gone, but the healthy spouse still has retirement accounts?

We had to look this up for mom. Asset limits for the spouse vary by state. If you Google "<your state> Medicaid estate planning", you should get a good start.

Keep in mind that Medicaid usually only pays for *nursing home care*, not independent or assisted living. Again this varies by state and there had been some expansion for in-home care.

[sillygoosegirl]

Jan 23, 2016 23:26:31 GMT -5 niq said:

Jan 23, 2016 21:07:11 GMT -5 sillygoosegirl said:

So does the sick spouse qualify for Medicaid LTC if the joint assets and that spouse's retirement accounts are gone, but the healthy spouse still has retirement accounts?

We had to look this up for mom. Asset limits for the spouse vary by state. If you Google "<your state> Medicaid estate planning", you should get a good start.

Keep in mind that Medicaid usually only pays for *nursing home care*, not independent or assisted living. Again this varies by state and there had been some expansion for in-home care.

Yes, the limit to nursing home care has become quite an issue with my 99-year-old grandmother...

[niq]

Jan 23, 2016 23:57:37 GMT -5 sillygoosegirl said:

Jan 23, 2016 23:26:31 GMT -5 niq said:

We had to look this up for mom. Asset limits for the spouse vary by state. If you Google "<your state> Medicaid estate planning", you should get a good start.

Keep in mind that Medicaid usually only pays for *nursing home care*, not independent or assisted living. Again this varies by state and there had been some expansion for in-home care.

Yes, the limit to nursing home care has become quite an issue with my 99-year-old grandmother...

My sarcasm detector is permanently broken, so I can't tell if you're being serious?

Either way I'm sorry, this stuff is no fun to deal with

[LoveTrains]

I need a SS or another option. It's not part of my plan right now, but its not that I think its a scam, its that its just so darn expensive I'm willing to roll the dice and pray I don't need it.

[winnieandwine]

Jan 24, 2016 12:28:51 GMT -5 @mx said:

I understand that the policies currently on the market aren't worth much. My grandmother needed care to the tune of 12k/month for more than 15 years. It was all covered by Medicaid. I understand most plans on the market max out at about 5 years of care. My LTC plan is suicide--hopefully legal--if I find myself in a situation like my grandmother. 15 years of wasting away with out of control dementia is not for me.

medicaid won't pay for you to stay in your home with 24/7 care, which I would vastly prefer after having worked in SNFs and LTC centers.

you'd also have to deplete all non-retirement assets which could mean leaving your children without an inheritance which we'd like to avoid.

re: buying older -- that generally seems to be the trend, but you take the risk of an early-onset diagnosis (PD, MS, dementia) making you ineligible for coverage.

[scout8]

Jan 24, 2016 16:19:32 GMT -5 @mx said:

mofongo , she died about a year ago. I know it wasn't all Medicaid--part was Medicare as well (and some VA Benefits because she was a WWII vet).

The way the state of WI administered their Medicare/Medicaid program for facility-based care was that they wouldn't move you to a less expensive facility once you qualified for the program. So her limited cash paid for the first 2-3months she was in the "memory care" place and then once she fully qualified for Medicaid the State picked up the tab in full until her death.

I have no delusions that these programs will be so generous by the time I'm old, but the LTC market had also tightened up significantly so I guess I'm just counting on cash flow and crossword puzzles. I'll re-evaluate what the premiums/benefits of the plans offer when I'm in my late 40s.

This is how it worked for my grandma in her assisted living facility in IL too. She had to use her own money at the beginning, but when she ran out of $$, Medicare (or Medicaid--I'm not sure which one) paid for everything at the facility. The place she lived was very nice and she did not have to move. 

[jaybird]

My parents bought policies when they were in their mid-50s. We priced out a policy at that time too since it sounded liked a good idea. The price difference between my parent's quote and ours (in our late 20s) was minimal, so it didn't make sense to us to commit money so young.

Also, I heard that MNTF hospital is going to have an open position soon, though they, um, don't know it yet. It may skew more peds than you want though. If you're interested, keep a look out for the posting. Probably in the next few months.

[shaynaatl]

I'm assuming that by the time we are of that age, LTC insurance will no longer be offered or will be insanely expensive.

[winnieandwine]

jaybird thanks for the tip!