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Children Liable Too ? Long Term Health Care Coverage.....Your Thoughts Please

edited June 2012 in Off-Topic
Morn'in Coffee,

For the older group here; do you have a Long Term Health Plan or feel this is not needed?

For the younger group here; do you feel your parents should have a Long Term Health Care Plan, if they do not currently have such a plan.

The direct questions being the ongoing premiums cost to a retiree (retirement savings money reductions) or the possible out-of-pocket costs for uncovered medical expenses to the individual and/or the children of the individual.

I have retained this link in full; as there are 74 comments.
Is it needed, and who is liable?

Another link for costs and calcualtor that just hit my pc's inbox. Yes, this is try'in to sell a product; but may be of value.
Costs and Calculator

I thank you all in advance for your insights into this area of money.

Take care,
Catch

Comments

  • My wife and I both took out LTC policies about 6 years ago. I was 52 at the time and she was 58. The reason we did so was to protect our retirement assets in case one of us needed high priced long term care. Old age isn't the only reason you may need this care. If one of us had a stroke or even a car accident that left us in need of daily care for the rest of our life, the other spouse could see their savings wiped out for the rest of their life too.

    Paying the bill for this insurance hurts, but we do it because of the fact one of us could be left without savings. Secondary would be lessening the emotional burden to our kids if they had to make long term care decisions for us. I don't believe they are (or should be) obligated financially.

    The biggest problem I've had with the policy is that when we signed, we were told that our yearly cost for the policy was locked in for the rest of our lives. That is not the case. The insurance company can and did petition the state to raise prices substantially. On the plus side, NY state does rebate some of the cost on your taxes. The states certainly have incentive for us to buy this insurance since the cost of Medicaid comes out of state budgets.

    Anyway, that is the reason for us buying LTC.
  • edited June 2012
    Catch, I must admit that, for most of my life, I was clueless (could have cared less) about any long term planning. When my workplace first offered a LTC plan I had never heard of them before. Long story short, neither I nor my husband qualified at that point for the workplace plans. So we have enough savings, I figure, for one of us to be self-insured. On the other hand I have no children.

    I find it odd that only people with children face the problem described in the WSJ article. I have always gladly paid taxes that supported other peoples children and the raising of the children, if necessary. There is only so much blood in a turnip. If the children are to take on more and more of their own expenses with a zillion savings accounts (HSA, 401k, 529, ...) and insurance policies like LTC, where does a child save or insure for their parent-risk especially as wages stagnate or go down while everything else goes up?

    I don't know what the answer is in our culture but as I grow older I am getting an attitude. The boomers will die even if not given proper feeding and care. So I don't really care any more. However, the laws described need to be abolished. How can a society look at the dying vs the newborn and choose the dying? If society want to make a business of dying, then leave it as a society problem and collect taxes until people wise up. Talking things to death is ridiculous. The people doing the talking want a free lunch to magically appear but most ordinary people can't afford to pay for their own eventual care much less that of their parents. So the lawyers in the litgations will be the only ones collecting in many to most cases. Savings to government programs is probably small.

    And yes, LTC policies were orginally underpriced so many people who bought unchangable policies have experienced increases.
  • Hi MikeM,
    Thank you for your input. A related LTC, personal story I read a few weeks ago indicated what you noted. A couple was given a choice of increased premiums (the contract apparently had this "fine" print) or the same premium for now; but decreased benefits as described in the original policy.
    'Course, the note I have found most often from the insurance companies is that "they never expected health care costs to be what they are today".
    I do understand this, and although our house would not want to pay more in premiums; ultimately an insurance company could choose to not offer a LTC policy, period.
    Truly an area, not unlike some other areas that provide the ultimate "catch-22", eh?
    Regards,
    Catch
  • Hi Anna,

    Well, you covered a lot of the common ground related to some of my thoughts, too.
    I have a genetic family background which indicates that I will retain a nearly full head of hair from now at age 64 and going forward until.....well, until.
    My post about the LTC; and similar related areas posted by others here, too; cause too much head scratching for me, on some days. No hair is falling out yet; and perhaps the head scratching is actually a stimulation to the scalp and of benefit. Although, I too become tired of the reasons for the head scratching.
    Anna, thank you for your insight and thoughts into this area.

    Take care,
    Catch
  • edited June 2012
    As we enter the "golden years," I begin to doubt the wisdom of old teachings like not standing near trees in thunderstorms. Nope, don't got. Both in mid 60s, no kids, good health. Have to at least wonder whether the "probabilities" favor buying this stuff or just letting our savings run.
  • edited June 2012
    Hi hank,
    Yes, we do get into the "coin toss" of life events, eh?
    No simple and straight-forward answers that will be the same of all of us.

    Hey, a non-related question. As you wander about your part of the state, do you have an inclination as to second/vacation homes and pricing in the area? I know some bigger parcels with enough waterfront have recently sold in the GT area, including Leelanau and related; but these were purchases by companies with resort building in mind.
    I would also expect some of the high-end properties will still attract the monies from the high networth folks. The question is more to the middle of the range, shoreline properties with existing housing and where this market has, or is trending.

    It appears there is still many waterfront properties, mostly with exisiting houses for sale. But, I am not familiar with; nor I have monitored this part of the state over the past 4 years.
    The broad question would be as to whether this particular market area (shoreline) has bottomed or still looking for a bottom....or otherwise.
    Thank you, Hank.

    Take care,
    Catch
  • edited June 2012
    Today is a very important day for our country, our rights and our economy. Today the US Supreme Court is supposed to decided whether Obamacare is fully or partially or not at all, legal. I am not bringing this up to debate a hot political topic, but only because this decision will probably influence whether or not long term healthcare insurance can be a made mandatory or not. I believe it is only a matter of a several years before mandatory long term healthcare will be pushed forward, if the US SC upholds Obamacare. Whatever you buy today, could be out the window.

    But putting this important decision to the side for the moment, I have not purchased long term healthcare coverage. As pointed out, a deal is not a deal, when one party can change the terms of the contract. Yes technically the insurance companies don't do this, the state does. But we know that the collective they, spend a lot of millions a year lobbying the states.

    Not being the most knowledgeable on what is a very complicated insurance policy, my perception is that there are payout caps on the insurance policy. So if you or a love one is in a nursing home for a few years, then the insurance stops paying. But correct me if I am wrong.

    The other caveat is the rising rate of the cost of care. Its historic rate of increase far exceeds the official inflation rate. What you think is sufficient coverage today, might be well short of the daily coverage in 20 years. You might buy coverage of $300 a day, but what if the cost when you need it is $1,200 a day?

    Just my personal anecdote. My dad, who did not have long term care coverage, was mostly in but sometimes out of nursing homes for about 4 years, not including the rehabilitation stays which were covered by Medicare. The cost was around $10,000 a month because he required skilled nursing. Today that same cost would probably be about $12,000 a month. That cost included a state fee of $3,200 a year. I call that a tax, not a fee. Because with a fee you are suppose to be paying for something based on your exclusive usage. Most of his roommates were Medicaid patients. By law they could not receive lesser care than other paying patients. So how is this a fee? No, it was a tax for being very sick and not being able to take care of yourself. Government is so very compassionate.

    If he had long term care insurance, I don't know how much would have been covered. Too many unknowns to guess. I think that is what my basic message is. Planning is so very hard for the individual, because our government cannot plan anything itself. They can't even decide on a definitive annual budget.

  • Hi Maurice,
    I did not note the pending court decision; but have thought about this too; and it is indeed a part of whatever comes to light in the coming years.
    Thank you for your time and effort with this topic.
    Take care,
    Catch
  • edited June 2012
    Reply to Catch 22: We're not far from TC and I know couple folk who've gotten unbelievable buys in past 1 - 2 years. One couple got a nice house that was being forclosed on with a hilltop lake view for around $125,000. We did a re-fi year ago - so know from the appraisal that prices were still at rock bottom... No desire for a second home. We had a second home up here when we worked downstate. Unless you rent it out when not there, it's difficult to make financial sense of such. Yep, there's some appreciation and we certainly enjoyed the weekends up here. In our tours, we really like the stretch along Lake Superior between Paradise and Whitefish point. Lot of parcels for sale - probably good prices - but haven't checked. As you know, that area's only about hour's drive north the Big Mac and still very remote. Heck, we tried to buy ice cream when up there last week. Went out at 9PM & found everything closed - even the lone gas station ..... OOPS - missed your most important query. Haven't priced shoreline but living in area past 15 years my impression is it's pretty much gone with the general price pattern. Think would have heard if otherwise. Around the TC area, lskefront was running north of $500 per foot at the pre '08 height. Don't know where it is now, but likely quite a bit lower. In the UP, of course, land & lakefront is lot cheaper.
  • Reply to @Maurice: Thanks for the insights. Them darn unknowns. Unfortunately, all my experiences with insurance companies have led to the conclusion they're in the business of exacting the highest premiums possible while paying out the lowest benefits they (and their legion of high-paid attorneys) can get away with. Sad, because in theory, LTC is something we all need ... On another note, my understanding is the SC pretty much reached the decision month or more ago, and essentially have been writing the majority & dissenting opinions over that period. Marsha Coyle on PBS (snooze) speculated this would all be released Thursday, the last day of their term before recess - though could come today.
  • I retired twelve years ago at a relatively young age and the first thing I did upon retirement was to take out a LTC health insurance policy. At that time, I had a clean bill of health (no pre-existing conditions, no prior hospitalizations or medical problems of any sort) and the product was relatively new. As a result, most of the major insurance companies offering LTC policies had drastically underpriced their policies. I recognized this immediately and, even though I was probably 2-3 decades away from needing this coverage (assuming I did not sustain an unexpected injury or medical condition, e.g., auto accident, cancer, etc.) I enrolled in a policy because I knew I could do so at rock bottom prices.

    At that time, several insurance companies offered policies in which one could pay higher yearly premiums but completely pay for lifetime coverage, with yearly cost-of-living coverage adjustments (increases) in their policies, after ten years. Amazingly, two large insurance companies offered the option of paying a large sum up front in one payment and obtaining lifetime coverage without ANY yearly or additional payments in future years. Needless to say, I jumped at this option and obtained lifetime LTC coverage with one large payment. Within two years, the insurance companies realized that these policies were disadvantageous and discontinued them so that they would have the option of increasing yearly premiums to keep pace with rising medical costs.

    One important consideration for anyone considering LTC insurance policies ---- be certain that the insurance company you stake a policy with has the highest financial ratings for stability and solvency from ratings companies such as A.M. Best, S&P, Moody's etc. If your insurance company folds in the next decade or two before you actually need to use your LTC policy you are up a creek without a paddle and all of the money you have put into the policy is wasted. When I evaluated nearly ten LTC policies from major insurers over a decade ago, the companies which had the highest ratings were GE Capital Assurance, John Hancock and Allianz of Germany (highest rated at that time).

    My personal opinion is that LTC insurance is essential and you are one accident or misfortune away from unexpectedly requiring a lifetime of home care assistance, residence in an assisted living facility or nursing home and without this coverage you will quickly be wiped out financially, then forced to live in a facility not of your choosing based upon what Medicaid coverage will provide for. If I am wrong about this, please correct me, but I believe this is THE most important form of insurance for one's retirement years.
  • edited June 2012
    The results are in. The Supreme Court has upheld Obamacare. As MFO's unofficial futurist, I am predicting that you can expect complusatory universal LTC insurance to begin being pushed for future legislation. Remember you read it first here. Well I guess a few, like Accipiter, have probably read this elsewhere. It is in the manifesto.:)

    Quite probably those who have the best deals, will pay the highest surcharge. That will be a tax, supposedly going for those who cannot afford LTC. The usual exclusions will apply.
  • Long term care was already part of the Patient Protection and Affordable Care Act (ACA). HHS declined to implement it. So I am dubious that this administration would push for an even stronger version than the CLASS Act (Title VIII of the ACA).

    My takeaway is that LTC costs are so poorly understood (including by insurers), and generally so high, that it is not a good value at this time - private or public.

    Sebelius' letter (10/14/2011) to Boehner, declining to implement LTC:
    For 19 months, experts inside and outside of government have examined how HHS might implement a financially sustainable, voluntary, and self-financed long-term care insurance program under the law that meets the needs of those seeking protection for the near term and those planning for the future. The work has been groundbreaking in many ways and has taught us a great deal, much of which is captured in the attached report. But despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time. ... The law passed by Congress required me to design a plan that would be actuarially sound and financially solvent for at least 75 years.
  • Reply to @DlphcOracl: I agree with you that LTC is important insurance to have in retirement but maybe with the stipulation you have a spouse. I liken it to having life insurance during your working years with a young family. You have an obligation not to leave your family without financial means if you die. Same for LTC in retirement. If one spouse needs expensive long term care, the other spouse could be financially ruined for the rest of their life too. So I buy LTC for my wife's well being, and she does the same for me.

    On picking a high quality stable insurance company, in New York state we have something called an insurance partnership. This means that the insurance partnership would pick up your policy in the case your insurance company went bankrupt. This is really nice added protection set up by the state.
  • Reply to @MikeM:
    Thanks for mentioning Partnership for Long Term Care. I first learned about it on usenet:misc.invest.financial-plan. Here's the NYS version. At least that's what I think you're talking about.

    It's not quite what you're describing, though I still think it's a great deal. This was a program originally offered in four states (NY, Calif. Conn., Indiana), but since the mid 90s has gone nationwide. The original idea in the NY version was that if you purchased a private LTC policy from a participating insurer, that covered something like three years (the typical max time spent using LTC), then the state's Medicaid would pick up the costs once the insurance ran out. You would not need to spend down any money to qualify for the Medicaid benefit (this was called "total asset protection"). The other states' version said that you didn't have to spend down to zero to qualify for Medicaid - you could keep however much money as you were covered for by the insurance ("dollar for dollar"). Since the mid-90s, some states have adopted both versions.
  • edited June 2012
    I have a brother-in-law who lives and works in Singapore. He doesn't plan on returning to the USA anytime soon. I understand that the coverage doesn't begin until 2014, and I'm reasonably sure that he'll still be overseas at that time. I wonder if he'll have to pay into the health care plan or not as he's living and getting paid outside of the USA?

    Beachfront properties in MI? If only Ann Arbor had such property!
  • No - won't have to pay.

    "The individual mandate exempts U.S. citizens living abroad (see PPACA § 1501 (adding Internal Revenue Code (“IRC”) § 5000A(f)(4)))".
    http://www.ciab.com/WorkArea/DownloadAsset.aspx?id=2102

    If you want the gory text itself, you'll find it on pdf p. 318 of this rendering of Title I of the ACA: http://www.healthcare.gov/law/resources/authorities/title/i-quality-affordable-health-care.pdf
  • Thanks msf! My wife received an email today from her brother saying that this is a common topic of conversation among Americans in Singapore now. A certified U.S. accountant has told him that he wouldn't have to pay into Obamacare, thanks for confirming!
  • edited June 2012
    Reply to Mo.

    who knows if or when it will be "complusatory". I'm not worried either way.
  • Reply to @Accipiter: Thanks for pointing that out
  • edited June 2012
    Reply to @Maurice: As I see it (admittedly one narrow perspective) we currently have defacto socialized medicine from the standpoint we don't leave the sick & injured laying in the streets. I doubt EMS even asks for insurance information when they haul somebody to the ER. The uninsured receive EMS & emergency room care just as anyone else would. Providers recoup by jacking up prices. And in the end, you & I ("Responsible Joes") pay through higher premiums. If your employer is paying your premium rest assured it's at the expense of other benefits you'd otherwise receive. Now, that's a very regressive "tax" because the poor fella earning 40-50K a year is hit just as hard on his premiums as Bill Gates or other billionaires are. Obama Care, especially the clause requiring everybody to have insurance, will spread the burden around a bit.

    Also, I think chances are good that as the plan is debated over the course of the election campaign, public opinion will shift in its favor. (Looks like both candidates will have supported similar HC plans - one at the state level:-)
  • edited June 2012
    (goofed-:)
  • edited July 2012
    Genworth: Not worth the effort

    It appears the best final solution will be a plan where one simply falls off a roof.......
  • Thanks for the article. Found a related one from last March, saying that lots of other companies are getting out altogether. And that what's killing them is the current low interest rate environment: "For every 0.5 percentage point drop in investment return, ... insurers have to increase premiums by about 15 percent to maintain net income projections."

    Ironic that the low interest rates that are saving part of the financial industry (banks) are killing another part of the financial industry (insurers, or at least part of their business).

    http://www.bloomberg.com/news/2012-03-28/genworth-bets-on-long-term-care-as-insurers-flee-market.html
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