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Do you need long-term care insurance?

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  • Do you need long-term care insurance?

    Maybe not for many on this forum, but some will need it and there are other options available, too. My blog post in this month's newsletter discusses LTCI and I talk about timing of purchasing it in my July vlog. (Of course, you can sign up to get my 100% self-written, self-produced, and totally free newsletter at the bottom right-hand side of any page of our website.)
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

  • #2
    Good post.  I liked the rule of thumb....<1mill plan on Medicaid ....1-3 mill buy LTCI....>3 mill self insure.

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    • #3




      Then you have no guarantees on cost (except maybe they will rise)..
      Click to expand...


      Actually, you can buy a policy with inflation protection. This is simply a cost-benefit problem, as with any other kind of insurance. You never know if you'll use a disability policy, either.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4




        That’s not what I meant. They are allowed to request price increases so u never know in the end how much you will pay with straight LTCi.
        Click to expand...


        You have a good point there. The models that LTCI was built upon years ago were faulty from the beginning and insurers have had to adjust or drop coverage. While I believe the turbulence we have seen over the past 5 or so years will slow down and, hopefully, rates will become stable, there is, at the present no guarantee. In the meantime, that doesn't negate the need for LTCI coverage in every situation. And I included some reasonable alternatives in the article.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5




          Nope you don’t need LTCi coverage.

          You need a plan for ltc but it doesn’t need to include insurance.

          Cash pays for ltc. There are several ways to cover that including using insurance.

          The higher the utilization for ltc occurs the less insurance will make sense. There are just too many fees etc for in essence a pre pay plan.

          All I would really need would be coverage for the tail end and the insurance companies don’t offer that protection any more.
          Click to expand...


          Well, that's your opinion. Do you not have disability, life insurance, or property insurance either? I don't sell insurance and have no dog in the fight, but I do believe that, in some cases, not all by any means, LTCI appropriately covers a very real risk. It's up to consumers to make an informed decision as to whether they are willing to self-insure or not. My job as a financial planner is to inform and clarify.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            I decided not to buy it.

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            • #7
              It appears I have hit a nerve and that was not my intent. Regardless, I don't understand why you considered my question about other insurance a "silly tactic". I don't believe I've made a mistake by stating the LTCI is sometime appropriate - agree to disagree? (Woof!)
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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              • #8


                It’s become much more uncommon to be the right choice. Clearly if you knew you would quickly be on claim it’s great but given the lack of risk transfer it just isn’t the same deal. Assuming companies don’t go under, those old no longer available limited pay such as 10 pay unlimited benefit plans were a good deal. Today you can’t fully evaluate it without making tons of assumptions that favor insurance. It’s clear currently that on the low and very high income end that it’s not awesome. I take the middle to be a very small middle bc not only do u need to be in that range, you have to be able to pay rate increases in retirement or live with reductions.
                Click to expand...


                I don't really have a problem with that. LTCI is a much younger industry than, say life, and the problem is the opposite. As people live longer, life policies have more investment time. (Perhaps we should be asking why industry life insurance rates aren't declining.) The opposite holds true for LTCI. I tend to be more optimistic than you about the long term and believe rates will be more stable. Earlier policies simply used unrealistic assumptions and the companies couldn't survive or continue to offer a profitable product. I also think STCI is probably a more viable option with a more predictable pricing model.
                Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                • #9
                  Docs may be able to self insure but what about the average Joe? Just tell them they don't need it? Not everyone will qualify for medicaid either..

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                  • #10




                    The average joe is unlikely to be able to afford it as they get older with price increases. There are risks in life that we don’t insure against bc there just isn’t a good product to do so at a decent price. Many will retain the risk. The current products for the most part don’t cover long tails as well.
                    Click to expand...


                    Agreed current products aren't great, but many folks are worried about it. I know lots of docs stuck with paying the bills for their parents (sometimes x 4...), putting them way behind on their finances.

                    I truly worry about this as a major killer of wealth. I suppose that is one reason we plan to have way more than we need.

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                    • #11
                      LTCI for me is like many insurance products we are sold........insurance is not always the correct risk management strategy.  Insurance works best when the event is low probability, high impact.

                      Look at vision and dental insurance.  These are predictable costs/risks that really should be handled through budgeting.  I'll admit there may be a "smoothing" benefit if you have an emergency root canal, but usually you pay and incur similar costs year after year.  Not an ideal risk for insurance.

                      So, is LTCI low probability, high impact?  I think this is what Rex was getting at in the attractiveness of older policies vs the limitations of current policies.  Today's policies look more like dental insurance than a health insurance product.

                      KJF

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                      • #12
                        Ooops you guys covered my thought while i was typing...

                         

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                        • #13




                          I’ve always seen LTC insurance as a scam like 529s. Did colleges take that 529 money ten years ago and invest it as a cash flowing endowment to defray future costs? No. It went to salary increases, exorbitant pensions, and superfluous campus amenities to entice enrollment & pad the tuition bill. What a disaster when you look at the hyperinflation of college costs.
                          Click to expand...


                          The state university I work at, in Alabama, has seen state funding drop by 21% over the last nine years.  Tuition has gone up by 5-7% per year over the last three years.  I've gotten pay raises of 0%, 1% and 2%.

                           

                          Now if you want to talk about California...

                          University of California Blows Big Money on Gold-Plated Pensions

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                          • #14
                            Interesting thread and responses. I am a primary care doc that had significant numbers of nursing home patients for years and served as director for a number of LTC facilities. Have stopped nearly all. Very dissatisfied with the quality of care delivered. LTC has become a dumping ground for families that don't care. The models that exist, in my opinion, have become inhumane. Like the prison system in the US, nursing homes now house a larger percentage of the population than any developed country in the world. I am investing in my kids with love. Will gladly care for aging in laws because it is the right thing to do (not the most convenient) and brings me joy. It also teaches my children that family matters. You cannot place a value on that. Time to change the model. LTCI puts the resources in the hands of middlemen banking on fear.

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                            • #15
                              I will say that dementia care is NOT easy at home. My father is in this situation and my mother is his caregiver with essentially all needs, including feeding/incontinence/mobility/wound care, and he is bedbound. We get NO help from hospice - she has been offered 30' of a nurses aid 5 days a week and if they perform routine care in bed they make a mess in her house. They have provided medications which are fully covered and a hospital bed. That's it. They are also billing Medicare $6000 a month for these "services" although they aren't even being utilized, and Medicare is completely fine with this. My mother called both parties up to question them about this (like, hey, why are you paying them $6000 a month for nothing and don't even cover the diapers) and was told that this is how they do things. It's a complete racket. A SNF in our area would be $11000/month out of pocket for a shared bedroom, $15000/month for a private room.

                              If she were to put him in a nursing home, she would deplete their collective retirement off of which she lives in a matter of months and then the house would be on the line. The alternative is to provide all the caregiving herself, which she has been doing for the last 1+ years, for which she wasn't trained (she isn't an RN), and which exerts a huge physical and emotional burden. She has her own health issues that are not being addressed because she can't get respite care more often than 5 days every 60 days and because the caregiving is running her ragged. I'm not sure if long term care (insurance) would solve this problem but it seems to be a particularly toxic problem for (lower) middle class people who don't have that asset cushion to maintain their loved one in a SNF for several years without losing everything. It seems the poor who are already on Medicaid and the wealthy are the ones who are taken care of. Meanwhile, the hospice racket continues, our taxes to Medicare will be shelled out by the thousands to hospice enterprises who convert these gains to substandard and minimal care for the actual patient at home. The people who are not on hospice yet get even less - no 100% coverage for medications and no coverage of respite.

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