Long term care insurance: to keep or not to keep

[geekette]

DH got LTC insurance years ago through a previous employer.  We've kept it, since it was relatively inexpensive (currently $720/year).  He's 60 good health, little family history of troubles (that weren't related to smoking, anyway).  They're offering the every three year bump in benefits, so we're at a decision point - raise (an additional $300/year), keep the same, drop entirely.

Coverage with John Hancock.  They're well rated on Consumer Advocate, but the comments are horrific - delays, unanswered letters, randomly stop paying, etc.

I have no coverage. 

We're at the point where I feel we can self insure, but...  Does anyone have any good experience with LTC claims from any company?

[Rural]

No experience, but I'm looking, which is how I know John Hancock no longer offers new long-term care policies. So if you let it go, you can't get it back, if that matters to you.

[Car Jack]

I don't have it and won't buy it from my work.  The many forum posts I've read all over the place is that as you approach an age where you would need to use it, the premiums go through the roof.  From memory, from $1000 a year to $10k a year the next year.  And this doesn't stop when you start to claim.  So you may be collecting but at the same time, those increasing premiums will continue to increase.  I guess if you have an old policy that has defined increases, you can evaluate your cost and risk for the future.  For policies that can increase an unlimited amount, I don't see how anyone would keep one of those policies.

[Dicey]

The current price is a smoking deal, so I'd be inclined to keep it, at least until you're sure your stash is big enough to fully self insure.

I've posted this cautionary tale elsewhere, but it bears repeating. In-laws bought LTC insurance from an Allstate agent at their local Sears store. The policy specifically stated it covered Alzheimer's.  They paid on that policy for almost 40 years. FIL died without needing LTC. MIL did indeed develop ALZ. She was healthy as a horse, but her memory was gone. She lived with us for six years to protect her nest egg. Eventually, we had to move her to a nearby Board & Care.

Allstate insisted the policy only covered Care in a Skilled Nursing Facility. Well, times have changed. Physically healthy people don't get beds in SNFs any more. People who are recovering from joint replacements or other surgeries make up the bulk of their patients. There are "Memory Care" facilities, but in our HCOLA, they cost at least $8-10k per month. The Board & Care cost about half that.

We kept the policy in force, because we had no way of knowing if she would eventually need skilled nursing. She died last year. Allstate has refused her claim. The representative is argumentative, rude and unresponsive. Appealing to his superior led to: no change whatsoever. They keep asking for the same paperwork over and over.

Finally, they offered a pittance ($3k for each of 3 children IIRC), but insisted it was a final offer and had to be paid equally between siblings/heirs, even though they are not specifically named or even mentioned in the policy. Problem there is one sibling is mentally ill and on public assistance. She refuses to provide her SSN or any other information. Her benefits could be negatively impacted if she receives any money, and she's completely paranoid about her privacy. everything.

Yes, there is the possibility of hiring a lawyer, but it's probably not worth the cost. We can also appeal to the state, but it's been a long slog and we're just tired of it all. DH and his healthy sibling are FI and don't really need the money. Other sibling can't take it. MIL left a still-extremely generous estate, so it doesn't seem worth fighting for money that will change no one's life.

The only reason to do so is so those bastards who sell LTC to unsuspecting people are held accountable. They make promises, rake in shitloads of money and pay out as little as possible. It's just wrong.

The other important thing to remember is LTC only covers a relatively small portion of the actual cost. It's most often just an expensive illusion of safety. Sure, it pays off big time for some people, but so does the lottery.

[BlueHouse]

The only reason to do so is so those bastards who sell LTC to unsuspecting people are held accountable. They make promises, rake in shitloads of money and pay out as little as possible. It's just wrong.

The other important thing to remember is LTC only covers a relatively small portion of the actual cost. It's most often just an expensive illusion of safety. Sure, it pays off big time for some people, but so does the lottery.

yep.  yep yep yep. 

After a year of calling Every.Single.Day, jumping through ridiculous, expensive, and unnecessary hoops, then finally writing a demand letter from a lawyer, Lincoln Benefit FINALLY is paying out on the policy my mom paid into for 25-30 years.  These were horribly unresponsive people, and the only reason we believe they finally started fulfilling their obligation is because three highly skilled professionals devoted HOURS every week for a year.  We were relentless.  If you do not have a family member willing to give up hundreds of hours of their time for a long term to get some action, then just assume you'll NEVER see any of that money.  I don't have kids, and now I know what I have to look forward to.  I won't pay anybody a dime to insure my health.  I'll save up that money and make sure I am in control of that money when I need it. 

[DaTrill]

Same experience above posters.  I only know of one semi-positive case and endless negative cases of LTC insurance.  Only positive case was a policy from a large school district for a district administrator with millions in yearly premiums paid by all the other staff, teachers and admins.  A single policy holder has 0% chance of collecting benefits.  If your policy is with Apple, Microsoft, megacorp with 100k+ employees or giant school district or state employer with millions in other premiums collected, then it might be worth it, but have to weigh the time your dependents will devote to getting claims paid.       

[Cranky]

My mom had an ancient policy with a company that had been bought out multiple times. The policy was so old that it covered “old age homes”.

It did pay out because my brother-in-law spent about a million hours on the phone with them, and he is like a pit bull when he starts on something. It actually covered her 3 years in memory care, which is about the average length of stay.

[iris lily]

I agree it is a smokin’ deal I would keep.

My mother had it and it served her well for the 5+ years she was in a nursing home for dementia. It was just about to run out, and she died. It paid about half her costs and the the half was covered by
by her income. She died in 2010 so perhaps that was a different insurance environment but we didnt have to fight to get insurance  payments.

We also have enough money to self-insure but only because we have to self-insure. If I had some nursing home coverage at a reasonable price I might hang onto my assets at a lower level than  I’m hanging onto them now. If you are interested  I will summarize our end-of-life projected plan spending our own money and current income on nursing home care.

[cool7hand]

Similar to other posters, that premium is a steal. I suspect that premium and the fact that JH no longer writes this kind of policy indicate that JH failed to price the policy property. I'd make sure that the premium is fixed, and if so, I'd keep it!

[clifp]

Generally, the product is shit.  You essentially need a heavily involved younger person to act as your advocate, otherwise you won't get shit.

On the other hand the price is really good.

If you have family or much younger friends who can be your advocate keep it

[iluvzbeach]

I would absolutely keep that policy. They are nearly impossible to get these days. My grandmother had one and it saved her & my grandfather’s estate tremendously in her final years. My mom has one as well and although the premiums are increasing each year, it has a clause where if she ever opts to not take the premium increase, the insurance company will return all premiums paid to date. She’s currently paying about $160/month and we’ve decided together that it is still worth it. If the premiums ever reach a point where she’s no longer comfortable paying (only at the time of an increase), then she’ll just opt for the “return of premiums” clause. I’d suggest checking whether your husband’s policy has a similar feature.

[Cassie]

For the small increase I would keep the policy. I read that of the people needing nursing homes the average stay is 3 years. Very few people in my family needed that type of care.  Luckily no one had dementia but if it runs in your family having insurance is beneficial. It’s awful that people are having so much difficulty collecting on it.

[Dicey]

For the small increase I would keep the policy. I read that of the people needing nursing homes the average stay is 3 years. Very few people in my family needed that type of care.  Luckily no one had dementia but if it runs in your family having insurance is beneficial. It’s awful that people are having so much difficulty collecting on it.

Remember the quote about "lies, damn lies and statistics"? That stat you cited needs to include the fact that a significant number of people have little to no need of nursing homes. That's why these damn LTC policies don't pay anything for the first 90 days.

[iris lily]

For the small increase I would keep the policy. I read that of the people needing nursing homes the average stay is 3 years. Very few people in my family needed that type of care.  Luckily no one had dementia but if it runs in your family having insurance is beneficial. It’s awful that people are having so much difficulty collecting on it.

Remember the quote about "lies, damn lies and statistics"? That stat you cited needs to include the fact that a significant number of people have little to no need of nursing homes. That's why these damn LTC policies don't pay anything for the first 90 days.

Part of that, though, is that Medicare (for those on it) pays for nursing home care when recovery is progressive. For my mother, I am thinking that was about 6 weeks.

Her policy truly was for long term care, intended as such as used as such.

[geekette]

Well hey, at least there's one good story, iris lily!

90 day lockout, except for home care and hospice.

If he dies before 70, all premiums are returned.

Lifetime max is $500k.  We have no kids. 

So far, it looks like all premium increases are inflation based, but as his group ages, the big changes may come later.  Hard to know.

[Cassie]

Dicey, I know that most people never need a nursing home. The problem of course is you can’t predict who will.

[Dicey]

Dicey, I know that most people never need a nursing home. The problem of course is you can’t predict who will.

Sure, but as mustachians, we're pretty good at saving/investing. Better to keep the money in our own control than spend gobs of it on something we might never need. I recommended OP keep the insurance while it's cheap and focus on building their stache.

I can count on my stache,  I cannot count on LTC to actually deliver the goods they promise or to deliver enough of it to make a significant difference.

[Money Badger]

@geekette,   Is your DH an honerably discharged veteran during any time of active conflict by the US military?  There is perhaps a layered approach BUT as others noted, all long term care products by private sector AND our government have huge gotchas.   With the military one, the veteran qualifies at very low income levels only.   BUT, this one did pay once applied for my father who used it for roughly 3 years of assisted living, then nursing care.   It required an interview to confirm the need (in the facility) and some heavy paperwork for a Dr.'s referral, etc., but it did help us.   Otherwise, that cheap policy seems too good to be true and you're looking at paying well north of $20K over 20 more years into his 80s IF they don't do the "jack it through the roof" raise about about 70 or so which I heard stories from the nursing administrators while I looked after my Dad.   Also some facilities would avoid residents (without confessing this, but i saw it in the more competitive/higher quality facilities who chose higher asset patients intentionally) when they heard that the person had such insurance as primary means of payment.    Having control and options for the best facility one can afford is a FAR better answer that the risk of Hancock suddenly "divest from that product line" as most LTC companies have in recent years...

And beware, well deserved 20 year caregiver rant follows!    The elder care system is confiscatory of one's equity to pay for not just the facility, but all legal costs, workman comp claims from help that sue administrators constantly, regulation burdens (without a clue on improving actual care) and a healthy dose of Medicare fraud or overspending on contractor services and medical devices that are inflated that make Medicare pay less for actual vital services we will all REALLY F'ing need eventually.   The system sucks the life out of both patient and family just trying to keep their elders in care, literally and figuratively!  Whew!  There, I feel better.   So take care and keep on 'stachin' so this becomes a rounding error on your finances!

[geekette]

No, he's not a veteran.  He's been FIRED for 9 years, so we're not adding to our stash (but the stock market has been good to us).

I think what we've decided to do is skip the inflation adjustment, and keep the $600/year plan for a bit.  It's really just if something terrible happens to him when he's young(ish) like an incapacitating car accident or early ALZ (which doesn't run in his family, AFAIK). I think our stash will hold if it's just his final years.

If he outlives me, which is likely, he wouldn't fight for his due, and we don't have kids who would either, so...meh.

[Reynold]

My father and my FIL both had long term care policies, and we got payouts from both of them without too much trouble.  Father needed aides 3 hours/day for a year or two, then about a year in a couple of different memory care facilities, then passed away.  From my brief number crunching, he got back out about what he paid in premiums.  The company was not too hard to deal with, but we also had to choose accredited agencies for aides, which limited our options for who to pick.  The agencies were not as impressive as we had hoped, btw, the first set of aides for my father just didn't show up, we found out after a couple of weeks (none of us were local) and the company just said "Oh, it happens. . ."  You or local friends will need to check up on their work constantly.  We also know aides stole from him, so clear out anything valuable before you have aides come in.

For FIL, he had aides a few hours/day for 2-3 years, he would have needed more but MIL was still in shape to care for most of his needs.  He did not get back out what he paid in. 

Last time my DW and I looked, pretty much all policies now are basically life insurance you can draw down early.  Thus, you pay for a $200k policy, and if you die without needing it, your heirs get $200k.  If you need to draw it down for long term care, you get up to $200k in benefits, and it is used up.  So pretty easy to run the numbers on whether you want to pay, say, $30k for a $200k policy, or self insure, since either way it doesn't cover the really extreme needs you may have if someone is in a $150k/year facility for 10+ years.