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[collegekidsmom]

Long term care insurance has been mentioned here and there and I wonder whether this is really something that is becoming a necessity in the US. Have others purchased long term care insurance and if so, what is considered the best age to do this? I am curious whether this is becoming a mainstream thing for people to consider at some particular age. Last time I looked it was quite expensive-but not as expensive as getting wiped out financially if someone needs some kind of extended care.

[huckle]

I purchased it when I was in grad school because it was absurdly cheap.  $6 a month or so.  I still have the policy, lo, now over a decade later.  I wanted to get it even though I was young because I feared the costs of an upcoming "severely injured in an accident and in need of nursing home care for many decades" scenario would bankrupt my parents.  I do need to up the amount of coverage (from $100/day to $125/day), but haven't done that yet. 

Yes, the premiums can be expensive when you're older.  I have some relatives in their 60s who just recently got the coverage.  I think getting it depends on whether or not you will have family members willing and able to help pay the bill (interthreaduality), and if you want to be in a place that Medicare doesn't cover.  Of course, this is all moot, if you get hit by a bus tomorrow.   For me, it's just a peace of mind issue.

[mended_drum]

It's part of our insurance benefits, though we can pay extra to increase the coverage.

[michigander]

I have it.  I purchased it years ago when I was single, childless, living a long way from the rest of my family, and likely to remain so for the long term.  I've kept it because everything remains the same except that I'm now partnered with a person who is not physically able to be a full-time caregiver if the need arises.

Usually the premiums are cheaper the younger the purchaser is.  Unfortunately, my monthly premiums have risen several times over the years.  The policy is old enough that the cost of long term care has greatly increased while the benefit under the policy has remained the same.  However, should it be needed, every dollar will help.

I have no idea how mainstream long term care insurance has become, but it seems like a wise precaution for those of us who do not have children or an extended family to fall back on as we age.

[tuxedo_cat]

Well, one would think this goes without saying, but *read the fine print.*  On a recent hour-long NPR program covering this topic, there seemed to be a steady stream of thoroughly depressing anecdotes from callers about people who had sunk thousands of dollars into such insurance over the years, only to discover that there was an outrageous deductible ($100,000?) before any of that coverage would kick in.  So, basically, you had to bankrupt yourself to become eligible for coverage.  Or they bought coverage that included $X00 for at-home care, and by the time such intensive care was needed, they discovered it would cost 6x that amount.  It was totally depressing, I have to say.  I would be very reluctant to invest in one of these forms of insurance.

[cgfunmathguy]

Several of us quote Dave Ramsey on a regular basis about financial matters. Ramsey's take is that you should buy long-term care insurance if you are over 60. Before that, the probabilities are very slim that you'll need the benefit. After 60, probabilities change significantly concerning the need for care. Also, as TC notes, you should read the fine print before signing anything.

[reener06]

My parents bought this when they were in their 60s, and it was a good policy. It helped a lot with Mom's care last year, as she declined from cancer and Alzheimer's. It paid for a nurse to come in 3x/week, allowing my Dad to get out, and it also paid for someone to clean the house weekly or every other week. My Dad was very glad he got it.

[bioteacher]

I have purchased it for me through my workplace. I know it won't be enough to cover everything, but every bit helps. Since people in my family live a LONG time (my grandmother lived to see 100) I figured I'd better have something.

[palla]

Can you purchase this for someone else?  My parents don't have it and won't get it.  They feel their children will pay if they need long-term care, and I would rather have the insurance.  Can I get it for them?  Could I get it with their knowing about it?  I know that sounds sneaky, but they would pitch a fit if they knew.

[clean]

Palla,
I dont know if you can get it for someone, but I have a number of thoughts.  The bottom line is that I think that you may tell them that you will pay for it if they buy it.  Arrange for everything... drag them to the insurance agent over Christmas break.

1.  You really MUST talk to your parents and explain that you are not able to provide them with the care that they may need.  Get the costs for different nursing care and in-home care and explain that you wont be able to support them & you. 

2 Check with your HR department.  There is a deduction available for dependent care.  That is not limited to children.  See if you can buy it from work, or pay for it from that account.  That may be easier to sell your parents on... "it is a benefit from work that I get"

3.  If they expect that you will move in, or that they will move in with you, start to break those expectations now.

[pigou]

At the end of the day, it's worth keeping in mind that the expected value of insurance is always negative - that is you're probably going to pay more than you get out of it. The insurance business isn't by chance very profitable. If there's some amazing-sounding insurance where you pay $5/month and get great benefits, read the fine-print. It may well be, for example, that the plan "expires" when you turn 60, that there's a ridiculous deductible, or that the limit is worthlessly low. Moreover, there may be issues with the extent of the coverage and just what is actually paid for.

If you don't understand why it's profitable for the insurance company to offer the product, don't buy it.

edit: just to make sure I'm not misunderstood: I don't think you should never buy insurance. But you should make sure you understand exactly what your insurance provides. When something seems like a huge bargain, chances are you don't. Moreover, make sure you know what your existing coverage provides. I'm reminded of all the people who buy cancellation insurance on plane tickets with credit cards that already include such coverage.

[palla]

Thanks, clean.  I like the idea of presenting it as a benefit from work.  My parents are great and very independent.  They don't like to rely on anyone and pretty much don't.  They live alone, do everything on their own, travel all the time, and are fine.  But they are in their 70's and I would rather have some insurance just in case.

I think I will talk to HR this week.  Thanks again!

[collegekidsmom]

This information is all very helpful. Thanks for all of the replies so far.

[kevincain]

I am a long-term care insurance specialist in Houston, TX. I was 25 when I moved back home to help take care of my mom. She was 57. The next 8 years changed everything.
Long-term care insurance is just like homeowners insurance, automobile insurance or health insurance. You have these products in place to help manage risks. What makes long-term care insurance unique, however, is the way it protects relationships. I was my mother's care-giver. Long-term care insurance would have allowed me to be my mother's care-manager. For those who have not lived through the ordeal as either the care-giver or care-recipient the difference might seem minimal. Nothing could be further from the truth. As a care-giver your life stops. Every decision is made in the light of impact of the person you are caring for. Think of parents who have a special needs child. Think their life is the same as yours? Consider the 72 year old woman whose husband, now 86, was diagnosed with Alzheimer's 6 years ago. She took care of him for the first 5 years until SHE started to breakdown. Think her life is the same as your parents?
Long-term care insurance is not a miracle. It doesn't make sick people well. It provides resources and options. It creates a stream of income that will pay for home care. The national average for a non-medical assistant in the home is almost $20 per hour. It will pay for care in an assisted living facility, national average of approximately $36,000 p/year, as well as care in a nursing home, national average in excess of $80,000 p/year. (Google MetLife Mature Market Institute Cost of Care Survey) Around the clock home care? Start at $100,000 and go up from there. I just met with a tax attorney whose father-in-law moved in. Cost of care for 2 years?  Approximately one quarter of a million dollars.
The reason long-term care insurance premiums are greater than home or auto insurance is that the risk is so much greater that benefits will be paid. The Department of Health and Human Service estimates that 70% of people over age 65 will require some form of long-term care. The Alzheimer's Association estimates that at age 65, 1 in 7 people will be diagnosed with some form of dementia. At age 85, the odds sky rocket to 1 in 2. How much more expensive would your home insurance be if 50% of homes were expected to burn down? How much more expensive would your auto insurance be if 50% of cars were expected to be stolen? Not only does the client have to manage risk but so do the insurance companies.
When considering long-term care insurance work with a long-term care insurance specialist. This is a complex product. You wouldn't go to your family doctor for cancer treatment. You would go to an oncologist. Don't go to your financial advisor or CPA. Work with a long-term care insurance specialist and remember: this type of insurance may or may not be suitable for you. What is important is to have the discussion. Consider the options: to insure or self fund. This insurance is for people who are in good health and who have assets to protect. It is not for everyone.
As far as getting a policy for your parents, more and more adult children realize that that to pay for insurance is a much better option than a) paying for care or b) providing the care. Really, what other options are there? If your parents can health qualify and if the policy is affordable, by all means: insure. That is my historical bias speaking. When I say the 8 years that I was a care-giver for my mom change everything it is not hyperbole.
With regard to Dave Ramsey and his suggestion that you should wait until you are 60 to consider long term care insurance I completely disagree. A significant number of people who can afford insurance at that age cannot health qualify. The company that you choose will not care how wealthy you are; they will care how healthy you are. The younger you are the less expensive your premium and the more likely you are to qualify for preferred health discounts. Consider this: 40% of people in nursing homes are under the age of 65. What about Christopher Reeve, Michael J. Fox, and Coach Pat Summit? Health changes and that changes everything.
Thanks for letting a non-academic chime in. My family is calling me to the conclusion of last night's Monopoly.
All the best.
Kevin Cain
Houston LTC Specialists

[hegemony]

I don't know if the above post is allowed by Forum rules but I'm here to say that I think he's right on.  I worked in insurance briefly, before escaping to academia, and I was alarmed to see how underinsured many people are, considering the risks.  Long-term care insurance is a relatively new product, and I understand that a number of insurance companies initially miscalculated the risks, and so didn't take in enough money to cover the claims that eventually came in.  Then the response in many cases was to try to weasel out of paying the claims.  So it's important to check out companies' track records by googling for info.  It's also important to get an insurance company that looks as if it will be around in twenty or thirty years.  It's a bad scenario when you pay premiums for twenty years, then you're 75 and the company goes out of business and it's too late to get a long-term care policy with another company.

I have an elderly relative right now whose stay in a good nursing home is only possible because she had the foresight to put a long-term insurance policy in place years ago.  People often assume that Medicaid will cover their nursing home stays, but you have to be out of assets for that to happen (you will leave nothing to your heirs), and while your assets are being consumed by the nursing home costs, they cannot be spent on anything else.  In other words, your family cannot use some of your savings to make improvements on your house so it can be sold, or anything like that.  Not to mention that in some areas, the nursing homes that will take Medicaid are not the most desirable.  Here's more info:

http://www.medicare.gov/nursing/Payment.asp