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July 21, 2010


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I suspect that you are self insuranced based on my following of your blog. The length of time some one spends in a nursing home is the largest factor. I think you just have to have that money in your retirement plan and you will not have to pay an insurance company.

We considered it for my mother in law, but she has very little assets, living in a condo that we own. So she would qualify for Medicaid. I am sure we will pick up any extra expenses. Caring for her in her retirement was a choice that we made, but it has made me appreciate that we have saved and continue to save a lot for our own retirement.

LTC is not just for old people in nursing homes but for anyone needing long term medical care. The nice thing about LTC is that it gives you options so you don't have to go to a nursing home but can be cared for in your own home. I'm 31 and my wife is 30 and we have LTC through John Hancock which was a special group rate via my FIL employer. The rate we have is fixed for the life of the policy and we pay ~$600/yr. Compared to the cost once we get older this is comparatively low which can range from 3-5 times what we pay now. See here,

We did this as part of an income protection plan. We have our life insurance, our LTC to cover medical for any major accident or health issue, and I have disability via my work (we still need to get her some).

Note I don't sell insurance but I do believe that LTC should be considered alongside life and disability insurance when you create your protection plan.

The problem I have with purchasing LTC too young is that the medical landscape is going to change a lot in the next 40 years. Will the current policies be worded correctly to cover the types of care that is available in 2050? Very early LTC policies were mostly nursing home based. Then they added in home care but at a reduced rate. Now home care tends to be a more significant portion of the benefits provided.

What will be the important type of care to be covered in 2050. I don't know but I am not willing to pay for a policy for the next 40 years and find out I bought something that became obsolete. I wouldn't even start looking at it until age 50.

And yes if you get MS at age 30 then you are screwed. If that's why you want to buy it early then go ahead. I personally don't like to insure for asteroid events as I could make myself crazy trying to prevent every possible calamity that could befall me.

My parents are in their early 60s and just earlier this week I asked them to sit down with a reputable long-term care insurance representative to gain a better understanding of their risks and options so that they could make an informed decision about LTC insurance one way or the other. As the AARP says, the chance of needing LTC is about 50%, and the total cost of nursing home care can equal $9,000 - $11,000 per month, assisted living can equal between $6,000 and $8,000 per month, and care at home is typically around $4,000 per month. Even if someone were to opt for a combination of assisted living and home care that is less expensive than a nursing home, the time period for long-term care often is around 4 years (but this can vary, admittedly) so I'll let you do the math and figure out how expensive it can be if you're not insured and you're paying it out of your own pocket. We also learned that while Medicare does cover SOME long-term care costs, there are lots of restrictions to clearing hurdles to getting it and it only covers skilled care (i.e. physical therapy, etc.), it does NOT cover custodial care (i.e. helping someone to feed themselves, clean themselves, get out of bed, etc.). Long story short - don't rely on's a good idea to consider Medicare, your savings, and insurance to cover a lot of bases!!

The medical landscape can and will change but the cost of care isn't going down anytime soon. The policy covers medical care it ain't gonna be free in 2050 so why not lock in a low rate now and hedge my bets?

I could get MS (unlikely given family history) or I could become disabled in a car accident/heart attack/stroke (statistically probably). Both could require long-term care and disability insurance will only provide for lost income not medical care beyond what insurance will cover. The long-term-care picks up where other insurance falls short and does so as a nominal price.

Given that my wife does not work and I'm the sole breadwinner I'd hate to have either one of us financially burdened by an unforeseen circumstance because we chose not to invest the $50/mo in the additional insurance

I took out a Long-Term Care Policy when I was 26. The policy is $116/mo, it is lifetime, has built-in 5% appreciation in coverage, and protects my assets while allowing medicaid through a state agreement. All of my grandparents and great-relatives have needed some sort of expensive medical care - either nursing home or in-home care. The premium only keeps increasing as does the state-required coverage, it's not something I'm thrilled about paying, but it's growth has, thus far, outpaced the stock market!

A well-written LTC policy covers a lot more than just nursing homes for "old people". You may also need coverage to help out due to a disabling accident (car, skis, etc) just as much as you may need it later. Health insurance might cover your medical costs, but normally not many of the personal care items like bathing, cleaning, and eating if you are unable to do it yourself for a period of time. Many times people use LTC coverage for a few months as they recover and then go home from a facility that provides therapy after an accident. The costs are lower at a younger age, which make it an easier decision (for me at least) to have some basic coverage now. When I hit 50 I'll probably do some more research on best bets then and get a more elaborate plan. IMHO, this is a lot like other insurance in that it's something I hope I won't need - but it could be a real financial problem if I didn't have the coverage and had a catastrophe. Statistically, the odds are good I will need the coverage at some point. 40% of people currently receiving long-term care are adults 18 to 64 years old, and about 70% of individuals over age 65 will require at least some type of long-term care services during their lifetime. (data from - a good general info site)

My hubby and I are in our late twenties/early thirties. I am an only child and expect to take care of my parents as they age and need help. We have talked to my parents about making sure they have LTC insurance. We brought this up because as an only child, I am responsible for both of them. My family history has a lot of diabetes, heart disease, cancer and stroke. But most of us have made into the 80's and a few late 90's. My parents currently have several chronic health problems that make me worry about their care as they age. Currently we live far away from my parents, in our discussions I mentioned making sure their LTC policy allows them to get care outside of their home state. We all agreed that it would not be fair to my hubby and I to leave our home/careers/schools for our future children etc. in order to care for them.

My husband is from another country and has many siblings. Although we would not be involved in the day to day care of his mom (his father is deceased), it would be easy to send money to help take care of her and assist the rest of the family as they share responsibility caring for her.

Physical health is only half the issue. Mental health (e.g. Alzheimer's, dementia etc) is of equal concern.

MasterPo has seen first hand how that can ruin a family - financially as well as emotionally.

It wasn't pretty. :-[

I have tried to have this discussion w/my dad and his wife...their only response was to sell their house to pay for the nursing home. And then to have the state pick up the tab...I wouldn't even know where to start.

@ Brandon:

You state that 'its growth has outpaced the stock market.' So, is this is a policy w/an investment component similar to whole life insurance? (Because $116/mo. at the age of 26 is, IMO, a bit expensive.)

Holly, no, just 5% guaranteed appreciation. Tongue in cheek comment of sorts, but also somewhat true. You are right in that it is a bit high, but it was the best price for the plan I could get that fit my needs. Basically, to get the asset protection I had to get that exact plan. When I modeled coverage increases required by the state, versus premium costs each year, it was only going to get more expensive - out-pacing inflation.

As a Long-Term Care and Disability Specialist, I am always interested in people's pre-conceived notions about LTC insurance.

There is no bad time to buy insurance (except if you need it and can't get it). Starting young can be a great choice and you can lock-in lower rates. Getting it when you are 70 to 75 (about the max issue age) can be a good option too, maximizng your return on investment. Since we can't tell the future though, my suggestion to anybody is to always apply while you are healthy.

As far as premiums go, different insurance companies have different "sweet spots". Shop around and find the best carrier, with the best coverage, with the best rates for your prticular age/gender.

Protecting assets is the most important thing to consider with Long-Term Care Insurance. Sure you can pay for the care yourself or "self-insure" but why not use someone else's money. For less than the cost of ONE MONTH of care, you can pay the ANNUAL PREMIUM for most Long-Term policies.

MediCaid is hard to qualify for and you must spend down all your assets (except primary residence) to $2000 dollars in order to be eligible. Then once you recieve care and pass away, the Department of Estate Recovery in your home state will try to recoup the money MediCaid paid for you care. Most LTC Insurance participates in a 'Partnership Program' with their state, offering asset protection by eliminating estate recovery for the amount the insurance company pays out for the insured. So if the company paid $150,000 dollars in benefits and then you go on MediCaid and receive further care, your estate gets a $150,000 exemption.

You could work your whole life to build a legacy and with one long-term care event, it could all be wiped away.

Anon - MasterPo symapthizes with you. You can only lead a horse to water...

Keep trying. Maybe put it in terms of "Don't you want to leave something to your grandchildren?"

But some people either don't care or just don't want to deal with the realities of life and getting older.

Best of luck.

In my opinion, people should get the LTC insurance. An unexpected illness and then dimentia took our family by surprise and has been 3 years of day to day struggles for all of us. Yes,you can get Medicare and in CA Medi-Cal and we did get her qualified, but as stated in a prior comment, many restrictions, month to month delays and red tape all contribute to an untennable life for all. Get the insurance---get peace of mind for the elderly and be able to have some semblance of life for yourself.

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