My wife's mom had a policy payout fully. Be forewarned... You need somebody with lots of time to chase insurance on this. My wife worked tirelessly keeping up with this. They'll very happily never pay a nickel if there isn't somebody willing to jump through hoop after hoop. If you qualify for LTC, you will most likely not be able to do it yourself. If you don't have an advocate, you won't get the benefit.
Here's my experience with my mom's LTC with her dementia. 1. Is it worth it? Yes. We broke even on the total paid in after around 10 months. She's now going on two years. The premium cost was around the cost of a car insurance policy. Much easier to afford than the monthly memory care costs. 2. Yes, the premiums were tax deductable. We receive a 1099-LTC. While we don't pay taxes on the reimbursements, it gets reported offset by the actual care cost. 3. The biggest thing that people don't understand are the barriers to payout. Assisted living doesn't generally begin payout unless the person is having trouble with daily activities. It's easier to be approved if the person is in a facility versus being at home. Fortunately, memory care qualified mom since she's still able to feed and bath herself. Be sure you know what qualifies to trigger payouts for a policy. Prior to moving to memory care, I had to dispute a claim rejection. They are very picky about submitting invoices, but I've got a system down now. Some facilities will do it for you.
Insurance is an expense, not an investment. You will always do better *on average* by investing the premium and bearing the costs yourself. The question is whether or not the cost of insurance is worth it to avoid the worst case scenarios. There is no certain right or wrong answer. You have to answer for yourself based on your own risk tolerance.
LTC policies often have a specific cap. Knowing what that might be helps to work out the cost-benefit comparison between takkng out LTC insurance vs. self-insuring.
I have heard of premiums increasing by double or 150%. This forces you to either let it go after years of paying premiums or being burdened with the extra cost that they might deny your claims.
I have Federal Retiree LTC. But, being uncomfortable in general with LTC Options in the USA (along with other things) I retired to Thailand, from where I am writing this. My LTC Insurance pays outside the USA up to 80% of the policy limit. Senior Care in Thailand is so far superior, and so much more affordable, than what's available in the USA, I want other Seniors to be aware of this, and encourage any of them to check out Thailand options.
Lots of good information, Kevin. Thanks. Unfortunately, although we're getting close but not yet retired, we (myself and wife) will be in the social security paycheck-to-paycheck group with a modest 401k. Not that we weren't aware about the need for long term care if we make it that far, it's just that premiums are so steep (steep at the time we first gave it some thought, which was only recently). So, all quite sobering to consider. It keeps getting harder to age with dignity. Maybe move to Europe and retire where LTC might be affordable or perhaps government provided, or just move to Oregon when it's time and leave painlessly?
Investing $717 per month from age 55 to 85 results in $1.7M using a little less than standard market returns of 10%. $1.7M! Also, the vast majority of people will need nowhere near $350K per person. Those figures are unrealistic and skewed higher by a small minority with extremely large expenses. They also call LTC things that make family members help with for little to no cost for most seniors. It’s also telling that insurance companies want to bundle these policies with other products known to be poor uses of capital such as whole life insurance and annuities.
Years ago those who paid to have guaranteed premiums, found out when companies who sold LTC ran to government going "oops" we screwed up, can't pay our obligations, the companies were allowed to repeatedly drastically increase any premiums and when people couldn't pay they lost everything paid into it. (originally) So allowed once, can do it again. As far as statistics, it all depends on what it is based on, the details and spin put on it. When I try to get specifics and people do not provide or get them, I question validity. When I ran scenarios on the returns on the premiums in LTC or investing them, it was interesting. It also seems those who can't afford LTC's, need it and those who can, don't.
Even if you’ve paid $300,000 in premiums over a few decades, you can get it all back pretty quickly if you end up needing it. My mother-in-law is in an excellent assisted living that’s over $7,000 a month. Post a fall and surgery. My own mother, healthy and active at 90, grumbles about the high premium costs but still thinks it’s smart to have this coverage, just in case.
Long term care is 2 separate things. 1. Assisted Living with a la carte services. 2. Skilled nursing care at a Skilled Nursing Facility. If you already have $6000 monthly allocated, it will be sufficient to pay for assisted living. If you need more care, Medicare will pay for SNF if you have an injury or illness that requires this level of skilled nursing care up to be 100 days. Every facility is different in quality, services, and cost. It’s not typical you need SNF. That’s for seniors who are bedridden. Medicare wants the patient to get rehabbed well enough to go to assisted living facility or return home with a family member taking care of them.
Formerly from the Philippines and heard a resort style assisted living there is $2K/month. Might go back there if I really need it. Have friends here (los angeles)who went back home bec. long term care here is just too much.
Far less than 5% need long term care in a skilled nursing facility for 2-years. There are not enough beds and rooms in skilled nursing homes to assist > 40% needing skilled care for 2+ years. It's the type of long-term care that you need that will matter most. IMO, this insurance is difficult to justify IF YOU have sufficient resources to self-insure. AND, if you don't have sufficient resources, you'll likely struggle to pay the premiums and will likely drop the policy before it is used.
@@foundryfinancial There are several sites I've visited that provide data about that the % of people needing long term care does not come close to equaling the number of people that will require skilled nursing. If you look, you can find. Yup, everything is expensive but be careful on your expectations that ALL EXPENSIVE THINGS will be covered by your Long-Term Care policy, and for how long, and how long before the coverage begins (many have a 90-day lag time).
Excellent Video Kevin. You talk about building LTC in your financial plan, which is what you are doing. $350,000 per person seems a little high to me. Just curious how many years are you planning on this to grow and what rate of return are you using?
Skilled Nursing Facilities are $400 a night, $145,000 a year. Most seniors just need an assisted living housing with basic caregiving that cost $5000 a month or $60K a year. You don’t need expensive LTC insurance for this if you diligently saved.
You’ve referenced a study done by Genworth on LTC Costs. Don’t trust studies done by the insurance industry. It amounts to a study done to justify rising costs…this is the bottom line and the benefactor of these studies (Genworth, et al) are glad when the data points justify their rising costs. This is inherently biased data.
I don’t disagree, I’m always concerned with self interested studies. But partially it’s the most comprehensive study out there. Do you feel there isn’t skyrocketing long term care costs - higher than the rate of inflation?
@@foundryfinancial LTC costs have definitely gone off the charts. I started my LTC when I was 51 and I’m 61 now. I have Genworth through my pension and Its gone up to $109/mo. I’m keeping it for now, but we’ve already been told it will be going up for the next three consecutive years.
You can get LTC in the Philippines $24,000/yr or Thailand $36,000/yr for a fraction of the cost in USA…PLUS…these two cultures are so superior to US caregivers. I’ve been traveling to both countries since 2005. I’ve been exploring this since I was declined LTC coverage because I consulted a doctor on memory problems.
I think you would be better off investing to have money for long-term care. It also cuts through the red tape of the insurance company. That is what I am and have been doing .
I looked into LTC insurance and it's a joke! There's only a 5 year window on it......oh guess when you'll need LTC, predict the last 5 years of you your spouse's life🙄. Terrible purchase
I know someone with LTC with fixed costs of $3,000 a year that pays $3,000 a month, if 3 ADLs can’t be done. If you die without using LTC, then premiums are returned.
I live on SS and Pension, and I have most retirement savings. . I have long term care ins, and have had it for many yrs now. I previously worked at a medical center, and as such, we had varied and lucrative benefits offered to us as employees. when I retired, the LTC policy was turned over to me, and I still have it. I have the standard LTC type policy which was available at the time that. My premiums are not expensive, but if I were to get that policy now, they would be much higher. I presently pay $433.80 every quarter, which is very, very reasonable by todays standards. These policies are very iffy, from what I have heard & read, when a claim is initiated, but that goes for all insurance companies. So I guess in considering whether it is a waste of money, is anyone's guess. You just have to take your chances and hope for the best in any situation, THAT IS LIFE, isn't it.
My wife's mom had a policy payout fully. Be forewarned... You need somebody with lots of time to chase insurance on this. My wife worked tirelessly keeping up with this.
They'll very happily never pay a nickel if there isn't somebody willing to jump through hoop after hoop. If you qualify for LTC, you will most likely not be able to do it yourself. If you don't have an advocate, you won't get the benefit.
Great advice.
This was our experience with my dad as well
Here's my experience with my mom's LTC with her dementia. 1. Is it worth it? Yes. We broke even on the total paid in after around 10 months. She's now going on two years. The premium cost was around the cost of a car insurance policy. Much easier to afford than the monthly memory care costs. 2. Yes, the premiums were tax deductable. We receive a 1099-LTC. While we don't pay taxes on the reimbursements, it gets reported offset by the actual care cost. 3. The biggest thing that people don't understand are the barriers to payout. Assisted living doesn't generally begin payout unless the person is having trouble with daily activities. It's easier to be approved if the person is in a facility versus being at home. Fortunately, memory care qualified mom since she's still able to feed and bath herself. Be sure you know what qualifies to trigger payouts for a policy. Prior to moving to memory care, I had to dispute a claim rejection. They are very picky about submitting invoices, but I've got a system down now. Some facilities will do it for you.
Thanks for this!
This is super helpful. Great job Kevin. I enjoy listening to you because you explain things so well without talking down to us.
Thank you!
Insurance is an expense, not an investment. You will always do better *on average* by investing the premium and bearing the costs yourself. The question is whether or not the cost of insurance is worth it to avoid the worst case scenarios. There is no certain right or wrong answer. You have to answer for yourself based on your own risk tolerance.
LTC policies often have a specific cap. Knowing what that might be helps to work out the cost-benefit comparison between takkng out LTC insurance vs. self-insuring.
I have heard of premiums increasing by double or 150%. This forces you to either let it go after years of paying premiums or being burdened with the extra cost that they might deny your claims.
I have Federal Retiree LTC. But, being uncomfortable in general with LTC Options in the USA (along with other things) I retired to Thailand, from where I am writing this.
My LTC Insurance pays outside the USA up to 80% of the policy limit.
Senior Care in Thailand is so far superior, and so much more affordable, than what's available in the USA, I want other Seniors to be aware of this, and encourage any of them to check out Thailand options.
Lots of good information, Kevin. Thanks. Unfortunately, although we're getting close but not yet retired, we (myself and wife) will be in the social security paycheck-to-paycheck group with a modest 401k. Not that we weren't aware about the need for long term care if we make it that far, it's just that premiums are so steep (steep at the time we first gave it some thought, which was only recently). So, all quite sobering to consider. It keeps getting harder to age with dignity. Maybe move to Europe and retire where LTC might be affordable or perhaps government provided, or just move to Oregon when it's time and leave painlessly?
Investing $717 per month from age 55 to 85 results in $1.7M using a little less than standard market returns of 10%. $1.7M!
Also, the vast majority of people will need nowhere near $350K per person. Those figures are unrealistic and skewed higher by a small minority with extremely large expenses. They also call LTC things that make family members help with for little to no cost for most seniors.
It’s also telling that insurance companies want to bundle these policies with other products known to be poor uses of capital such as whole life insurance and annuities.
I should have mentioned it’s 350k inflated after 20-25 years. $68k in today’s dollars.
@@foundryfinancial inflation-adjusted at 2.5%, you’d have $979K vs the $68K needed, in today’s dollars. That’s a bet I’m certainly willing to take.
@@CalmerThanYouAre1 yeah, for most people with assets - I think investing is a better bet.
68, healthy. Planning a move to SE Asia next year to prepare for my extreme old age. Much better long term care available there.
Years ago those who paid to have guaranteed premiums, found out when companies who sold LTC ran to government going "oops" we screwed up, can't pay our obligations, the companies were allowed to repeatedly drastically increase any premiums and when people couldn't pay they lost everything paid into it. (originally) So allowed once, can do it again. As far as statistics, it all depends on what it is based on, the details and spin put on it. When I try to get specifics and people do not provide or get them, I question validity. When I ran scenarios on the returns on the premiums in LTC or investing them, it was interesting. It also seems those who can't afford LTC's, need it and those who can, don't.
Very nice job thank you
Even if you’ve paid $300,000 in premiums over a few decades, you can get it all back pretty quickly if you end up needing it. My mother-in-law is in an excellent assisted living that’s over $7,000 a month. Post a fall and surgery. My own mother, healthy and active at 90, grumbles about the high premium costs but still thinks it’s smart to have this coverage, just in case.
Long term care is 2 separate things. 1. Assisted Living with a la carte services. 2. Skilled nursing care at a Skilled Nursing Facility. If you already have $6000 monthly allocated, it will be sufficient to pay for assisted living. If you need more care, Medicare will pay for SNF if you have an injury or illness that requires this level of skilled nursing care up to be 100 days. Every facility is different in quality, services, and cost. It’s not typical you need SNF. That’s for seniors who are bedridden. Medicare wants the patient to get rehabbed well enough to go to assisted living facility or return home with a family member taking care of them.
Formerly from the Philippines and heard a resort style assisted living there is $2K/month. Might go back there if I really need it. Have friends here (los angeles)who went back home bec. long term care here is just too much.
We need an ACA for LTC. Before many of the Boomers are out of luck.
ACA?
@@priestesslucy Affordable Care Act (Obamacare)
@@priestesslucyACA is Obamacare
Far less than 5% need long term care in a skilled nursing facility for 2-years. There are not enough beds and rooms in skilled nursing homes to assist > 40% needing skilled care for 2+ years.
It's the type of long-term care that you need that will matter most. IMO, this insurance is difficult to justify IF YOU have sufficient resources to self-insure. AND, if you don't have sufficient resources, you'll likely struggle to pay the premiums and will likely drop the policy before it is used.
I’d love to see your source (I’m just going off Morningstare data), but do you think skilled nursing is the only expensive care?
@@foundryfinancial There are several sites I've visited that provide data about that the % of people needing long term care does not come close to equaling the number of people that will require skilled nursing. If you look, you can find.
Yup, everything is expensive but be careful on your expectations that ALL EXPENSIVE THINGS will be covered by your Long-Term Care policy, and for how long, and how long before the coverage begins (many have a 90-day lag time).
I’ll take the gas pipe when I’m no longer self sufficient
Excellent Video Kevin. You talk about building LTC in your financial plan, which is what you are doing. $350,000 per person seems a little high to me. Just curious how many years are you planning on this to grow and what rate of return are you using?
That’s an inflated number in 20+ years. In today’s dollars plan on around $68k for 2 yrs.
@@foundryfinancial Thanks for the clarification. I thought you were starting out at $350k in today's dollars per person.
Skilled Nursing Facilities are $400 a night, $145,000 a year. Most seniors just need an assisted living housing with basic caregiving that cost $5000 a month or $60K a year. You don’t need expensive LTC insurance for this if you diligently saved.
You’ve referenced a study done by Genworth on LTC Costs. Don’t trust studies done by the insurance industry. It amounts to a study done to justify rising costs…this is the bottom line and the benefactor of these studies (Genworth, et al) are glad when the data points justify their rising costs. This is inherently biased data.
I don’t disagree, I’m always concerned with self interested studies. But partially it’s the most comprehensive study out there.
Do you feel there isn’t skyrocketing long term care costs - higher than the rate of inflation?
@@foundryfinancial LTC costs have definitely gone off the charts. I started my LTC when I was 51 and I’m 61 now. I have Genworth through my pension and Its gone up to $109/mo. I’m keeping it for now, but we’ve already been told it will be going up for the next three consecutive years.
You can get LTC in the Philippines $24,000/yr or Thailand $36,000/yr for a fraction of the cost in USA…PLUS…these two cultures are so superior to US caregivers. I’ve been traveling to both countries since 2005. I’ve been exploring this since I was declined LTC coverage because I consulted a doctor on memory problems.
Bad advice about helock or reverse mortgage
I think you would be better off investing to have money for long-term care. It also cuts through the red tape of the insurance company. That is what I am and have been doing .
Save on long-term care: put down your plastic sheeting now
😂
I looked into LTC insurance and it's a joke! There's only a 5 year window on it......oh guess when you'll need LTC, predict the last 5 years of you your spouse's life🙄. Terrible purchase
LTCI is a waste of money.
Don't fight it. It's God's way of saying "Come Join Me"
I know someone with LTC with fixed costs of $3,000 a year that pays $3,000 a month, if 3 ADLs can’t be done. If you die without using LTC, then premiums are returned.
I live on SS and Pension, and I have most retirement savings. . I have long term care ins, and have had it for many yrs now. I previously worked at a medical center, and as such, we had varied and lucrative benefits offered to us as employees. when I retired, the LTC policy was turned over to me, and I still have it. I have the standard LTC type policy which was available at the time that. My premiums are not expensive, but if I were to get that policy now, they would be much higher. I presently pay $433.80 every quarter, which is very, very reasonable by todays standards.
These policies are very iffy, from what I have heard & read, when a claim is initiated, but that goes for all insurance companies. So I guess in considering whether it is a waste of money, is anyone's guess. You just have to take your chances and hope for the best in any situation, THAT IS LIFE, isn't it.
Only multi millionaires can afford long term care, its not worth worrying about
Well that’s not true, but it’s not cheap.