Should You Buy Long Term Care Insurance: Pros and Cons

When choosing a policy, you will usually have to decide the daily or weekly amount of the benefit, how long of a waiting period before benefits are payable, and whether you want automatic inflation adjustment of the benefit amount. Like life insurance, the younger you are when you enroll, the lower the premiums because you will be paying over a longer period of time. The insurers had to raise premiums because they didn't correctly determine the number of people who would discontinue coverage before ever receiving any benefits. People who enroll in this tend to keep up with the premiums because they are people who plan ahead and know that the odds are that they will eventually need this protection.

My husband and I decided to purchase long-term care insurance about 2 1/2 years ago when his company offered it as a benefit (at a decent rate) through John Hancock. Since then the benefit has been pulled but we’re still insured with John Hancock directly. The premiums are about $175 every two weeks, which amounts to $4550 annually. This has a big impact on our budget, as you might guess, but our decision was based on a family history with nursing homes.

My husband is the youngest of five children, and his dad was 46 when he was born. In the mid-1980s, when we were in our early 30s, my husband’s dad (now in his late 70s)and stepmother were both taken ill at the same time. Both of them needed to be in a skilled nursing facility, so they went to a well-regarded nursing home in the area. Little did we know that this would be a permanent solution. Needless to say, even in 1980s dollars, they went through all their savings in a year, and then had to go on Medicaid. My father-in-law lived another two years while my mother-in-law lived another 9 (!!!) years in that nursing home. (Stories abound about crazy things that happen in nursing homes. One story, my father-in-law’s retirement watch was stolen when he died!)

Having lived through the nursing home experience for many years, the last place we want to be at the end of our lives is in a nursing home. We decided to purchase long-term care insurance, and we can only hope that our health and the policy will allow us to remain in our own home when the time comes.

We decided to take long term care policies on each of us and partial insure at 150.00 per day. It costs us about 2600.00 per year for that. We saw my wife's grandmother live 7 years in a nursing home and the children had to come and care for her as it was through medicade and the home was interested in money not care. We have the option of part time care, in home care, assisted living, or a full nursing home when needed. Its through Genworth Financial. At least I have peace of mind and our nestegg will not all go to health care. It was a battle to get my wife to agree after what happened to her grandmother.

When I looked into long term care insurance a couple of years ago, I found that the policies available to me would only cover expenses in the state I was living in at the time. Is this the case with most policies? As we have not decided yet where to live when we retire, it made no sense to consider it any further.

My husband and I made the decision recently to purchase long term care insurance because the opportunity to buy it with a lifetime benefit was soon going to be gone. Plan providers have realized people are using these plans and often for many years, so they are now only going to offer new plans for limited terms such as 5 - 7 years of care. I am glad we got the lifetime coverage, and even though it is expensive, if either one of us ever have to use it it will be a huge burden lifted off our shoulders to know that most of the cost is paid. I don't want to have to deplete all our assets or rely on family for care or paying my bills. At least this way I know I won't have to be a burden on my kids. I think that with people living so much longer the chances of us having to use it are pretty likely.

I strongly recommend purchasing the book Long-Term Care - How to Plan & Pay for It by Attorney Joseph L. Matthews, thru nolo.com. It is thorough and written in plain English. It does take some digesting as it's a complex subject. Once you are SERIOUSLY considering a policy, the comprehension becomes easier! From the book I was able to put together a wish list of policy terms and take that list to my insurance broker for some serious discussions. He told me I'd done my homework so well, he could offer me a job! I purchased a very flexible policy thru Mutual of Omaha at a very reasonable rate for a then-55-year-old. Do your homework, and purchase from a reliable seller.

My parents bought long term health insurance. Mom passed after a few weeks in a facility leaving a distraught Dad behind. After paying over $70,000 in premiums he cancelled the insurance to "save" money, just when he was most likely to use it. We are often our worst enemies as we get older.

After seeing what they went through with declining health, I hope that we will have progressed enough as a civilization to allow me to chose when I want to pass, rather than linger on painfully and endlessly. Seems we are kinder to our pets than we are to our elderly.

When we retired about 10 years ago, BEFORE we retired in our mid 50's one of the major decisions we made was to each purchase a long-term health care policy. At that time, at our age, based on advice, was said to be the best time to buy. The advice was excellent. We purchased policies through AARPMetLife and have had very small increases in cost over the years. It costs us about $175.00 each quarterly. A number of years ago we got a letter MetLife was no longer going to be writing these policies but current policy holders were exempt and they have continued to honor that commitment. AARP does still offer long term ins. through another provider but understand that it is getting more and more expensive as all us baby boomers "mature". I strongly advise anyone looking for this insurance to purchase while in their 50's and hopefully still healthy! It is peace of mind insurance as we all have horror stories of relatives going through their life savings in nursing homes.

I purchased a policy from UNUM through my employer at about age 48, then when my current husband and I were married, I purchased another policy for him (about 10 years ago). We took these over when I left that employer and we continue to pay $1280 a year - the premium has not changed since the original purchases. However, I expect at some point it will go up and the coverage we elected will only cover a part of the costs. We are hoping that we'll be using the coverage more for in home care than nursing home care. Our mutual family histories have followed that pattern and with continuing medical advancements we believe that will be the trend in elderly care in years to come. My husband's parents (92 and about 80)right now should have in home care on a part-time basis, but cannot afford it because they don't have LTC insurance. We both work full time and are doing what we can to get retired (we're both past the usual 65) so we cannot assume this role. The situation is sure to come to a head soon as they are both declining at an increasing pace. We may be faced with having to work into our 70s to pay for their care.

I failed to add in my post of Dec. 19th that our long-term care policy currently covers benefits of $250 a day for up to five years. That's about the going rate in the Boston/Worcester/Providence area. The policy also includes a cost of living increase added to the base.

I feel lucky in that I did purchase Long Term Life Insurance when I was 55 through AARP Met Life (16 years ago). I have also taken advantage of the 5% benefits option offered a couple times which also increases your premium. I now pay $390 every quarter and I have a lifetime policy with the half benefits payable home care option. At the time of my purchase the criteria to purchase was: If you are poor, not to worry, you will be cared for free. If you are wealthy, not to worry cause you can afford it. If you are in the middle and would like to leave what you have to whomever you want to leave it then buy Long Term Care Insurance. I'd like to stay in my own home if at all possible. Nursing homes are awful in my opinion.

We are 70. We have never subscribed to long term care /nursing home insurance. We now live in Florida where the definate trend is toward aging in place. Nursing home and other such facilities are not the big thing here as in other areas of the country. We chose to live in a condominium that is reasonably barrier free. Those who still drive and have a handicapped parking permit are assigned spaces closer to the building. There is easy access for wheel chairs and scooters can be driven right into the building and onto the elevator and right into the units. Interiors of units can be easily adapted by opening walls and widening doorways. Master bath has a walk in shower. Carpeted floors can be easily changed to hardwood or tile. Units are bright and sunny so there is cheerfulness. The smallest units are 1400 sq.ft. Household help can be contracted privately with an individual or through an agency in our area--we live in Winter Haven FL between Orlando and Tampa. The county has a bus system where you call and make an appointment and a wheelchair bus comes right to your door and will take you to medical appointments etc. It is important to think about your housing as you age. How adaptable is it? Is it all on one floor? Are the laundry facilities adaptable? Do your homework before you buy. As I said we never invested in insurance for nursing home care and would certainly choose to stay in our own home and bring in needed services. We are still husband and wife and would provide care to each other as long as we can. The important thing to think about as you get ready to choose housing at retirement is to think about how you might be in ten or fifteen years down the line and choose you location and place of residence wisely. We all get older and can be medically and physically different at some point in the future.

Regarding Ellen's statement, nearly every long-term care policy today will pay benefits anywhere in the United States. You can purchase a policy in one state and the benefits and the premiums will stay the same when you move to another state. You can make a claim on your policy regardless of which state you may be living in at the time of claim.

Ellen may be from California. There are policies in California that offer extra "asset protection" if you exhaust your policy's benefits, but you can only get that extra asset protection if you are living in California when you apply for Medi-Cal.

Scott A. Olson
LTCShop.com

Just a note...women live longer than men and wind up spending much longer (usually) in LTF. That and the incidence of Alzheimer's has increased dramatically making aging-in-place not an option.

Personally, I had a policy at one point, but it quickly got so expensive that I had to quit. I can't aford it now either so I shall have to wait and see!

Lulu is right, women are most likely to need extended care and therefore makes them the perfect propsect for long term care insurance. Statistics can actually back that up but if you still feel lost and confused because of the drastic changes happening in the long term care industry, rates increasing by 40% and some carriers discontinued selling this covereage, you can raise your queries to an ltc specialist first. Just because other people are purchasing this, you'll do the same as well. It comes with a high price tag so you should make sure first if you really need this anytime in the future. It's good that there are guidelines here that can help you come up with a decision. They are here to guide you and at the end of the day it's still you who will decide on how you want to face your future. Just a piece of advice, don't be impulsive and take your time in understanding every little thing about long term care insurance.

Just saw this WSJ article - Explore this alternative to Long Term Care Insurance - CCRCs. Not exactly cheap, but entering a CCRC will pretty much insure your long term care insurance problem. http://online.wsj.com/article/SB10001424127887323511804578299951773683968.html

My mom lived in Margate FL and had friends that lived in a CCRC John Knox Village, located in Pompano Beach. Her friends loved it there. When she needed a skilled nursing facility, I looked into their SNF since you did not need to live in John Knox for the SNF if they had room. I was NOT impressed. I mentioned it to my mom who mentioned it to one of her JKV friends. The friend agreed the the SNF was not ideal, but that JNV was working on it. Some of the problems were the age of the facility.

The nice thing if you have lived there for awhile is that it is relative easy for your friends to visit.

Although this article is about CCRC in NC, it has info that would probably be useful to other states especially newer types of CRCC
http://www.ncmedicaljournal.com/wp-content/uploads/NCMJ/Mar-Apr-10/Sprigg.pdf

It's really hard to rely on what others say about long term care. I guess your best resource person is yourself. Assess your health condition and your situation. Then ask yourself, " why do i need long term care ". When you're sure that you do need it, then see quotes and find out how would you pay for it

:roll:While I am an advocate of not spending all of my money in one place!... rather than saving for 'old age', one does have to make enough to have enough $ to save. My parents were fortunate enough to have enough to get long-term care insurance but my dad is the only one able to use it. But after a slow start in the job world (1930's & beyond), he advanced in his job - unlike today where you might/might not, never mind being paid enough!

There is another option. Long Term Care Insurance will work for most people in my view although it requires a commitment to paying for it essentially the rest of your life or until you enter a nursing home. Your children are still faced with some ugly decisions - when and where besides how is it going to paid for.

The other option is Continuing Care Retirement Communities (CCRC). Most work like this: you pay a set amount (there are refundable and non-refundable plans) then pay so much a month and you will receive life-time care. We signed up for one and will, when our name hits the top of the long waiting list, sell our house and move into an apartment in the independent living part of the CCRC. We will have one good meal a day, recreational opportunities, fitness opportunities, learning opportunities, etc. Housekeeping, maintenance, weekly bedding cleaning, utilities, etc are all included. Our apartment will be gutted and remodeled to our specifications. What we give up is a lot of money, having to maintain a house and, to me this is the big one, relieve our children of where to eventually put us. We are making that decision for them and paying for it. Once we are unable to live independently we will move into the assisted living wing of the CCRC or into the memory care wing. One of the things that drove us to this decision was the excellent, unfortunately, chance of DW getting Alzheimer's. So many people have told us that people who can't face reality in their old age wind up hating their children for putting them in a nursing home because no one can take care of them. We do not want to end up that way. Nursing home okay if it is in the cards but we want to pick and we don't want our kids' lives turned upside down. DW is 65 and I am 72. Moving to a CCRC will be like moving to an apartment. We will keep our car. We will continue to travel. We just cut down on a lot of worries and problems. And our kids will thank us.

LTC Insurance is option. CCRC is another.

My mother had purchased and paid for a 4 year LTC policy. When her Alzheimer's progressed to a certain point, I was able to move her into assisted living. She spent the 4 years there. The housing costs went up annually. Her benefit did not. Each year the amount we had to pay out of pocket increased. Still she got to be in assisted living for four years, a benefit not covered by Medicaid. Then we moved her to skilled nursing, and she was covered by Medicaid. And she needed skilled nursing by that point. So we used up her small savings, but she was able to have appropriate ns comfortable care for those 4 years. I think it was a good policy and a good expense for her.

My husband and I bought LTC policies when we were in our 50's. Our plans have a level premium, so will never go up. It also offers annual benefit increases to keep up with rising costs. The monthly premium for BOTH policies is $300.54. My mom is currently in Assisted Living to the tune of $4500.00+ a month. She did not have LTC, and we are supplementing her income monthly to pay the bill, causing a widening hole in our own retirement savings plan. LTC or CCRC is the way to go - best gift you will ever give your children!

I think about CCRC because I have no children. Never having been married , I may not be a flush as some members of the list (since my early days of working, I did get paid less than my male counterparts...glad this seems to be less of problem today.

This will be part two of my retirement even the independent part because I will not stay in this location. Moved here for the job six years ago and "retired" after 5 years and 4 days. So will move to a new location, not sure where. Then check for CCRCs and other alternatives over the next few years.

I would love to see additional information on this alternative. I know that some are very financially secure, but not all of them. Would love some ideas of criteria when looking at them and hope that this can be included in this blog or an independent blog.

PS. My folks know a number of people that moved in John Knox Village in FL and loved living there.

My mother passed away at 97, having spent the last three years of her life in a wheel chair. Mom lived in a CCRC, but didn't want to move out of her apartment. She required care for 24/7. She and my father had had LTC, but gave it up when they moved to the CCRC. My dad didn't envision either of them being incapacitated because they both were traveling and playing golf into their 90s. It cost $22/hr 24/7 at the CCRC because we had to use their staff. It cost $192,192 for the last year of her life. We were very lucky Dad and Mom had those assets, but there were a lot of grandchildren who could have benefitted. I bought my policy the year mom died when I was 57 years old. I made my boyfriend who was 64 buy one too, before I would consider living with him. My policy will give me benefits for 5-7 years and his policy will give him benefits for 3-5 years. We can hire anyone we want wherever we want to be to get the help. We can even pay family members. Our policy is with Genowirth, and I consider it worth every penny knowing that I won't be relying on anyone to take care of my needs.

SandyZ, your policy sounds like something affordable. Most of the stories I have heard seem to be much more than this. If you don't mind sharing, who is your policy with?

Barbara, thanks for that info. I sure do not have your parents resources. What would have been the expense if your mother was willing to move to the next step in the CCRC? Was the reason she didn't want to move discomfort with something new or did she find the assisted living and/or nursing home unacceptable standards?

Bill Yoder, our LTC policies are with Mutual of Omaha. Again they were purchased 10+ years ago so I cannot comment on what is available today.

Elaine, you were wondering about how to pick a CCRC. I used to work for one here in NY state; basically in NY, the state regs are so strict that no one can start/operate a CCRC unless the company/organization has AT LEAST 10 YEARS OF OPERATING EXPENSES available, and that amount MUST be kept available during the CCRC's operation. So, of course, there are VERY few CCRCs in New York state. About 13-14 I believe, at this point. A TRUE CCRC has a life care contract with you which means they'll take care of you the rest of your life--many communities around the country might LOOK like CCRCs but aren't, really -- they may have different levels of care available, but there's no contract guaranteed for those services.
One good place to start to find one is CARF--the accrediting agency for CCRCs around the country. Not all CCRCs are accredited -- that doesn't mean they're bad, but to meet accreditation standards, they must show financial solvency, adequate staffing for levels of care, etc. Here's their website:
http://carf.org/ccrcListing.aspx
When you hunt around on their site, they also have some great consumer publications to help you know more about CCRCs and the questions to ask. They can be complicated, and there are different business models in terms of refundability of the entry fee, fee for service, etc. CCRCs are usually regulated by a state's department of health as well as department of insurance -- so if you're comparing CCRCs in different states, you could well be comparing apples to oranges, as each state operates with different regulations -- some lax, some strict.
What Barbara's experience with her mother was, not wanting to move to a higher level of care at a CCRC, is not uncommon. However, why pay DOUBLE for the same service? Because the monthly fee one pays at a CCRC, no matter what level of care, usually pays for any level of care, but you do have to move on their campus to where those higher services are offered.
Financial solvency is a real concern. Do due diligence, ask for three years of audited statements and have your accountant review them (or review them yourself if you're comfortable, but it's worth paying someone, because this is a huge investment), ask for copies of each type of contract offered and have your lawyer review them AND YOU READ THEM AS WELL and then ask questions. If you find a CCRC you're interested in, expect to make several visits -- you should not only meet with marketing (a given) but also ask to dine with residents, talk to some, and many CCRCs offer "try it" stays for a minimal fee.
And don't be misled in thinking all CCRCs that are nonprofits are better than for-profit communities. I'd still rather be with a nonprofit one, but again, due diligence is required. Before I entered the field, my parents in Ohio went into a fairly new nonprofit CCRC; they lived there less than a year before they both passed away (yes, they waited too long),and when we pursued getting back the 90% of entry fee refund the estate was due, guess what -- they were in receivership! So instead of getting back about $150,000 (this was in 2000 -- much more would have been required today), we ended up with $12,000 -- and that was only because we had joined a lawsuit with other nonsecured creditors.
CCRCs aren't for everyone (even if you have the funds). My husband wouldn't be caught dead (sorry!) in one.....but if he predeceases me, I would seriously look at one (if I can afford it at that point), because we have no children, few relatives, and no one else to help me out.
Okay, I can't resist -- one group of CCRCs I would highly recommend looking at are with the Kendal Corporation (nonprofit). They're mostly East Coast based, go as far west as Chicago. Very much based on Quaker principles. go to www.kendal.org . Good luck, everyone!

Does anyone have experience with GL Builders in FL?

Great info, thanks so much Paula. I appreciate the link to CARF and Kendal, I have heard of both. Like your husband, they really do not appeal that much to me, but like you, I have no children and few relatives and expect to have fewer as time marches on...so I want to explore the concept now. While I expect to have close friends after moving to my retirement location (as yet unknown), many will probably be closer to my age.

My situation is that I will probably wait too long even if I can find a CCRC that I like. I know some allow pets, but that is important to me. I am thinking of locating to somewhere in NC and found this awhile back that might be a good place to start if anyone else is interested. http://www.ncdoi.com/SE/Documents/CCRC/Continuing%20Care%20Retirement%20Communities%20Reference%20Guide.pdf I am sure that other state's DOI should have similar information. A place to start.

But I am back to finding a place that I want to move first since I will be relocating.

Elaine, in response to your question, Mom didn't want to move to the assisted living section of the facility because it was in a building where hospice patients and memory patients were living. It scared her. My father had passed away in hospice there, and I will admit there were sounds of moaning when you passed some of the areas. There was little socialization going on as well, even though people were moved in a common area or hallway. Mom's issues were purely physical(needing help to move in any way) but she still wanted social interaction.

What I learned from this is be prepared for the unexpected. My father simply could not envision one of them living for several years but needing a lot of assistance. LTC would have greatly reduced the expense, although it wouldn't have eliminated it. I won''t have my parents'resources. I have one child and she's an adult on the autism spectrum. I expect that, if I need care, I will be paying for it. Barbara

Buying long term care insurance is imperative nowadays since the cost of care continuous to increase. The reason behind this is the longer life expectancy of people. Statistics would show that about 70% of the aging population, those who are 65 and above will require long term care. Meanwhile, about 41% of those who are below the age of 65 will also need ltc due to illness, disability and injury. This only shows that everyone is at risk of requiring long term care and should buy private insurance so as not to risk their savings and assets. LTCI is expensive by nature but this is still cheaper compared to self-insuring. The numbers mentioned is enough to prove that it's better to have coverage than to pay out-of-the-pocket. To those who are interested can learn about long term care insurance rates here:

http://longtermcare.gov/costs-how-to-pay/what-is-long-term-care-insurance/long-term-care-insurance-costs/

http://www.aaltci.org/long-term-care-insurance/learning-center/how-much-does-long-term-care-insurance-cost.php

Jeremy, Thanks for the web sites. One thing that neither addressed (or I missed) is some indication of how much a premium can increase and is that regulated? Sadly, I missed the ideal ages.