What are your experiences with long-term care insurance?

Some rough math

Mom's policy was $440 a quarter so $1,700 a year x 25 years = ~$45,000 in premiums

Benefit = $90 x 365 x 4 = ~$132,000

She has nearly received back her premiums and has the potential to get 3x back over the life of the policy

The above example doesn't take into consideration the time value of money

If you wanted to self insure your own LTC - what would it take ?

Say you want a benefit of $250 a day for 4 years by the time you turn 80 and you are 60 now or said differently, you want ~$365,000 set aside and you have 20 years to save up

You would need to invest $1,100 a month for 20 years and earn 3% to hit your goal

I think a lot depends on what specific needs you are looking to address.

Both my parents had LTC policy's. They cost roughly $5000 a year each and I know they had them over twenty-five years. To keep the premium low they worked out things like a 26 week wait where they had to first pay care out of pocket - although even once a week care qualified. There was also different pay outs based on level of care, i.e. in home vs. nursing home. For instance if my dad was at home with a hired caregiver they paid a whopping $45 a day. In the beginning daddy started with 8 hours a day - so basically less than two hours were covered.

In the end, I'm not sure if it was all the tweaking that rendered the policys fairly useless or if that's typical of the benefits. When you do the math neither parent got back out as much as they paid in. Honestly, I've often wondered if a good investment via a reputable brokerage firm wouldn't have been better.

I know that many insurers are no longer offering LTC policies. To cover their costs the premiums make them impossible to sell. AARP no longer handles these. Rainmom, the insurance companies need to have lots of customers like your parents, who don't get any value back, and the fact is that there are so many elders that will need the services and too few who won't get their premiums back.

I pay for house insurance. If a tornado hits or a lightening strike causes it to burn down or a drunk driver swerved into my house doing structural damage, I will receive benefits far in excess of what I've paid in. But I hope none of those things happen! I very gladly let my premiums cover the repair of the houses that were in the path of the tornado.

The premiums are based on statistics of how many houses do burn down/get blown away/etc in a year. Not many do, so it works out fine.

But statistics are changing on the need for long term care. Now it is is really more like life insurance -- you know when you sell the policy that the purchaser is going to receive benefits some day.

(Whew! That was a long digression.) Anyway, I too wonder if investing the money yourself makes more sense than turning it over to an insurance company for long term care coverage.

This was in a recent newsletter from an elder law firm. It doesn't answer your question of an insurers name but it's another way to look at the numbers.

How Will You Pay for Long-Term Care?
If you’re like most adults you haven’t given this subject much attention. Why? Because it's not something most people want to think about. It’s right up there with giving consideration to making a Last Will and Testament or deciding whether you want to be buried or cremated (or both, i.e., burial of cremated remains).

But now that we have your attention, let's give the subject some thought. There are only a few ways of funding long term care: out of pocket, which means pay out of your assets and/or income; Veteran’s Benefits, if you qualify; Medicaid, once again if you qualify; and utilizing long term care insurance.

Some people think, "I have Medicare, I’m covered." Not so. Medicare may pay a short term stay in a nursing home if you need rehabilitation but there is no long term care benefit with Medicare.

"But, I’m not going to go to a nursing home." A lot of people like to say the same thing, but drop by a nursing home around lunchtime and ask for a show of hands for those who planned on being there and you wouldn’t see many hands. The U.S. Department of Health and Human Services claims that more than 40% of people over 65 years of age will need care in a nursing home.

Nevertheless, let's assume you end up in a nursing home environment someday, as many of us will. How will you pay for it?

We encourage those who can still meet the age and health criteria and who can also afford it to consider buying a long term care policy.

The average cost of a nursing home semi-private room is $5,500 a month in Harris County and it can easily go up to six, seven and $8,000 per month.

You may wish to insure for the entire amount or insure partially. What does that mean?

Well, let's assume you were going into a nursing home which has a current cost of $5,500 a month for a semi-private room.

You could get a long term care policy which insured for that $5,500.

Now let's assume that you want to get your premium lower. You could consider insuring for the difference between your direct income of Social Security and/or pension income and the projected private rate.

So if your Social Security is $1,800 net, you would insure for $3,700 now and make sure to pay for an inflation rider to keep the policy insuring at a rate in the future which is commiserate with the rate now.

Or, you could come up with an option that blended the first two examples.

You insure for $4,500 a month and plan on using $1,000 of your Social Security income, with a plan to use $800 of the Social Security for other monthly expenses.

Other things need to be taken into consideration as well. If there is a spouse at home, it may be better to insure for more, therefore leaving more of your Social Security check for your spouse.

You should consider obtaining at least a five year policy. The average life expectancy is about 2.8 to 5 years once in the nursing home depending on your source statistics. You could consider Medicaid if you outlive the policy.

If you can afford a lower policy and Medicaid is not something you want to rely on, then buy as long of a policy as they will sell you.

Check to see if your employer provides this type of benefit you may purchase through them. If they do, it should cost you less.

Whatever you decide, at least take the time to give it some thought.

My almost-91 year-old mother has a LTC policy from Allstate that she’s had for quite a while. They don’t write them like this anymore. I don’t remember what her premiums are, but she (heirs) gets them back if she doesn’t use the policy. When my father died six years ago, she got over $38,000 back in unused premiums (he never used the LTC insurance).

Here’s the potential payout: in-home help payment currently $113/day paid to her for 1000 days, 30 day exclusion period.
In-facility payment currently $226/day paid to her for SEVEN YEARS, 30 day exclusion period.
These daily payments periodically go up. My mother has currently paid ~$38,000 in premiums (which her heirs get back if she doesn’t use; if some is used, heirs get the remaining premium amount).
Total potential payout (conservative, not taking into account future daily payment increases) – nearly $700,000. !!!!

BUT…I recently found out that even if my mother needs help with two of the important ADLs at an Assisted Living facility, the policy won’t pay out. The agent explained to me that my mother’s policy will only pay out for a facility that is qualified as a SNF/nursing home. Apparently newer policies do allow payment for an AL facility.

I’m sure they make it very difficult to ever start this golden payout. Medical records and a record of care get sent to some office in another state, where a determination is made.

My mother has stated she never wants to use the policy. (And I have told her I will not be her personal care aide.) She thinks she is more "independent" than she is. She denies her failing abilities.

I suspect she will never use the policy. But at least her heirs get the premiums paid back, which I think is very unusual.

I think having LTC is smart, maybe even essential, but I'm awaiting other answers to how to make sure it will meet your needs.

I bought my policy about 15 years ago. I've paid faithfully on it. Last month I got a letter raising the premium 67% And the sad thing is, I'm not even sure it is adequate for current prices. I've got to call the agent and check what is covered.

I hope other people give us some good advice!

My sister has been paying for a long term care policy for 20 years now. I chose just to put funds into a special saving account. Most long term policies provide only a portion of the cost for each day. Made an excel chart to show costs over the years. Right now I am ahead, and as we both age and just hope we never need it.

Not all policies are alike and recently some insurance companies stopped issuing them

My mom's original policy was written in 1991 and she started benefits last year

She had a 30 day waiting period and the policy pays out for a max of 4 years

The unfortunate part is that it pays 60% of her benefit or $90 a day for her memory care which is considered assisted living not skilled nursing which would pay her $150 a day

Her memory care is $330 a day so $90 a day falls way short and we're 15 months into the policy

I'm scared to think of how this will play out if she outlives the policy

My dad and stepmom went with CalPERS about 17 years ago; premiums had risen to about $4000 a year before my dad was moved into assisted living--and then a 24/7 nursing home--last year. A bit confusing to get the process started (eg, the 90 day waiting period and not knowing when the first check was going to arrive) but since then has been relatively smooth. I send Dad's nursing home the 1st of the month and get a check for the previous month about 10 days later.

Oh, and my partner and I applied for LTC after things started going downhill with my dad; we were both 51 at the time. He got approved through Genworth (~$1500/yr, I believe). I, unfortunately, was turned down due to my leaky heart valves, and my financial planner ran the numbers and believes I should be ok without one (but I may reinvestigate once said valves are repaired or replaced).