No I don't have a handle. Its just what is the "insurance" that you are buying with the premium. The one policy I saw over a decade ago and what 3-4 clients have discussed with me and this post, the LTC insurance is merely appreciation of principle in the 4% range. Anyone can create savings account with those same yearly premium amount and put them in CD's or purchase bonds. The difference being you get to keep that money if you never go to the nursing home and you don't have to go through the process of having to get the insurance company to pay (fyi its a a major hassle). Its not to say for some people, some situations and some policies it would definitely make sense. You would need to talk with Insurance agent to see what is available.
Long Term Care
- Thread starter Hawk_4shur
- Start date
I worried mostly about my wife having assets so she can go out and find a boy toy when I'm gone.
Decent product is going to result in a top-notch actuary(s) calculating a price for the company that won't be palatable for potential buyers. The companies need to, at least, not lose money.
You got in while the getting was still good. That ship sailed a long ago.
The are some life insurance products out there that have a rider for nursingnhomes. For example, my company has a Universal Life policy with a Flexible Health Car Benefit. So you have the advantages of a lIfe Insurance policy but can use the money if you need to go into LTC. If you never need LTC then you have your money in the UL and the death benefit. If you are 50, you would habe to be underwritten for Life insurance but you are still you enough, premium just a little higher than if you were say 25.
Maybe bump it up a few years.
I would rather die at 70 than 95.
Dying at 95 practically guarantees years of disabilities, mental and/or physical.
(I've had several relatives live past 90.)
It depends on your quality of life. My dad died of cancer at 87 and in many ways he was too young. He lived alone in a house he built in his 60’s. He golfed almost every day six months out of the year, kept two rental properties and did most of the maintenance himself, and went out to the bars every night to hang out with friends. He also had a couple of groups that he played cards with every week, and he went on a walk on the riverfront every day.
This subject comes up occasionally here, and I am struck at the naivety of people who think 70 is old these days.
I get what you're saying regarding the payout of benefits. However, this does not take into consideration the effect having ltc insurance has on medicaid covering ltc costs. Normally, medicaid does not kick in until your assets are really low and your income is spent down to a very low level.
Ltc insurance may (it does where I live) create a shield for your assets equal to the amount of benefits the insurer has spent on your behalf. So you still have to meet the income test (after spend-down paid for medical & other qualified costs if needed if needed), but they won't require you to spend your shielded savings before medicaid picks up the nursing home costs.
I would hope your financial planner understands and explains this to her clients. If not, you should find a new one, imo.
Edit to add: not all ltc products meet the criteria to qualify for this shield. Make sure you understand those criteria and a prospective policy before doing anything. Again, a financial planner could be a big help here.
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Yes this is far from financial advice. These are only my personal observations and prior experience, which also I might add is getting dated. You are also correct about The medicaid situation potentially being complicated. However in most cases, it is the assets that you are trying to protect not "shielded savings." The other aspect is medicaid will come back and claw back any resources from your estate after death in the amount paid for resources. If you have to go on Medicaid assume all the resources will be gone at that point. Also you have to consider how much higher would a persons assets be had they not paid the insurance premiums. I am also aware of several individuals you paid the premium for 2 decades than either forgot to pay (dementia) or thought it was too expensive and stopped. All that previous paid money became a sunk cost.
There are essentially 3 ways to avoid it, have enough assets to pay, have enough LTC insurance that will cover up to 3-5 years, or give away or selling all assets. Giving away assets can be a nightmare and some of the tax consequences of how that is achieved can be very negative. I am all for LTC if the policies are truly insurance. I had a client that transferred land to their name from father as a "gift." He came in smiling proud of what he had done. I said wow, you now have Land valued at the price your dad paid for it $400 when if you would have waited for it to go through the estate you would have still received the land and you would have got the step up in basis to $7000. At that point he was no longer smiling. In trying to protect assets individuals can make very foolish decisions. Had another individual I was aware of that gave away assets to hide them, the individual had intend to keep the 100k and not utilize as expenses for him and his mom as he had planned. The police got involved, and he ended up giving it back (I am really surprised on this outcome because if he received a gift he wasn't required to give it back and the police couldn't charge him with a crime). I am just trying to show that hiding or getting rid of assets ultimately isn't as good of an idea as it initially sounds.
Healthcare needs at the end of life are extremely expensive and it will continue to rise. In the past the LTC insurance policies really did help shield an individuals assets if needing LTC.
Its why most people avoid the topic until they have a need for Long term care . . . and then generally have a mess on their hands.
Good, because you are wrong about a very important point and are actually spreading misiformation
This is the point that is totally wrong in 40 of the 50 states, including Iowa and Minnesota and Wisconsin. Those states and 37 more have Long Term Care Insurance Partnership, which allows an amount equal to the LTC insurance benefits paid by the insurer to be considered as an asset disregard, such that they are not considered when qualifying for medicaid and are not subject to being recovered from the estate.
The clearest quote I could find readily is from Wisconsin's Medicaid Eligibility Guide, as follows:
35.1.2 LTCIP Asset Disregard
35.1.2 LTCIP Asset DisregardThe LTCIP allows a person with a qualified long-term care insurance policy to have assets disregarded in the Medicaid eligibility determination, while at the same time protecting those assets from Medicaid estate recovery. Under the LTCIP, assets are disregarded when determining eligibility for EBD Medicaid programs, or any of the programs for Medicare beneficiaries (i.e., QMB, SLMB, SLMB+, QDWI ), up to the total amount of long-term care services paid by the qualified WI LTCIP policy on or after January 1, 2009. The amount paid out by the qualified LTCIP policy on or after January 1, 2009 is not counted toward the WI Medicaid asset limit, nor is it recoverable under the estate recovery program.
Your claims of "clawback" and total asset degradation of the estate are completely false if a person has coverage that qualifies under LTCIP.
This is a little scary. I hope you're not advising anyone regarding LTC insurance. If you are, please do them and yourself a favor and go to a seminar or otherwise study such that you get rid of your misunderstandings. You could be giving bad advice for which you may be held liable.
Link to State of Wisconsin handbook:
35.1 Long Term Care Insurance Partnership (LTCIP)
www.emhandbooks.wisconsin.gov
Solid post. There is a tremendous amount of misinformation and misunderstanding about these things. Both of my parents paid LTC for several years then stopped because it was too expensive. That money was wasted.
When my dad got cancer, he wanted to sell some stock and give the money to me and my sister before he died so “we would have some cash that we wouldn’t have to pay inheritance tax on.” I had to explain that his estate was about $10,000,000 under tne threshold for inheritance tax, and that anything he gave us over about $10,000 at that time would be taxable, whereas if we inherited it the step up would mean it would be tax free. They didn’t understand any of it, but they both decided I seemed to know what I was talking about so he didn’t do it.
This is hawkeyereport #1, nothing for advice. 2. The iowa estate recovery is a real thing. Assets can be recovered. Look to your state for the rules. There may be some Exclusions. However, the majority of the assets will be recovered by the estate. It’s why I said ”assume.” I was speaking in general terms not for all specifics. Look I’m done with the topic. Especially when Someone wants to throw out liability. FYI I am CPA, not a lawyer not financial advisor, and very clearly state it’s not financial advice. Any time I have a client I pass them on to the experts because as stated I have some general knowledge but am far from an expert. In general what I stated was accurate. Fyi, of course the payments from an insurance policy would be disregarded in a Medicaid situation. Medicaid wants to pay less so will let the insurance policy pay. And once they have been paid for care of course they can’t be clawed back. Dan we are talking about 2 different things. Medicaid not counting LTC insurance as asset for eligibility, but once the individual has passed away if there are any assets to offset Medicaid payments they will try to get those in the asset recovery program, This isn’t rocket science. However the real goal of LTC insurance should be that you never go on Medicaid. You are trying to protect your assets by having LTC insurance that can pay for all or some of your expenses. If end up on Medicaid most of your resources are gone or will be recovered by the state, and effectively the LTC insurance may have not been right for you. Look I wish you well and the OP, I think overall Dan you sound like you are in a good situation. However Its likely something that most people wouldn’t have access to now Like you were able to get almost 2 decades ago. Dan before you try to throw someone under the bus you better have a full understanding of what is occurring, especially when we are talking about generalities.
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No, what you said was flat out wrong, because we were not talking in generalities as you're now trying to claim, we were talking specifically about ltc insurance and the assets it can protect via a qualified plan for people and their estates. And this started because you insisted ltc insurance plans provide nothing more than a roughly 4% yield, completely ignoring the asset protection that can be achieved. And insisted that Medicaid would try to recover its dollars spent from the estate regardless of coverage. I'm glad you're done, as you clearly don't know what you're talking about here. All I want is for people to consider it as an option to discuss with their financial planner.
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Then you need to get onboard with my plan. When I turn 80, I will be marrying a 22 year old nursing student who will be set for life after a few years of wiping my butt.
