Last time I gave an overview of long-term care (LTC) insurance.
That post covered basics like what is LTC insurance, how likely is it that you’ll need it, and what are the costs on both sides (cost of care and cost of the insurance).
This time we’re going to focus on who might need LTC insurance, the issues to consider, my thoughts, and what we’re doing.
Let’s get started…
Who Needs Long-Term Care Insurance?
Now that we all have a good feel for the topic, let’s get to the heart of the issue: who needs LTC insurance?
Obviously each individual is different with their own personal goals. As such, there’s no way to answer the question for everyone’s specific needs.
The best advice, like almost all financial advice, is to develop your own goals and plans and from there determine whether LTC insurance is or isn’t for you.
That said, I’d at least like to offer some direction.
To that end, I have always thought there was a general rule-of-thumb that covered the issue for most people.
It went like this:
People on the low and high net worth ends didn’t need LTC insurance while people in the middle do.
Apparently, this is still a thing.
No LTC Insurance for the Ends
Like last time I’ll share the wisdom from various sources and add my comments along the way.
Let’s begin with Forbes:
The conventional wisdom of financial planners on whether to buy long-term care insurance is this: If you’re wealthy enough to self-insure, you should. If you’re poor, you can expect Medicaid to pay your long-term care costs. But if you’re in what The SCAN Foundation Chief Executive Dr. Bruce Chernof calls “The Big Middle,” that’s when you need to decide whether to buy or to just count on your savings and good luck to see you through.
Wealthier people — those with financial assets of perhaps $2.5 million or more — may decide to forgo insurance. This affluent group can cover care costs — and given the relative rarity of long nursing-home stays, their heirs will generally be better off if they don’t purchase insurance, says Anthony Webb, senior research economist at the Center for Retirement Research.
People with more limited assets shouldn’t purchase long-term-care coverage if the premiums are not well within their budget. “If you’re not comfortable that you can continue the premiums indefinitely, you shouldn’t be buying,” says Claude Thau, a long-term-care insurance consultant in Overland Park, Kan.
If your assets are few, you may eventually be able to cover LTC costs via Medicaid, available only if you’re impoverished; if you have lots of money saved, you likely can pay for future care out of pocket.
From the Motley Fool:
Indeed, given that long term care insurance primarily protects your estate from Medicaid seizures, it typically only makes sense to carry that insurance if you have a decently positive net worth.
At the upper end of the net worth scale, if you have sufficient net worth, you can self-insure by setting aside a pool of money to cover the cost of any long term care you may need in the future. You see, according to Genworth, the average annual cost of a nursing home room is around $85,776 per year for a semi-private room or $97,452 for a private room.
And according to the American Association for Long Term Care Insurance, only about 12% of people stay in nursing homes for more than five years. Further, a typical stay is generally shorter if you’re married than if you’re not, likely reflecting the fact that one member of a couple often functions as a caregiver for the other as they age, delaying the need to move to the nursing home.
So, given that an ordinary couple is unlikely to spend more than about $1 million on long term care ($100,000 per year x 2 people x 5 years per person), insurance looks less worthwhile if your net worth is beyond $2 million, especially if you’re a decent investor.
From the Bogleheads:
I recently discussed long term care insurance with a friend in the insurance business. He said to me that anyone with a net worth of $2.5-3 million should not buy one of these policies.
I had a similar discussion with a financial planner (CFP). He put the number at about $2M. Above that you can self insure. Certainly that is an opinion, and certainly no one knows the future. I find it interesting that the numbers were in the same ballpark.
$2 million per couple is cutting it pretty close. I could see $2.5 million per individual.
I find that investors seek out a specific asset threshold to help determine whether they could self-fund long-term care costs rather than buying long-term care insurance. In my early days of focusing on retirement planning, $1.5 million was often asserted to be a “safe” asset threshold for paying long-term care costs out of pocket. More recently–no doubt in light of the fact that we’ve seen long-term care costs trend up more rapidly than the general inflation rate–that figure has crept up to $2.5 million.
I think it makes more sense to size up the long-term care need on its own: the likelihood that you’ll need long-term care, how much it’s apt to cost and for how long, whether you’d receive that care at home or free up your home as an asset to pay for it, and so forth. Armed with an understanding of those costs, you can then look at whether your portfolio, factoring in both the long-term care costs and all other expenses, is up to the job.
Ok, so it looks like there is some consensus on the rule-of-thumb. If your assets are above $2 million (or $2.5 million if you want to include a margin of safety) it looks like self insuring is the way to go.
If your net worth is very low, there aren’t really many assets to protect anyway and LTC insurance is likely an expense you can’t afford, so why not let the government pay for it?
How Low is Low Enough?
I looked for a reference to find an exact number for the low-end guideline and ran into this report which says:
There’s a wealth “sweet spot” at which LTC insurance significantly improves the probability of sustaining retirement spending.
For the typical family of modest wealth (below the sweet spot), there’s a high risk of portfolio exhaustion should they become subject to an expensive end-of-life event, regardless of whether they have insurance.
At the other end of the spectrum, families with substantial wealth (above the sweet spot) can self-insure. They’re likely to be secure financially and leave an inheritance regardless of insurance.
It’s in the middle bands where LTC insurance becomes a potentially value-added proposition.
In Los Angeles (an average-cost market), there’s an improvement in the odds for couples with between $1 million and $6 million in liquid net worth. In Manhattan (a high-cost market), the range for couples is $3 million to $12 million.
Wait! Los Angeles is an average cost market? I don’t think so.
According to Best Places, Los Angeles is 73% more expensive than the average U.S. city.
If you take the $1 million to $6 million and adjust it down by 73% for the average, you get $270k to $1.6 million.
A few other opinions…
From Investor Junkie:
If your net worth is less than $500,000, then forgo LTC insurance, as you will likely qualify for Medicaid or some other sort of assistance.
If your net worth is over $2 million, the conventional wisdom is to self-insure your long-term care needs.
Nonetheless, there are some people — for example, those who have assets worth $300,000 to $500,000 above and beyond the value of their homes — for whom LTC insurance may be a sound idea. This is particularly true if LTC insurance is viewed as a safety net rather than as a financial investment — and if your policy includes coverage for assisted living facilities.
So if your house is worth $400k, this would put the range at $700k to $900k.
$700k seems too high for me and $900k too low based on what the others are saying.
From Advisor News:
“In general, it’s a great idea, and a great hedge, for people between the ages of 50 and 75 with a liquid net worth between $500,000 and $5 million,” said Lawrence Sorace, a wealth manager with Mulberry Lane Advisors in Matawan, N.J.
He’s a wealth manager, so he’s prone to estimating as low as he can go on the low end and as high as possible on the high end to include as many people as possible in the “I need to buy LTC insurance” middle.
So I read this as “$250k to $2.5 million” in reality.
The information is a bit scattered and hard to find (especially on the low net worth end, but I think the $500k to $2.5 million range is more than generous. If anything, the truth is probably more like $250k to $2 million.
But as I said above, personal finance is personal and what you feel comfortable with might not be what someone else is comfortable with. So if you’re outside this range on either end, you still may want to opt for LTC insurance.
Just to be clear, if you’re on the low end of net worth, are working to get Medicaid to pay for LTC, and are moving your assets to both protect them as well as qualify, you need to know the government is on to you.
That said, if you have enough foresight, you can get around their hurdles.
Here are the details:
When a senior is applying for long-term care Medicaid, whether that is for services in one’s home, an assisted living residence, or a nursing home, there is an asset (resource) limit. In order to be eligible for Medicaid, one cannot have assets greater than the limit. Medicaid’s look-back period is meant to prevent Medicaid applicants from giving away assets or selling them under fair market value in an attempt to meet Medicaid’s asset limit.
All asset transfers within the timeframe of the look-back period are reviewed, and if an applicant is found to have violated this rule, a penalty period (a period of Medicaid ineligibility) will be established. This is because had the assets not been gifted, sold under their fair market value, or transferred, they could have been used to pay for the elderly individual’s long-term care. If one gifts or transfers assets prior to this look-back period, there is no penalization.
The date of one’s Medicaid application is the date from which one’s look-back period begins. In 49 states and D.C, the look back period is 60 months. In California, the look back period is 30 months. As an example, if a New York resident applies for Medicaid on Jan. 1, 2020, their look-back period extends back 60 months to Dec. 31, 2015. All financial transactions during that timeframe will be subject to review.
Examples of the type of transactions that could result in a penalty include money that was gifted to a granddaughter for her high school graduation, a house transferred to a nephew, collectors’ coins sold for half their value, or a vehicle donated to a local charity. Even payments made to a personal care assistant without a formal care agreement or assets that were gifted, transferred, or sold under fair market value by a non-applicant spouse can violate the look-back period and result in a period of Medicaid ineligibility.
And as for qualifying based on your financials, there are rules pertaining to both income and assets. Let’s begin with the income limits:
A rule of thumb for the year 2020 is a single individual, 65 years or older, must have income less than $2,349 / month. This applies to nursing home Medicaid, as well as assisted living (in the states which cover it) and in-home care when this is provided through a state’s HCBS Waivers. (HCBS stands for Home and Community Based Services).
Income limits (for nursing home Medicaid and HCBS Waivers) are not as straightforward for married applicants. Generally, married couples’ incomes are counted separately. Therefore, the income of a non-applicant spouse is not used in determining income eligibility of his / her applicant spouse, who is able to have up to $2,349 in monthly income.
Furthermore, the non-applicant can be allocated some of the applicant’s income to enable him / her to continue living at home when his / her spouse goes into a nursing home or receives HCBS through a Medicaid waiver. This is called the Minimum Monthly Maintenance Needs Allowance (MMMNA).
In 2020, in most states, the maximum amount of income that can be allocated to a non-applicant spouse is $3,216.00 per month. For married couples in which both spouses are applicants, in most states, in 2020, each spouse is allowed $2,349 / month or a combined income of $4,698 / month.
And for assets:
The Medicaid asset limit, also called the “asset test”, is complicated. There are several rules of which the reader should be aware before trying to determine if he / she would pass the asset test.
First, there are “countable assets” and “exempt assets”. In most cases, one’s home and furnishings are exempt.
Second, unlike income, which is sometimes counted separately, all of a married couples’ assets are considered to be jointly owned and are counted towards the asset limit.
Third, asset transfers made by the applicant up to five years preceding their application date (or 2.5 years in California) are counted. This is referred to as the Medicaid Look-Back Period, and if one is in violation of this period, they may be ineligible for Medicaid for a period of time.
In 2020, in most states, a single applicant, aged 65 or older is permitted up to $2,000 in countable assets to be eligible for nursing home Medicaid or HCBS Waivers (New York is a notable exception allowing $15,750). Aged, Blind or Disabled Medicaid usually has the same asset limit. An applicant’s home is considered exempt, given the value of his / her home equity (the fair market value of one’s home minus any debt on the home, such as a mortgage) does not exceed $595,000 (or $893,000 in some states, or California which has no upper limit on home value).
Furthermore, if a single applicant does not live in the home, he / she must have “intent” to move back into the home.
This is far from all the details but it gives you a taste of what you face if you try and get LTC Medicaid assistance.
To say it’s complex and not very forgiving is an understatement IMO.
How to Think About LTC Insurance
If we go with the net worth guidelines noted above, lower net worth and higher net worth individuals are out of the conversation at this point.
What can those in the middle do to decide whether or not they should get LTC insurance?
While reading all the posts from my last article as well as this one, I found this piece from Morningstar which gave the following six-step plan to determine how to handle LTC issues:
Step 1: Gauge the likelihood of needing care.
Step 2: Ballpark the cost of care.
Step 3. Customize based on your own situation and preferences.
Step 4: Think through a backup plan.
Step 5: See if your retirement plan can support a long-term care fund.
Step 6: Segregate long-term care assets from spendable assets.
Seems like a very reasonable step-by-step process. It’s worth a read if you are interested and think LTC insurance may be for you.
What are the Alternatives to LTC Insurance?
That said, even if you’re in the middle range, LTC insurance might not be for you.
Both the planners we met with as well as the retirement workshop planner really disliked LTC insurance.
Their main objections were:
- You may pay a ton of money and not use it. Of course, this is like almost every other type of insurance (home, car, term life, etc.) and I’m sure they wouldn’t recommend not buying those.
- Even if you get LTC insurance and need it, the insurance company will fight you every step of the way to try and minimize their costs. This seems like an indictment of the insurance industry, so how could they sell any insurance product? 😉
Now maybe they are being non-biased, expert advisors. Or maybe they’d prefer to sell you an expensive permanent insurance product instead — which is what both planners above recommended for us instead of buying LTC insurance.
So make of that what you will.
One thing they didn’t bring up (I did in one meeting) is that companies are exiting the LTC insurance market in droves (at least historically they have). What happens if you pay all your premiums for a decade and then your company decides to get out of the business? Maybe nothing and you’d still be covered, but my guess is that there would be associated hassles if this happened.
Of course there are other ways to cover the cost of any potential long-term care other than buying insurance.
In searching for LTC insurance posts I ran into this one titled Alternatives to Buying Long-Term Care Insurance. They list the following for consideration:
- Save money for long-term care
- Tap into ‘living benefits’ on a life insurance policy
- Sell your life insurance policy
- Use an annuity
- Buy a combination long-term care/life insurance policy
- Buy a short-term care insurance policy
I like thinking outside the box and thus appreciated these options.
Items #2, #4, and #5 seem to be similar (or exactly) what the planners above are recommending FWIW.
I don’t think many of these are that great, but they are worth considering if you’re seriously thinking of buying LTC insurance.
Personally if I was in the middle group, I’d try and see if I could get to the high end and self-insure.
If I couldn’t do that, I’d look at both LTC insurance policy options as well as alternatives and try to find one that I felt would work and not cost me my entire net worth.
I would try and do everything I could to avoid the Medicaid option.
My Thoughts and Plans for LTC Insurance
After all my reading and the two posts I’ve written, here are my general thoughts on the issue and how we’re handling it:
- It’s a coin toss as to whether we’ll need long-term care (basically 50/50).
- Even if we do, it’s not that likely that we’ll need it for long.
- Given this, the cost appears manageable, even if we double or triple it. In most scenarios, our income alone would cover most of the costs.
Here are the (very) rough numbers:
- Current income is around $130k and spending around $91k.
- Non-revenue-producing assets (excluding assets like real estate and private loans, which we’d need to generate income) are $3.2 million
- Let’s say both my wife and I needed LTC at the same time (hopefully the worst case scenario) and it would run us $100k each per year ($200k total).
- Our income would likely drop as I wouldn’t be running ESI Money (though it could be sold to increase assets). Take out everything else but real estate (which our kids could run) and we’re left with $60k per year.
- At $3.2 million in assets, we’d need to withdraw $140k per year ($200k – $60k) which is a 4.375% withdrawal rate.
- As such, the combination of assets and income should last us a long time.
Now, of course, let’s say this all happens in 20 years. The cost of LTC is going to be way higher by then.
This is one reason we’re maintaining a rather aggressive asset allocation in retirement. Hopefully our assets will grow in the next 20 years.
In addition, I’m always on the lookout for additional sources of income (more real estate, dividend stocks, etc.) that could add extra (and more stable) income.
Given these factors, I think we are fine, so we won’t be considering LTC insurance at this time.
In the end, everyone needs to consider the potential impact of long-term care costs and create a plan for it — to buy insurance, self-insure, let the government pay for it, or something else.
So those are my thoughts. What’s your take on the issue? And what do you plan to do to address the potential long-term care costs you face?
Jerry Higdon says
We are on the low side of the middle class regarding LTC insurance. However I anticipate like you our assets to gain more as we age. Additionally I anticipate we will get an inheritance that would put us over the middle class you mention. As a solid Christian married couple, I would expect we would care for each other as long as we could, we also should expect our four children and five+ grandchildren to also assist. Therefore we will not be getting LTC insurance.
Thank you ESI for this very insightful deliberation. God bless you.
Pastor Jerry from Illinois
Dale Tucker says
I purchased LTC in 2009. The monthly premium is currently $285 and the daily benefit is currently $326. The elimination period is 12 weeks. The premium/benefit were way lower originally, and have increased over time. I have the option of increasing the benefit (and of course the premium) annually – based on forecasted future cost of care. My former wife and I saw what it was costing her mom (alzheimer’s) for care and it kind of scared us, so we both got policies. I’ve been retired for almost 4 years now (I’m 60). My net worth as of today is ~$1.85M. I view it as a peace of mind thing – and also don’t want to burden my kids with dealing with all that would come from selling off assets, etc. Anyway, these 2 ESI posts have been really helpful (they all are!). Thanks ESI!
Both LTC posts were full of valuable info and I have shared them with many others.
My health is not great and I did not qualify. Got a Genworth policy for my wife in 2005 for $1200 a year. It has gone up very little. Benefit was $3900 a month with a 300k lifetime max. Has 5% annual increases so now is about 9k a month and 400k max. 90 day elimination period. Has the at-home care provision.
We fall in that 1m-2m spot and since my health is not that great, I would need help taking care of my wife so it still looks like a sound plan. Cancelled all our life insurance when the kids graduated college and house is paid off and no other debt so the life insurance premiums can now go towards the LTC.
We have plenty of money to self insure but when we turned 60 we bought LTC insurance because it made my wife feel more secure. I know the math isn’t that solid but her security and her feeling secure are well worth the price in my opinion. Same reason she still has a term life policy on me.
Just one thought (or question)on the high end threshold discussions….as I read through them…..net worth for a married couple involves two people, it’s not clear if the guidelines mentioned were for “couple” or 1. Significant difference.
We’re 61 and have owned ours for 10 years or so. One breathtaking 50% premium increase four years ago. We could certainly self insure, but if you’ve ever watched an elderly person slide downhill slowly, it has a big impact on your thinking. Legacy minded, we’re keeping ours for now. It’s just like all insurance(which drives me nuts/absorbs a big chunk of monthly cash flow), it’s risk mitigation. Genworth here also.
“So, given that an ordinary couple is unlikely to spend more than about $1 million on long term care ($100,000 per year x 2 people x 5 years per person), insurance looks less worthwhile if your net worth is beyond $2 million, especially if you’re a decent investor.”
Great (and timely) articles on LTC! I’m going through an update analysis regarding LTCi now. We fall at the top end of the group (~2.5MM net worth) who may need to consider LTCi. We bought policies through Northwestern Mutual when I FIREd four years ago at age 58 (me)/57 (wife). Premiums of $4,700/yr for a benefit of $6,300/month x 6 years for total benefit of $453,600 each. Both of us have longevity in our families with nursing home experience for parents and grandparents. While we still debate whether to self insure, my deciding factor comes back to a strong desire to keep my money and give what we can’t spend on fun to my kids/grandkids rather than to a nursing home.
My current decision point is – since I’m keeping my LTCi, what is the most cost efficient way to pay the premiums? My agent reached out during this lock down period and suggested paying the premiums via funding a Non-Qualified Tax Deferred Variable Annuity (4.5% commission plus 0.5% fee on top of underlying investment fund fees). I usually stop listening when I hear “Annuity”. But since I like to analyze things (retired engineer) and we are under stay at home orders, I listened. The benefit to me would be to pay the LTCi premiums with 1035 Partial Exchange from the annuity. The agent says this effectively lets me pay the premium with pre-tax dollars, which would save me around $1,500/yr in taxes assuming a 24% tax rate. Plus the annuity grows tax deferred. I don’t see a need to take any future withdrawals from the annuity for living expenses as I have adequate cash flow via a pension, outside liquid investments and eventually RMDs. I’ve never felt an annuity in its typical sales pitch purpose had a place in my portfolio. But if I truly can save $1,500/yr on taxes by paying premiums with “pretax” dollars, then maybe it’s worth looking into and doing some due diligence. My initial google searches confirm this is a legal option. Do you or anyone else have experience or thoughts on this approach?
ESI, I really appreciate this blog! It’s unnerving how often your posts align with things going on in my family’s life – from your “Comcast removed remote recording” rant (one of my favorite features although it is finally back), Norwegian Cruise impacted by the hurricane (think we were booked on the same cruise a week later), retirement seminars (just to check out what’s being peddled) to LTC insurance now. Scary. But it also shows you are hitting the right topics and connect with your audience. Keep up the good work!
Thanks. Appreciate your kind words.
I don’t have experience with what you’re describing, but am interested in hearing from those who might.
Be weary of your agent and any snake oil he’s trying to sell you. Those Northwestern Mutual agents love selling Whole Life Insurance policies too, and present them as the best investment in the world.
“Act as if every broker, insurance salesman, mutual fund salesperson, and financial advisor you encounter is a hardened criminal” – William J. Bernstein
This is very helpful. Thank you, ESI!
100000 per year may be a little low for two people in a good facility. My parents are currently paying about 15,000 per month with full board. Mom is in full nursing and Dad is in an assisted living apartment with a high level of personal care. LTC pays about 9500 per month for about 3.5 more years. Good facilities are expensive. My aunt was paying $10,000 a month four or five years ago for full nursing for one person, but in an area with very few nice options.
I did a quick and more simple analysis of our situation (similar to ESIs) and came up with the same conclusion to self-insure. Same situation with our parents (now only our mom). She has a similar cushion, much older and on top of that, have 3 kids that can pitch in if need be. Regarding our in-laws, we’re looking into a structure where all their kids help out when needed. No LTC insurance.
I find it sad that kids who were brought up in good safe homes and were supported through college don’t return the favor when they are mature, established adults. Shame on them for not living below their means and are are not able or willing to help out when their sacrificing parents gave so much for them. I am also sad/angry that those who pissed away their wealth on non-essentials are able to use Medicaid to get the EXACT same care as those who worked hard, saved and tried to stay healthy and are now depleting their hard earned savings for the same care at the same facility. Not sure it’s true for all long-term care facilities but is true for the nursing homes my spouse works for (located in a solid middle class area).
My understanding is that those on Medicaid are paying much less than those paying from their savings, because Medicaid reimbursement to nursing homes is very low. As a result, the better nursing homes make applicants show that they have a good deal of their own savings before accepting them as residents. Those who truly skipped saving money can only get into the lower cost, primarily lower quality homes.
I think this is true on average but most nursing homes have a “quota” of slots for Medicaid. If you’re lucky/connected, you can get in good homes at Medicare prices.
How to think about insurance: (Spoiler: Insurance is always a bad deal. You should get it because you would be ruined without it. Otherwise you should not get it.)
1. The expected value from insurance is always negative. That is to say the average person has to lose money by having insurance or the insurance company would be out of business.
2. Since the expected value is to lose money why would anyone buy it? Only 1 reason really makes sense: Things that will be devastating or very painful to your life if they happen and you are not insured.
Even then, the cost is prohibitive if the event is too common. The insurance company has to cover 100% of all payouts plus its overhead, its profit, and its agents’ profits. That probably makes insurance cost something like 130% of the expected payouts. That’s just a spit balling number. I have no research behind it. Feel free to make it larger or smaller if you like.
Using this number consider the cost and payouts for 6 examples:
1. 100% chance of event happening. Cost = $130K, 100% chance of a payout = $100K
2. 50% chance of event happening. Cost = $65K, 50% chance of a payout = $100K
3. 33% chance of event happening. Cost = $43K, 33% chance of a payout = $100K
4. 10% chance of event happening. Cost = $13K, 10% chance of a payout = $100K
5. 1% chance of event happening. Cost = $1,300, 1% chance of payout = $100K
6. 0.1% chance of event happening. Cost = $130, 0.1% chance of a payout = $100K
Where in this chain does the cost benefit start to look like it is at least not that painful? Probably around #5, perhaps #4.
For LTC, how many people think they are insuring against #5 or even #4? Most probably think they are insuring against something like #2 or #3, but then you have already paid almost 1/2 to 2/3 of the benefit you are going to get. You couldn’t make me take that kind of a trade off if you put a gun to my head. If you want to argue that the costs don’t seem to be that high then your odds of getting a payout are lower than you think. Otherwise you are not arguing with me, you are arguing with math. Math is thus far undefeated in the argument category.
Insurance is always a bad deal. You should get it because you would be ruined without it. Otherwise you should not get it.
APEX, thanks for your v. good and useful comment on ESI good post. If anyone wants to go deeper on which of the 6 examples is most applicable to LTC, then this is excellent and in depth look from Vanguard’s research pieces: Link
And on the bottom of this post see this additional link to get the full PDF (24 pages full of graphs and tables and good discussion on Health Care in retirement and LTC):
“See our complete research on health care costs in retirement”
My conclusion on studying this PDF plus APEX’s analysis of when insurance is useful, and using all that ESI has written for us, yields that what ESI states is solid advice. If you are the type of person that wants to dig further into the numbers, then worthwhile to take a look at this PDF.
This is a great resource!
Money is important, we all agree on that otherwise we wouldn’t come to our host’s site.
However. Remaining in one’s home for as long as possible is the most important thing to the person who may require LTC. I say this as someone who has lost a father in the last year, the decline was over six years and his wife (my mother) was with him the whole time. He required a part-time (12 hrs/day) in-home caregiver for two years, and a full-time caregiver for the last six months. The state will work with the family to provide hospice care when “the time comes” checking in by phone or brief visits, and a caregiver for the last several days (six or less in our case).
I have a disabled sibling requiring f/t caregivers, and she has lived with my parents for the last three years. My mother is showing signs of decline, and will not be driving much longer. Fortunately my brothers and wives are around to lend a hand. Blah, blah, blah, life is finite and hard and all studies of philosophy end in the truth that “life is suffering.”
That said, professional caregivers from a bonded service cost about $36/hour. Totally worth it, to stay in the house.
Millionaire 73 says
Thanks for pulling the two articles together as I had “research long term care” on my To-Do list for several years and your two articles allowed me to feel comfortable that it is not something I will need.
I have read every ESI Money article over the past 2 years and the amount of high quality information on a regular basis definitely sets it apart when it comes to money or FIRE content.
Thank you for your review and information of this subject. My folks bought LTC, many years ago, and paid $1400/year, for maybe 10-20 years–not sure; my dad died without tapping into it, as he had a stroke, and died 8 weeks later from pneumonia. That was 8 years ago, so the LTC insurance told Mom that her premium was paid in full. She had to recuperate in a facility las year, and used it for 3 months of her stay, and still she has enough to pay $100/day for 4 years. She is 92 and resides in her own home, with help, and nightly caregiver (my sis & I, plus a paid caregiver 3 nights). But you just don’t know– what can happen with your health. I know friends mom spent 8 years in a LTC facility with Parkinson’s; another friends mom spent 8-10 years in a LTC facility with Alzheimer’s. You just don’t know what your health is going to be like.
I’m choosing to self insure. I’ve decided to save one month’s LTC cost $7800 per year, and build it up to cover a year’s cost, to get started. Hopefully, we won’t need that — but if I can self insure, all the better.