Long-term Care and Financial Planning

[JourneyOfLife]

Interesting financial planning considerations for Long-Term Care.

These videos seem to be targeted at insurance agents and planners. I thought they were informative.

The mission of the New York Life Center for Retirement Income at The American College is to elevate the knowledge of financial service professionals so that you can better assist your clients to make difficult decisions about their retirement security.

Understanding the advantages of long-term care insurance as a funding option for long-term care needs (http://www.theamericancollege.edu/retirement-income-center/video_player/257)

Concepts and Conversations: Long-Term Care (http://www.theamericancollege.edu/retirement-income-center/video_player/90)

[JourneyOfLife]

MorningStar: 40 Must-Know Statistics About Long-Term Care (http://news.morningstar.com/articlenet/article.aspx?id=564139&t1)

[Villages PL]

I went to Homewood in the villages to hear a lecture on Alzheimer's disease. After the lecture, I inquired to find out how much it costs to live there (just curious). To my surprise, the yearly cost for a one room efficiency is about $55,000 which includes 3 meals per day. But I don't recall there being many activities as it's a relatively small facility.

[JoelJohnson]

I went to Homewood in the villages to hear a lecture on Alzheimer's disease. After the lecture, I inquired to find out how much it costs to live there (just curious). To my surprise, the yearly cost for a one room efficiency is about $55,000 which includes 3 meals per day. But I don't recall there being many activities as it's a relatively small facility.

My sister and I used to kid that our mother (who had Alzheimer's) could hide her own Easter eggs and make new friends erveryday.

It's a hard way to see someone you love go.

[JourneyOfLife]

I went to Homewood in the villages to hear a lecture on Alzheimer's disease. After the lecture, I inquired to find out how much it costs to live there (just curious). To my surprise, the yearly cost for a one room efficiency is about $55,000 which includes 3 meals per day. But I don't recall there being many activities as it's a relatively small facility.


That particular disease has a fairly well known progression that might imply certain levels of of care needs. They are called stages.

7 Stages of Alzheimer's & Symptoms | Alzheimer's Association (http://www.alz.org/alzheimers_disease_stages_of_alzheimers.asp)

I think the assisted living approach might work for early stages of that disease. But Alz patients eventually need a lot of help and eventually a lot of hands on care.

This source of information suggests that the period of time a patient lives with the disease could be up to a decade.

http://longevity.about.com/od/longevityandillness/a/Alzheimers.htm

Alz patients often end up in a nursing home setting.

Semi-private Nursing home rooms are likely to be more expensive. Private rooms, even more expensive.

[JourneyOfLife]

A short discussion about taxes and LTC Services.

Tax Talk: Deducting nursing home costs (http://www.bankrate.com/brm/itax/tax_adviser/20040723a1.asp)

[TraceyMooreRN]

I work for rehabilitation facility locally--best Long Term Care or secondary insurance based on my knowledge is AARP and State Farm ....but do your research!

[SusanOfWoodbury]

I went to Homewood in the villages to hear a lecture on Alzheimer's disease. After the lecture, I inquired to find out how much it costs to live there (just curious). To my surprise, the yearly cost for a one room efficiency is about $55,000 which includes 3 meals per day. But I don't recall there being many activities as it's a relatively small facility.

Yes, and once your money runs out, you are out or put on a waiting list?
Why not just stay in your home with some home health aides..?

[SusanOfWoodbury]

Hi,
My name is Sue and I have worked in Home Health Care for many years. I have also worked for companies and private care.
Long Term Care Insurance is very expensive and you may never get to use it.

Assisted Living facilities have pro's and con's. "Once you money is gone, you are out or put on a waiting list"

Why not stay in your home, eat what you like to eat.. Do what you like to do, Go out when you want to go out...Those things are all possible even with Dementia or any other illness

I have worked in many homes in NH, Maine and now in Florida. My moto is that people do better when they stay in their own homes.

Hiring a Home Health Aid or a Certified Nursing Assistant will keep you in your own home.

This is just another option for people..

[Villages PL]

Yes, and once your money runs out, you are out or put on a waiting list?
Why not just stay in your home with some home health aides..?

Yes, I like your idea very much. As long as I have my brain working, I think I prefer to stay at home as long as possible. One thing I don't like about assisted living is that I would be paying for meals that don't meet my standards. It's restaurant food and I would be thinking, "What are they trying to do, kill me?" :-)

[Villages PL]

I have read that long-term-care insurance-rates have gone way way up because more and more people are cashing in on the benefit. People figure, "hey, I paid a lot of money, so I'm going to use it!" Years ago, people only used it if they absolutely had to. Now people are planning on using it.

In that case, the premiums are pretty much unaffordable for most people. The insurance companies know it but are raising rates to protect themselves. And many of them are getting out of the business.

[JourneyOfLife]

Two general reasons have been cited for LTC insurance premium increases by [some] insurance companies.

1) Lower policy lapse experience than was actuarially projected by [some] companies for their LTC insurance products.

2) Extremely low bond rate environment. High grade bonds are one of the most common investments that insurance companies use to back the insurance pools for insurance products. By law, insurance companies have to maintain a relatively low risk profile for the investments they use to back their insurance products.

Here is a 2010 MorningStar video that discusses the issue.

Defense Tactics for Rising Long-Term Care Insurance Rates (http://www.morningstar.com/cover/videocenter.aspx?id=363548)


The low bond rate environment is a challenge for other institutional investors too (e.g. pension funds, other types of insurance products, endowments, etc)

[NJblue]

This is a topic of interest to me since there seems to be different ways that people are dealing with this threat to one's estate - or even the ability of the healthy spouse to maintain a normal lifestyle.

Several years ago we looked into LTC insurance and I opted to not take it for the very reason that seems to be happening now - rates that are quoted are meaningless since they can be raised at any time and the increases can be exorbitant to the extent that they no longer are affordable or cost justified. In that case your only option appears to be to cut back on your policy or terminate it and say goodbye to all of the payments that you have made over the years.

In speaking with elder care lawyers, another option that exists is a Medicaid Asset Protection Trust which effectively and legally shields all or a portion of your estate from what the government uses to determine your eligibility for Medicaid. According to these lawyers, nursing homes are not allowed to discriminate against you because you are on Medicaid - you are afforded the same care as someone who pays out of private funds and/or LTC insurance. One local attorney said that one of her clients uses funds from the trust to pay for a private room in an upscale nursing home where his wife is and where Medicaid is picking up the basic charges (since Medicaid only will pay for a semi-private room).

I don't know what other ramifications of this approach would be, but I was surprised in seeing Morningstar data that showed fully 49% of all nursing home revenue comes from Medicaid. This was significantly greater than the amount from private pay. LTC insurance was an extremely small portion of total nursing home income. While certainly "poor" people don't make up 50% of the population, what was not clear from the Morningstar numbers was of those who were using Medicaid for payments, what percentage were also using asset protection trusts versus those who had essentially bled their household assets dry to the point that both spouses had become impoverished by the nursing home stay.

Can anyone provide any insight concerning asset protection trusts and/or caveats about using Medicaid for nursing home expenses?

[JourneyOfLife]

This is a topic of interest to me since there seems to be different ways that people are dealing with this threat to one's estate - or even the ability of the healthy spouse to maintain a normal lifestyle.

Several years ago we looked into LTC insurance and I opted to not take it for the very reason that seems to be happening now - rates that are quoted are meaningless since they can be raised at any time and the increases can be exorbitant to the extent that they no longer are affordable or cost justified. In that case your only option appears to be to cut back on your policy or terminate it and say goodbye to all of the payments that you have made over the years.

In speaking with elder care lawyers, another option that exists is a Medicaid Asset Protection Trust which effectively and legally shields all or a portion of your estate from what the government uses to determine your eligibility for Medicaid. According to these lawyers, nursing homes are not allowed to discriminate against you because you are on Medicaid - you are afforded the same care as someone who pays out of private funds and/or LTC insurance. One local attorney said that one of her clients uses funds from the trust to pay for a private room in an upscale nursing home where his wife is and where Medicaid is picking up the basic charges (since Medicaid only will pay for a semi-private room).

I don't know what other ramifications of this approach would be, but I was surprised in seeing Morningstar data that showed fully 49% of all nursing home revenue comes from Medicaid. This was significantly greater than the amount from private pay. LTC insurance was an extremely small portion of total nursing home income. While certainly "poor" people don't make up 50% of the population, what was not clear from the Morningstar numbers was of those who were using Medicaid for payments, what percentage were also using asset protection trusts versus those who had essentially bled their household assets dry to the point that both spouses had become impoverished by the nursing home stay.

Can anyone provide any insight concerning asset protection trusts and/or caveats about using Medicaid for nursing home expenses?


Sounds like you are criticizing the Medicaid safety net (the rules) and the insurance industry????

[NJblue]

Sounds like you are criticizing the Medicaid safety net (the rules) and the insurance industry????

I'm not sure I understand your post. I am making statements abouts facts as I know them and asking for information. I am purely in an information gathering mode trying to find out what the options are. If you read this as being some sort of criticism, I'm not sure where you are getting that. Was it that I stated that insurance rates for LTC are subject to change? That they can be large changes? It would seem that previous posts of 50% changes would make such statements true. If I'm wrong about anything that I mentioned, please tell me why, rather than make a blanket statement/attack about my motives or beliefs. For one who starts many threads here presumably for discussion, it's curious that you try to inhibit any discussion that ensues.

[JourneyOfLife]

Just a question about one or two comments in your post that I thought were somewhat germane to the topic of "financial planning for LTC".

AP around Medicaid is, in many ways, the antithesis to financial planning.

Rather than getting this thread off track or potentially derailing it, Why don't you consider starting another thread to discuss your interest in Medicaid related AP?

You should be able to reuse your original post to start the conversation.

It will probably be a hot topic for some.

[NJblue]

Actually, I couldn't pick a better title for what I was commenting/questioning than what was selected for this thread.

[JourneyOfLife]

I don't have any comments or advice about your AP question.

But in your opening sentence you listed two concerns; Estate and Surviving Spouse Living Standards. Are those your main concerns?

Of course we all want everything including maximum flexibility.

But sometimes because of personal circumstances, some goals might conflict with other goals, especially if certain scenarios play out.

If you were to prioritize them, which is first and which is second? Which one matters more to both you and your spouse?

[Hancle704]

$55,000/year in a LTC facility with 3 meals/day versus hiring a CNA or Home Health Aide would cost what? Any info?

[rpensabene]

I do long term care planning. Most policies you have a choice of staying at home, assisted care facility or nursing home. I would be more than happy to sit with you and explain how long term care policies work. Depending on how old and how you structure the plan dictates the cost. Just like any other insurance (i.e. homeowners and auto), you are protecting your assets. You are also taking the burden off of loved ones. There are other funding options other than traditional long term care policies.
Send me a private message if you are interested.

[skip0358]

Just received a notice from my insurance that many LTC companies are gearing up for a HUGH price increase and they expect a lot of people to drop out. So what happens to the money you pay into these accounts if they stop selling or it becomes cost prohibitive ?

[JourneyOfLife]

Here is another good article on the state of the LTC Insurance marketplace.

What’s Killing the Long-Term Care Insurance Industry « Caring for Our Parents (http://howardgleckman.com/blog/2012/08/whats-killing-the-long-term-care-insurance-industry/)

[JourneyOfLife]

Just received a notice from my insurance that many LTC companies are gearing up for a HUGH price increase and they expect a lot of people to drop out. So what happens to the money you pay into these accounts if they stop selling or it becomes cost prohibitive ?

Some great questions. I am not sure anyone knows the answer.


I am pretty sure state regulators have to approve premium increases for existing policies.

The states are going to not want more people using Medicaid, so they will probably only let those premium increases go so far. My guess is that they will probably balance the concerns of the industry, the government, and policyholders.


I am wondering if there will be a bunch of class action law suits. If not now, in the future if the large premium increases turn out to be unjustified.

[buzzy]

Florida is insurance-friendly, and always grants rate increases. My John Hancock policy went up 40% last year. Hopefully that will be it for a while. I chose to pay the difference, rather than take reduced coverage. On my policy, If I ever stop paying, then the paid-in premiums will be available for a claim. This may vary for other insurers or policies.

[JourneyOfLife]

A few more videos on LTC planning. These videos seem to be targeted at the professionals (insurance agents/planners) that are involved in educating clients and helping clients to plan.


Here is the general website link. It contains information about other planning topics (e.g., retirement) that I thought were educational.


The Wealth Channel: Retirement & Estate Planning (http://www.thewealthchannel.com/retirement-estate-planning)


If you scroll through the list of videos, there are several on LTC planning (as well as other topics).