Opinions on Long term care?

luvstocraftSeptember 15, 2010

Just discussed long term care insurance with an agent yesterday and am a bit shell shocked at the cost!

We've been retired two years and son suggested that we should look into the insurance. We both would hope to stay in our home as long as possible and take care of each other. Have a comfortable income from RR retirement and savings from both work 401's. At age 65, we will go on Medicare plus supplement. The long term care would be for help in the home if one of us were ill, or in a care facility if necessary.

My concern is that we would just use up all our savings in insurance payments!

Anyone have any suggestions on advice on this issue? How do you plan ahead for in case you become unable to take care of yourself?


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When I was trying to decide on long term care coverage I found out the actual current coverage from several nursing homes. Then took our monthly income including pensions, SS added together. I then subtracted that figure from the current cost to figure out the difference.

Most people that really need nursing home care rather than assisted care only live on an average 5 years or less by the time they must have the care.

I took the amount of each of our 401s and divided it by the difference and decided that the cost at our age was not worth it. Much of the medical costs are covered by insurance which basically leaves the cost of housing, food, and personal attention.

Depending on current state and federal laws certain things can not be touched for long term care such as your house. It may be in the future everything we know now will change.

We were not concerned about giving anyone part of an estate so all monies could be spent on our care.

One thing to assure your children that they will not be required to pay for your cost, again unless laws change, is to let the most trust worthy one have a power of attorney to go into effect when you are unable to care for yourselves. Make it very clear that they sign all documents as a POA and not as a relative. As long as they sign POA they are not under most states liable for your debts.

Sorry having seen reliable people become greedy I would not provide a POA that goes into effect when you do not need assistance. You also should have a medical POA not a living will.

    Bookmark   September 16, 2010 at 9:35PM
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I've heard the term "medical POA" before, but don't know much about them. Where do you get a medical POA drawn up--do you see a special type of attorney or can you get the forms from a site like Legalzoom.com and just do it yourself?

We only have one son,and I did not even realize he could be liable for my debts. I thought those just "died" when you do.

I've not heard any friends or relatives talk about having insurance for long term care, so I'm just researching at this point. My DH and I are both the same age, so that may not be a good thing if we are both in declining health at the same time! I just am resisting paying so much for the insurance when we may or may not even use it. We do have money from both our 401's, a decent pension amount, and a house that could always be sold or maybe do a reverse mortgage if we needed the extra money for care.

I want to be responsible and I don't want to be a burden on our son or anyone else. Just trying to figure out how to be prepared as best we can.


    Bookmark   September 17, 2010 at 1:15AM
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We bought LTC insurance last year when we were 50 and 52. I did extensive research and spoke with several experts on the subject before getting it. We don't have kids, nor do we have family that would care for us and I wouldn't expect them to, nor would I expect my DH to do it all himself and vice versa.

Women live longer than men, and humans are living longer than ever before, period. The chances of needing this kind of insurance will continue to rise due to that. If your DH gets sick before you, you will be there to care for him, but who will be there to care for you?

I saw what my mother went through taking care of her stroke stickened husband (my step dad) while she was fighting breast cancer. LTC wasn't even a thought in their minds before then, and after their illnesses, they weren't eligible. It was living hell for her and besides using their savings, she had to cash in several policies/accounts just to pay for home care and then nursing homes over the multi-year period he was sick.

Keep in mind that you have to spend down most of your assets in order for Medicare to kick in and its limited coverage. With the LTC we have from John Hancock, a very reputable company in that field, should something happen to either one of us tomorrow, 5 years from now or further into the future, I know that the coverage we have will kick in immediately. And, there's a nice portion of our assets that can't be touched by Medicare due to having LTC.

If I added up what we’d pay per year over the next 35 years, that sum is a small fraction of what we’re covered for NOW. And, if we were to “just bank or invest” the amount we pay yearly to be used toward LTC, it would take an awfully long time to add up and earn enough interest to pay out what it’s worth now plus the 5% annual inflation rider on the policy.

We all want to remain in our homes, with proper care, as long as possible, and this insurance will pay for that, but, if we need further care (a nursing home), we know we have piece of mind with our policy.

Our financial advisor told us to wait until we are in our upper 50s to purchase this insurance, but upon doing the math on what we pay for premiums as this younger age, with the higher premiums at the older age, we pretty much break even. Besides, who knows what can happen in 8-10 years, especially with our family histories. We’re healthy now and our policy reflects that.

I really wish more people would get educated on this type of care. The longer people wait, the more expensive it is and that's a huge deterrent to want to insurance oneself. Read as much as you can. Call people to ask questions, if not just to get educated with the mind-set that you are not signing up (I never let anyone talk me into anything).

There are numerous discounts to be had based on the various waivers and such. And if you pay it annually, you get another discount. We put money into our ING savings each month specifically for our annual LTC payment so when the bill comes in, the money is there - with interest.

It's a crapshoot whether we'll ever use it or not, and frankly, I hope we don't have to, but knowing it's there is a good feeling for us. Most people figure: why pay for something now when I may not need it for 30 years. By, then, it'll cost a whole lot more than it will now, if you can even get it. Besides that, I've heard stories of people getting into terrible accidents where they were able to use their LTC benes b/c they qualified due to temporarily loosing 2 ADLs (activities of daily living).

Lots to consider. Good luck with your research. Sorry for the long post.

    Bookmark   September 17, 2010 at 5:56PM
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I will try to be brief about POA's. There are many types depending on you own wishes but they allow someone full access unless they are restricted such as medical decisions or only activated when you are unable to make your own decisions.

As background my father had a severe stroke and we had to become his guardians/conservators in order to take care of him and any bills. At the hospital he/we were assigned a social worker who told me never to sign anything unless I signed for the person that was unable to sign, sign Dad's name the 'for' or 'by'. If I signed only with my name I would be liable for any costs. Luckily between his insurance and Medicare I believe the final cost was under $500.

When my husband developed heart problems and was to under go a procedure where they would stop his heart then restart to get the rhythm correct the first thing they asked when checking in was did he have a medical POA. They sent one with the rest of the paperwork and had a notary come and do the witnessing of his signature giving me POA for his health. It was stressed that even though I was his wife any blood family member could request a different type of treatment. At that time and in this state a blood relative had more standing than a spouse. As a spouse I am legally liable for any debts my husband has but if I was unavailable and someone had to sign one of us into a hospital unless they signed the for/by the hospital could bill that person for any costs.

To me it is important to have some sort of POA at least for medical problems so that my wishes would be carried out. My husband and I have discussed this many times and neither one wants to be on feeding tubes the rest of our lives. Having known some people that life is more important than quality of life it is important that someone can legally say no more treatment before any connections are made. After the connections are made in most cases the hospital legally can not remove.

For the second part of your question.
"We only have one son,and I did not even realize he could be liable for my debts. I thought those just "died" when you do."

It depends on your state laws. If you have a spouse in most states they are liable for your debts. Your son would only be liable if he signed documents not using a POA or as I mentioned for/by you or your spouse.

This part gets tricky your spouse can not be forced to sell certain assets to pay for any debts for long term care such as house, car, burial insurance. These depend on rules in effect when you need the care so I can only give some information on them. Some people to avoid this put everything in trusts and have nothing in their own name. However I have also seen this backfire as the person can use what is given as their own to do with as they wish. If they decide that they want to sell where you live there is very little that the giver can do after the fact. Your son probably would not do this but not all people have been as lucky. Personally I am greedy having been poor having stuff in my own name is a mentally important.

Many families transfer property and money to their heirs during their lifetime rather than risk the possibility of final care taking everything. You would have to talk to an attorney concerning methods.

If you need additional care and your money is running out most? will do what the social worker called a spend down so that they qualify for Medicaid not Medicare. Medicare will only pay for medically necessary costs which do not include long term nursing home stays.

If you have an estate any final bills will be taken out of it then any remainder paid to your heirs. This does not make any difference if you do or do not have a will bills come first.

There are several websites that provide information that you can discuss with your spouse and son before making any decisions.

    Bookmark   September 17, 2010 at 11:17PM
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Luvs, a lot depends on family medical history and your own finances. There are some who paid for LTC only to not be financially able to continue paying later in life so that the LTC was not there when needed. (money spent wasted in a way)

We chose not to buy LTC insurance. I took care of my mom, who had taken care of my grandmother (along with mom's sisters). Mom was single. My father had remarried and had his wife for care. DH's father was a quadriplegic, who remarried and was taken care for by DH's mother, then the new wife. FIL was a quadriplegic for 25 years. He also had outside help, nurse's aides came and gave baths, helped get him up etc. MIL (DH's mother) is still alive at 85. The second wife has remarried. DH and I will not be taken care of by our children. Probably TMI, but wanted to show the various situations.

DH and I made each other our Living Will protector, with our son as back up should we both be unable at the same time. You want to make sure that the LW states that photocopies are legit, and make sure your family doctor has a copy as well your son, and each of you.

There are REvokable trusts, which you could put in DH and your names, with the trust going to whomever (the survivor, then your son). This allows you to control the trust, sell assets, etc. until both of your deaths. An IR-revokable trust would not allow you to remain in control. Also, I understand that trusts do not go through probate as wills do. And you can choose what to put in trust so your full estate does not have to go in at one time if you so choose.

    Bookmark   September 18, 2010 at 10:50AM
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Wow! All of you are so kind to give me all this information and such great examples as well. So many things to consider.

Debi, John Hancock is a good company however, they no longer do business here in Calif. The agent and the companies she's reccommending to us are also top companies similar to John Hancock--just that the cost is $8000 a year! To me that seems really steep. Yes, it would have been cheaper if we had taken it out earlier and prior to DH becoming a diabetic. The pool the insurance would provide would be more than double our current savings, and the policy does have that built in 5% for rising costs of care. The best sounding plan is for six years with the option of being able to use part of the other spouse's years if needed.

The other factor not on our side is the fact that we are both the same age--63. (DH is older by three whole months!) LOL That may mean that one of us may not stay healthy enough to take care of the other one!

Calirose, I could certainly see where people could get to the point where they might not be able to continue making the payments on the LTC insurance. That's why I was concerned about possibly using up all our savings to pay for it. As I'm understanding it, the payments continue until you qualify to file a claim--that could be for 10 or twenty years if we stay healthy.

As for the medical POA, I will look into that for sure. Want to make sure my son doesn't end up owing anything for our care, and to make things as easy as possible for him if/when such decisions become necessary.

So am I understanding correctly that the Living Trust can help protect some of our assets--but just a Will will not do that? I had heard that the living trust would help not have to go through probate--that would be a good thing. Depending on how ill/disabled we become, there might not be much left anyhow from the sound of things! LOL

I will take all of your advice and keep asking questions and reading up on all this. Have to tell you though, the more I read the booklets and such, the more my head hurts! So many things to consider and really no way of knowing what is going to work out the best.


    Bookmark   September 19, 2010 at 12:03AM
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Luvs, we are near the same age. So I know how confusing this can be; and I have learned that some items may have different names in different states.

A Power of Attorney (POA) can be used for medical and/or financial decisions. You wouldn't want anyone to have a POA over financials unless you are really unable to make your own decisions. The POA usually has an end date (ie my brother made his POA when he went to Iraq)

A Living Will is a medical document stating who can make decisions about your health care in the event you are unable to do so.

A Trust is a way of passing assets without going through probate and probate costs. A trust can be contested just as a will - but that may depend on state laws. As mentioned, there are Revokable and Irrevokable trusts.

Check out Suze Orman's site and her books (library). Or email me if you have any questions I can help with. If you are unfamiliar with the documents, I can send you some blank ones (from Suze)so that you become familiar with them before having to make one.

    Bookmark   September 19, 2010 at 11:21AM
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Thanks, Calirose. I've been doing some more research and finding out some other options/benefits we might qualify for. My DH is a Veteran, so may be some options there too that I need to investigate.

I'm pretty sure I can't afford to do the LTC insurance even though it sounds great. I just can't see spending all our savings paying for it when we might find out we lived longer and the money to make the payments ran out! Maybe someday there will be something more affordable.

I also checked some sites about burial information and found some forms I can use to fill out the information our son would need to know to handle our service and affairs.

Not being morbid--but I just want to get all this stuff figured out and do as much as I can now so I can get it all off my mind and just enjoy my remaining years with peace of mind!

Thanks for all your help and advice. I'll try to keep coming by this forum a couple times a week. I'm sure there will be other things I can learn from all of you.


    Bookmark   September 19, 2010 at 10:29PM
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Although many people are aware of the "spend down" limit of $2K assets allowed under Medicaid, be aware that Medicaid expenditures on someone's behalf are not just 'written off' when they die. If a husband or wife runs up thousands of $$$ expended on their care under Medicaid, the surviving spouse is not liable for the debt, but once the surviving spouse is dead, the ESTATE can be placed under a lien if the state wishes to do so and there are sufficient assets left to warrant suing for recovery of costs. This can happen because Medicaid does allow certain assets to not be counted for entry into the program.

Everyone always needs to do research as to what their state laws are. The Net is a great starting point, but advice given should never be relied upon for any individual situation.

Like debi_2006, we bought LTC policies early, in our late 40's. I am familiar with the insurance and financial services industries so fully expected periodic class-premium price increases to occur in future years. This has happened twice in the past 12 yrs. The premiums remain very affordable for us, which is good because there's no way we could qualify for the same rate levels we started at.

As the OP has found, far too often people rely on the conventional wisdom and wait to apply for this type of insurance, only to find that their health has deteriorated just enough that it's impossible to qualify for an affordable rate. As a result, you must adjust your financial planning to compensate for the fact that you have fewer options for mitigating the risk of financial loss to the surviving spouse in the event of disability, whether temporary or permanent.

    Bookmark   September 20, 2010 at 1:09PM
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We bought long term care insurance in our late 50's. We allocate money from our monthly income to pay for it rather than pulling from our savings. We cared for my mother for 9 years. During the first 3 months after she became unable to take care of herself, even with me doing the weekend care, it was costing $1,200 dollars a week to pay caregivers. I moved her into my home and had a caregiver while I worked and cared for her myself during all remaining hours. I am not sorry that I did, but it was a sacrifice that I would not want anyone to make for me.

Our purpose is to be able to have help in our home should we need it. Our policy allows for the able bodied one of us to be paid as the caregiver if the other becomes disabled. This would allow us to recover some of what we spent. In order to qualify for in home help, one has to have spent all they have which leaves the other to live in poverty. I think everyone needs to research, calculate their own finances and decide what best provides peace of mind and security.

    Bookmark   November 28, 2010 at 5:34PM
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>>(from luvstocraft) So am I understanding correctly that the Living Trust can help protect some of our assets--but just a Will will not do that? >>

I'm sorry that I didn't pay more careful attention to some of these questions, and hope it's not too late to get these answers to luv since like her, we live in CA.

First off, Living Wills are not legal in CA. The document needed is called the Durable Healthcare power of attorney. All forms since 2009 should include the POLST questions (Physician's Order for Life Sustaining Treatment). Anyone with a DHPoA prior to 2009 should Google and download this 1-page form, fill it out and give a signed copy to your doctor or HMO, ASAP.

Second, as pointed out, you need to be careful about which type of Financial Power of Attorney you want. Be especially thoughtful about who is the successor agent should you **and** your spouse become mentally incapable. Make sure that all your financial records are filed properly and are easy to access in an emergency.

Now, to wills vs trusts:
A will MUST go through probate. This has certain advantages: a will is public record, meaning it's a lot harder (although not impossible) to commit fraud. If you don't have a large estate, there is nothing wrong with using a will.

There are two kinds of personal trusts (well, there's many different kinds, but you generally need to have substantial assets to make use of them): Revocable and Irrevocable. In a revocable living trust (RLT), you or whoever is named trustee/co-trustee, own those assets and manage the trust. You can change the terms however and whenever you please.

An Irrevocable trust is just that - once set up and funded with assets, it cannot be changed. The trustee is just a manager of the assets. It can't be canceled if you change your mind or your situation changes. You no longer own any of the assets in the trust. It is a permanent legal entity unto itself, until all assets are exhausted.

Any trust must be funded; e.g., you must take legal steps to transfer assets to the trust. Just setting up a trust does not mean anything is inside the trust.

Trusts do not go through probate. They are a method of passing assets to heirs without the costs of probate. OTOH, speaking as one who served as Executor of a simple estate, I can tell you that even a simple estate or trust takes hours and hours to settle. It is neither easy, nor simple, and when a person is grieving it is extremely exhausting. An Executor of a will gets paid a fee (and in CA, believe me that fee is earned) - but a Trustee NEVER gets paid unless payment, hourly or flat fee or percentage, is specified in the Trust....even though a Trustee can spend just as much personal time, if not more, than any Executor does, on settling an estate.

Revocable Living Trusts will NOT save on taxes. They are a conveyance, a means of passing assets more efficiently in certain situations. They do not “protect” anything because that is not their intent.

The only thing it will save is the court costs of filing for probate, and the mandated fees to Executor and Attorney from the assessed value of the estate.

For example, my MIL has an RLT. Realistically, there was never any need for she and her (now deceased) husband to have one. They have only one son, had only one house, and modest financial assets. It made the transfer of assets to her as the surviving Trustee simpler, but then we had to have a lawyer draw up yet another trust, this time with her and her son (DH) as co-trustees.

Had they had a good will drawn up instead, we could have continued with that and spent less half the amount of money it cost, by having her update a will instead of creating a new trust.

In comparison, DH and I have a trust. We have no children, and our estate falls under whatever the federal estate tax limit is or is going to be. But because we have no children, our heirs are not directly related to us - and both heirs have siblings who by law would have just as much right to any inheritance. Therefore, we had our trust drawn up with specific language that excludes anyone not named in the trust. We also arranged for the Trustee to be paid on an hourly basis for work done for the estate, because we believe that's fair.

I did a little research on the so-called "Medicaid trusts". These are apparently encouraged by certain lawyers who claim they will protect assets from being seized by Medicaid. There is a debate about this subject, and some lawyers say there is no current legal decision that fully supports any trust as being 'untouchable' by Medicaid. Whether this is true or not, I have no idea.

A Medicaid trust is Irrevocable - once set up, you have lost all assets you transfer over. It is NOT excused from the Medicaid 5-yr look-back on asset transfers. If Medicaid does decide your trust is a fraud designed to hide assets from them, you would need a lawyer to file suit.

And of course, no one should ever set up any trust, Revocable or Irrevocable, without the advice of a lawyer. Even using good forms, such as those available from Nolo Press/Berkeley, can produce a document that does not address all the issues your estate may face...if only because there are things you don't know which may be issues in the future, that the questions of a professional might have avoided.

If you use a good estate attorney, they often charge a flat fee for drawing up the RLT, both PoAs, a pour-over will (VERY important) and even transferring the title to your home into the trust. Our attorney spent hours with MIL and with us, both together and separately, to ensure she had a clear picture of what we wanted. Then it was her job to create documents which would enable our wishes to be carried out, when we're no longer able to be there.

I apologize for going OT. But these are critical issues that all too many Boomers have left undone for too long. HTH!

    Bookmark   November 29, 2010 at 12:49PM
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jkmom51, thank you for all those details. I'm sorry I hadn't responded before now, hadn't been back to this forum for awhile.

I have the names of a couple estate planning attorneys and will make it a priority to get in contact with them soon. So easy to let these things slide!

Not sure why things have to be so complicated and so much "legalize" to try to sort out. I don't want it all to be a hassle for our son though, so better figure it out and make it easy for him.

Thanks for everyone's responses.


    Bookmark   December 2, 2010 at 11:58PM
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