Personal Finance (Not Investing) • Why are so many people choosing LTCI

Because LTC is potentially expensive and can exceed the 7.5% of one's AGI, any self funding would be best sourced from tax-deferred assets if possible. On the insurance side, qualified plan premiums are also deductible (particularly after age 70)

Much of the discussion in this post is to either self-fund or insure. We are actually doing BOTH:

- Even when insured, we have a 180 day elimination period to self fund
- Our policy covers enough per/day to cover 44 hours of a home health aid or assisted living and about 60% of a private skilled nursing care
- Our policy only has a 3% inflation rider and the costs could inflate at a higher rate (i.e. 5%)
- Our policy has two 3-year periods with an additional shared 3-year period (e.g. up to 6-years for one person) but care could be needed longer

The main benefits of partially insuring are:

- Access to LTC specialists to help us navigate a complex care system
- The partnership protection allowing one to qualify for Medicaid (worst case scenario) leaving one of us with some assets (for example, at age 85 ~$1.3M)

So I don't look at it as a binary decision. LTCI plays a part as does self-funding.

Do you mind sharing your age and premium cost for a partial insurance? How would LTCI work if you already have Medicaid

We are 44 and 48 and haven’t thought about this yet . However based on your savings, I think we should be able to self fund this in the future

My parents (74 and 67) has no asset in their name and qualifies for Medicaid so that’s the initial plan. But I see with my grandma in her last few years that additional coverage is needed beyond what Medicard provided. (Even through she lives with my aunt, no one wants to do the heavy work of caring for an older person so the family pay for extra hours of LTC). I m worried that the need for LTC for my parents would hit us during our retired age.

We purchased a policy at ages 61 and 62 and in average health and were able to be underwritten.

Policy Basics:
Insurer: National Guardian Life
Elimination Period: 180-Days
Max Daily Benefit: $200
Max Duration: 1,095 days per person (3-years) plus one shared 1,095 day period (e.g., up to 6-years for either of us)
Inflation Rider: 3% Compounded
Annual Policy Cost: $6,342

I cannot speak to the circumstances that you describe.

The way the LTC Partnership works is also state dependent. In the state that we live, Medicaid limits assets to < $2k for the applicant seeking skilled nursing care and <$154k for their spouse. Say it was 20-years from now and we had exhausted our policy benefits (about $1.25M then). The state would allow us to qualify for Medicaid with assets less than or equal to the benefits outlaid by our policy ($1.25M).

As I said in an earlier post, we still need to set aside assets to significantly self fund on top of this policy. It is simply part of a plan.

Statistics: Posted by KBR — Tue Aug 13, 2024 7:06 pm — Replies 201 — Views 20697