Long Term Care Insurance

[PurdueDave]

Several years ago my financial advisor got me to purchase a Long Term Care policy for my wife (she's currently 57 and healthy)
It has always been a bit expensive, but yesterday's mail had the new annual premium indicating it is increasing from $3100 to $7800.

Is this corporate greed, inflation, or an indication of an inept company trying to claw back profits from a disastrous offering?

I'm probably in the hole $30k, but I'm having a hard time continuing this money pit. What would you do?

 

[TopSecretBoiler]

Go to your financial advisor and demand an explanation.
Why do you have an LTC for someone who is healthy?
It's worth noting OPM dropped the LTC due to costs in 2022 I think. https://www.govexec.com/pay-benefit...ums-feds-means-even-fewer-likely-sign/390645/

 

[PurdueDave]

Go to your financial advisor and demand an explanation.
Why do you have an LTC for someone who is healthy?
It's worth noting OPM dropped the LTC due to costs in 2022 I think. https://www.govexec.com/pay-benefit...ums-feds-means-even-fewer-likely-sign/390645/

I asked him this yesterday

The policy is to protect your finances in the event she ends up in a nursing home. That could be tomorrow due to an accident or stroke, or could be in 30 years due to old age. It seemed to make sence years ago, maybe not now.

 

[TopSecretBoiler]

I asked him this yesterday

The policy is to protect your finances in the event she ends up in a nursing home. That could be tomorrow due to an accident or stroke, or could be in 30 years due to old age. It seemed to make sence years ago, maybe not now.

It would make more sense if the payments were fixed and you were sort of paying up front while healthy. But if they can set the cost at whatever they feel like...that's sounds like ripoff city to me. You'd be miles better off investing or paying off any debt.

 

[tjreese]

I asked him this yesterday

The policy is to protect your finances in the event she ends up in a nursing home. That could be tomorrow due to an accident or stroke, or could be in 30 years due to old age. It seemed to make sence years ago, maybe not now.

Kinda frustrating if you scrap and save a lot of your life to enjoy those later years and have a nest egg, while another that has spent or given away prior to... used to be three years doesn't pay getting the same treatment. Most people lose money with insurance, but when you need it...it is great

 

[Purdue95Grad]

Several years ago my financial advisor got me to purchase a Long Term Care policy for my wife (she's currently 57 and healthy)
It has always been a bit expensive, but yesterday's mail had the new annual premium indicating it is increasing from $3100 to $7800.

Is this corporate greed, inflation, or an indication of an inept company trying to claw back profits from a disastrous offering?

I'm probably in the hole $30k, but I'm having a hard time continuing this money pit. What would you do?

As others have said, you absolutely should find out what’s going on here. She’s still fairly young and if healthy, should still be able to shop around for policies.

Insurance itself is about balancing risk, of course, but this is a policy I wish more people had. I got one from northwestern mutual about 7 years ago because I had an aunt who suffered a series of strokes that rendered her essentially a vegetable. She had no directives and no care policy. So when any funding the family could get ran out, she laid in their living room in a hospital bed and her family had to take care of her 24/7. That might be more of a story for having things like wills and directives established etc but a plan would have provided much more financial help.

My parents invested in one, and when we had to move my dad into a facility five years ago or so, the policy kicked in. The facility at the time was almost $8k/month, and the plan covered every dollar and saved us from having to worry about raiding their savings etc and allowed my mom to stay in her house.

I get they aren’t cheap but folks can be ruined quickly by the costs of long term care.

Your advisor needs to give an answer for that steep increase though and then better start shopping around for your wife because that kind of increase is absurd and I would question how that policy was setup to even allow for that kind of premium increase.

 

[PurdueDave]

As others have said, you absolutely should find out what’s going on here. She’s still fairly young and if healthy, should still be able to shop around for policies.

Insurance itself is about balancing risk, of course, but this is a policy I wish more people had. I got one from northwestern mutual about 7 years ago because I had an aunt who suffered a series of strokes that rendered her essentially a vegetable. She had no directives and no care policy. So when any funding the family could get ran out, she laid in their living room in a hospital bed and her family had to take care of her 24/7. That might be more of a story for having things like wills and directives established etc but a plan would have provided much more financial help.

My parents invested in one, and when we had to move my dad into a facility five years ago or so, the policy kicked in. The facility at the time was almost $8k/month, and the plan covered every dollar and saved us from having to worry about raiding their savings etc and allowed my mom to stay in her house.

I get they aren’t cheap but folks can be ruined quickly by the costs of long term care.

Your advisor needs to give an answer for that steep increase though and then better start shopping around for your wife because that kind of increase is absurd and I would question how that policy was setup to even allow for that kind of premium increase.

Thanks for your input. Your experience is exactly why I bought the policy to begin with.

Apparently Met life just screwed up and way missed on their costs for benefits. They then requested the massive rate increase from the state of ohio which approved it. But the regulators won't answer why they allowed such a massive increase.

According to a Cincinnat newspaper, the increase impacted more than 8000 policy holders with most seeing 100% increases. Why my wife's is 250% can't be answered.

I can continue the policy and pay the massive increase; request a quote for a significantly reduced benefit; or just let it lapse. I'm not sure what I'll do.

 

[tjreese]

Thanks for your input. Your experience is exactly why I bought the policy to begin with.

Apparently Met life just screwed up and way missed on their costs for benefits. They then requested the massive rate increase from the state of ohio which approved it. But the regulators won't answer why they allowed such a massive increase.

According to a Cincinnat newspaper, the increase impacted more than 8000 policy holders with most seeing 100% increases. Why my wife's is 250% can't be answered.

I can continue the policy and pay the massive increase; request a quote for a significantly reduced benefit; or just let it lapse. I'm not sure what I'll do.

Not knowing why the increase it makes it harder to know what to do. Is it a yearly thing where you can go reduced and then go back to where you want...knowing that she is a year older. I wonder if any of the issues surrounding Covid put more people for longer in care? Part of the increase could be that the insurance puts people in 5 year or so groups and she is paying the same as someone 5 years older?

 

[Purdue95Grad]

Thanks for your input. Your experience is exactly why I bought the policy to begin with.

Apparently Met life just screwed up and way missed on their costs for benefits. They then requested the massive rate increase from the state of ohio which approved it. But the regulators won't answer why they allowed such a massive increase.

According to a Cincinnat newspaper, the increase impacted more than 8000 policy holders with most seeing 100% increases. Why my wife's is 250% can't be answered.

I can continue the policy and pay the massive increase; request a quote for a significantly reduced benefit; or just let it lapse. I'm not sure what I'll do.

Damn. That's upsetting and frustrating to read, especially when you see what their executives get paid out, etc.

I'm going to have to go back and look at my policy, but I am almost positive mine has a cap on the annual premium increase. That might be a difference between Indiana and Ohio, though, as well.

Did your financial advisor indicate that you could run into the same issue if you wanted to shop around? My parents had a sweet deal with Allianz that I would put money on not being offered now. Like I said, mine is with NWM, and my benefits compared to what they had fall well short, but would still cover a good facility.

I def can't speak for everyone, but I know the LTC plan my parents had was a true blessing to the family. Coincidentally, not two weeks after my dad moved into the facility he was in, I had a high school classmate who's mom moved into the same facility. They had no LTC policy and every payment was out of pocket, so the husband was raiding savings and retirement and was starting to talk about having to sell the house if the mom was in the facility X number of months longer. The mom passed after six or seven months there, but there are folks who are in facilities for YEARS families can be drained completely dry. It's almost like Russian roulette at times when it comes to these types of things.

 

[Katscratch]

To some degree it's an actuarial exercise. Squirreling away the money that would be spent on premiums and having it handy for home care some day is a legit way of thinking about it, especially considering if you pass away without needing it you have nearly all of the money.

My mom passed last year at age 93. She had long term care ins until my dad passed years earlier; then we moved near where she lived and decided that the premiums weren't worth the potential benefit. She died without never needing it - went to an exercise class and had a 1/2 mile walk one morning and passed away with no apparent illness that night.

On the other hand, the story above about permanent incapacitation such as long-term Alzheimers? That's a great advert for having it. I think in part it depends on one's personal, unique financial and family situation for capacity to provide for long term illness.

 

[Purdue95Grad]

To some degree it's an actuarial exercise. Squirreling away the money that would be spent on premiums and having it handy for home care some day is a legit way of thinking about it, especially considering if you pass away without needing it you have nearly all of the money.

My mom passed last year at age 93. She had long term care ins until my dad passed years earlier; then we moved near where she lived and decided that the premiums weren't worth the potential benefit. She died without never needing it - went to an exercise class and had a 1/2 mile walk one morning and passed away with no apparent illness that night.

On the other hand, the story above about permanent incapacitation such as long-term Alzheimers? That's a great advert for having it. I think in part it depends on one's personal, unique financial and family situation for capacity to provide for long term illness.

Fully agree with this as well (which is why I made the edit to my post about Russian roulette lol). I have no idea what possessed my folks to get a plan. They never planned their funerals, but somehow had the foresight to get a plan. And you're right, you might go through life and never need it. That's the risk, for lack of a better way of putting it. I looked at it twofold: I didn't want anyone to have to be burdened by having to take care of me physically after a certain point, and I sure as heck didn't want my retirement and savings to be raided and given to a place that changes my adult diaper and spoon feeds me until I kick it.

I should note that while I'm a proponent of LTC policies anecdotally, I would really just like to call all my own shots and wish this country would allow for that. My buddy and I joke all the time that when either of us gets diagnosed with something awful and terminal, we're concocting that last, glorious cocktail for the other person that will end it all. While I have nothing but respect and admiration for the place that took care of my father, I could not stand going in there nearly every day to see him. Sounds a bit hypocritical of me to keep paying the monthly premium and have that as my overriding wish, but I do it more for the others around me than myself.

 

[Katscratch]

Fully agree with this as well (which is why I made the edit to my post about Russian roulette lol). I have no idea what possessed my folks to get a plan. They never planned their funerals, but somehow had the foresight to get a plan. And you're right, you might go through life and never need it. That's the risk, for lack of a better way of putting it. I looked at it twofold: I didn't want anyone to have to be burdened by having to take care of me physically after a certain point, and I sure as heck didn't want my retirement and savings to be raided and given to a place that changes my adult diaper and spoon feeds me until I kick it.

I should note that while I'm a proponent of LTC policies anecdotally, I would really just like to call all my own shots and wish this country would allow for that. My buddy and I joke all the time that when either of us gets diagnosed with something awful and terminal, we're concocting that last, glorious cocktail for the other person that will end it all. While I have nothing but respect and admiration for the place that took care of my father, I could not stand going in there nearly every day to see him. Sounds a bit hypocritical of me to keep paying the monthly premium and have that as my overriding wish, but I do it more for the others around me than myself.

One other thought -- if you think those premiums are expensive at age 57, just wait -- every year older you get it gets more expensive per month in a major way..

 

[Purdue95Grad]

One other thought -- if you think those premiums are expensive at age 57, just wait -- every year older you get it gets more expensive per month in a major way..

That's a great point. I got mine in my 40s so I know I benefitted from being younger as well with my premiums.

 

[PurdueDave]

One other thought -- if you think those premiums are expensive at age 57, just wait -- every year older you get it gets more expensive per month in a major way..

That was the reason we bought her plan when she was 40. Premiums were relatively low, but did increase several times over the years. Strange that they didn't increase at all between 2020 and now, but then go up 2.5x.

I'm almost certain we'll never use it. I'll die well before her and she'll likely need to go to a nursing home after I'm gone. But, since we have no kids and she is a homebody, she'll probably forget about the plan and never use it.

 

[Purdue95Grad]

That was the reason we bought her plan when she was 40. Premiums were relatively low, but did increase several times over the years. Strange that they didn't increase at all between 2020 and now, but then go up 2.5x.

I'm almost certain we'll never use it. I'll die well before her and she'll likely need to go to a nursing home after I'm gone. But, since we have no kids and she is a homebody, she'll probably forget about the plan and never use it.

This actually made me chuckle (and let's be honest, you do have to laugh at some of this stuff or it becomes so depressing). My brothers and I had no idea our parents had invested in a LTC policy until one day, my middle brother was visiting their house, rifling through some papers, and found it in a file folder. Our immediate (and is one of the many reasons I'm probably going right to hell when I kick it) was 'you mean we could have sent Dad somewhere sooner???' 😂😂😂

 

[Indy_Rider]

I think the issue with these LTC policies (notice I said think) is that so many healthcare facilities are no longer accepting Medicaid. The ones that still do have strict limits to how many they will take because Medicaid doesn't actually pay out enough to cover cost anymore. So, these plans can't count on that to help offset the cost and are now getting hit with much larger bills as the cost of Long Term Care has really gone up.

I've had to deal with Long Term Care cost a couple of times now due to aging family members, so that 7800, depending on what you need from a care perspective might not even be a month of care now if you want to be in an actually good facility.