Consumer Homes.

Question:

an excellent article on LTC insurance.  An addition: In some states, the LTC can be written so that it won’t kick in unless some very restrictive conditions are met.  Make sure that the terms to make a condition qualify for the LTC benefits are clear and very general. They should include every condition that makes LTC necessary. – Hide quoted text — Show quoted text -> We just went through the agonizing process of buying > LTC insurance for me and my spouse. We are age 57 and 62 and wish we had > started sooner. Premiums are age-based and not cheap, but now if one of > us needs LTC, it won’t bleed all our savings away and leave the other > spouse in poverty. This gives us great peace of mind. > There are lots of parameters and variables to consider when buying > LTC coverage and I recommend you study up before you let any insurance > agents into your house. We found that we became more informed than most > we talked to and were therefore able to see through most of the fluff > and ask meaningful questions. This is not a subject to take lightly. > Some points we thought important: > 1. Singles or couples with assets (excluding their home) below $100,000 > probably don’t need LTC insurance. > 3. Opt for a monthly benefit based on today’s cost at a facility you > wouldn’t mind being in. > 4. If you’re less than age 75, get compounded, uncapped inflation > protection. Costs are going up now, and what do you think is going to > happen to costs when baby boomers start driving up demand? > 5. Include 100 percent homecare & assisted living benefits. This benefit > gives a lot of flexibility, but costs about as much as a nursing home. > 7. Get lifetime benefits if you truly want to protect against the worst > possible catastrophe. > 8. I think all the new tax-qualified plans cover the following, but ask > anyway about: >         a. cognitive impairment, e.g., alzheimer’s >         b. guaranteed renewable for life >         c. no exclusion for any current medical condition >         d. coverage if unable to perform 2 of 6 or 7 activities of daily > living (ADLs) such a bathing, dressing, transporting, eating, etc. >         e. waiver of premium after receiving benefits for some period > (in our case 90 days)

– Cheers, Steve Henning, Reading, Pennsylvania, USA Visit my home page at http://www.users.fast.net/~shenning

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> > 1. Singles or couples with assets (excluding their home) below $100,000 > probably don’t need LTC insurance. > Can you explain this conclusion for me.  Is this because of Medicaid?

I can’t imagine anyone with assets below $100,000 being able to afford to buy long-term care insurance that would provide better benefits than Medicaid.  Indeed, my usual measure is around $200,000.   > Also, did you look at how much the cost of LTC insurance would increase > as you get into your 70s, the time when, it seems to me, you most need > it.  Does it become so cost prohibitive that you would have to cancel out > of the policy?

No one should EVER buy long-term care insurance that has increasing premiums.  I believe most long-term care insurance is sold on a "level premium" basis — that is, you pay the same premium as long as you live.   You should also NEVER buy long-term care insurance without taking steps to make sure that premiums are paid.  Don’t buy long term care insurance you can’t afford to keep.  And make sure that a family member knows you have the insurance and is listed to be alerted if any premiums are missed or if you attempt to cancel the policy.  (Imagine the result if you begin to develop Alzheimer’s and you forget to pay premiums, or if dementia makes you decide irrationally that you no longer need the insurance!  Most states provide special protection against lapses in these situations.) — Mark J. Welch, Attorney at Law, Pleasanton CA — http://www.ca-probate.com         510-462-8483 — Email is not legal advice, and is not confidential.

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There is a booklet "A Shopper’s Guide to Long Term Care Insurance" which was published last year by NAIC (National Association of Insurance Commissioners)  You can reach them at (816) 842-3600 or emai me and I can send you a copy. Consumer Reports has an article on long-term care insurance planned for the next month or so. The University of Maryland Center on Aging is the national program office for the Partnership for Long-Term Care, an initiative of the Robert Wood Johnson Foundation.    There is information about the program and links to two state programs on our web site at: http://www.inform.umd.edu/aging/ University of Maryland Center on Aging

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> 1. Singles or couples with assets (excluding their home) below $100,000 > probably don’t need LTC insurance.

Thanks for a very informative post.  I’ve been helping my parents do some planning along these lines. Can you explain this conclusion for me.  Is this because of Medicaid? Also, did you look at how much the cost of LTC insurance would increase as you get into your 70s, the time when, it seems to me, you most need it.  Does it become so cost prohibitive that you would have to cancel out of the policy? Thanks. Dave Williams

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LL Living trusts are really a combination of several documents, some of which will come in real handy in case of guardianships mostly, and for extending the estate tax exclusion of 600K to 1.2mill even after second death. Living trusts dont protect you from creditors– including nursing homes. Depending on the situation of the estate, I recently solved that concern and others with one single product.   I had a 72 yr old single female with adequate assets, mostly financial, who had about 100K earmarked for her children, but had no LTC for nursing home/home health care. That 100K, after estate taxes, income taxes, capital gains taxes, etc would probably net 65-70K to the heirs.  Instead, with a single pay, i converted that 100K to 228K TAX FREE to the heirs (compared to the 65K).  ALSO…. a rider provided the benefit of using 1% of the FACE VALUE PER MONTH towards a nursing home, 2% per month towards home health care.  Consider what she got.  She gets to use the proceeds of the FACE VALUE while still alive. She could forseeably use 150K towards nursing home/home health care and STILL leave the same net amount to the kids as she would of before.  If she doesnt, the kids get quite a windfall…..  and IF she has some emergency she could have access to a large immediate cash value fund via policy loans. I would also suggest they have an annuity with certain provisions, especially, flexible, switchable and quickly annuitizeable to shift estate values of accountable resources and protect large portions of the estate for the commutiny spouse in case of nursing home situation.  Sort of like the probervial "spare tire".  Remember the rule of thumb—- if you can access cash— so can the nursing home….but if you turn lump cash into income for the community spouse—- that cannot be guarnished. Medicaide is a viable alternative if you PLAN it right…. they have a 3 year lookback period now, so you better do it right. All the above is guesswork due to the fact I dont know incomes, assets, coverages now, ages, their wishes for the estate, estate of retirement, real estate other than homesteaded home (dinosaur), etc……. – Hide quoted text — Show quoted text -> Can somebody please let me know what the best resources are regarding > understanding living trusts and nursing home insurances.   My parents > are actively researching these topics and I offered to help.  They > need information about their options to protect themselves and our > family from potential long-term nursing home/healthcare costs should > they become extremely sick later on in their retirement years.  They > have apparently been solicited by an insurance provider which offers > insurance policies that pay for long-term nursing home or home care. > I want to be sure that this is a viable option.  I’d also like to > uncover other potential resources.   > Please post a reply or email. > Thanks, > Lawrence

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X-Newsreader: WinVN 0.99.9 (Released Version) (x86 32bit) Federal and many States’ laws now take very dim views of shifting assets around to qualify for medicaid coverage of long-term care. In fact, it’s now a felony. So I’d be real careful about any transfers that even hint at the appearance of duplicity. With that in mind, we just went through the agonizing process of buying LTC insurance for me and my spouse. We are age 57 and 62 and wish we had started sooner. Premiums are age-based and not cheap, but now if one of us needs LTC, it won’t bleed all our savings away and leave the other spouse in poverty. This gives us great peace of mind. There are lots of parameters and variables to consider when buying LTC coverage and I recommend you study up before you let any insurance agents into your house. We found that we became more informed than most we talked to and were therefore able to see through most of the fluff and ask meaningful questions. This is not a subject to take lightly. Some points we thought important: 1. Singles or couples with assets (excluding their home) below $100,000 probably don’t need LTC insurance. 2. Choose a company rated at least A+. Ours is A++. 3. Opt for a monthly benefit based on today’s cost at a facility you wouldn’t mind being in. 4. If you’re less than age 75, get compounded, uncapped inflation protection. Costs are going up now, and what do you think is going to happen to costs when baby boomers start driving up demand? 5. Include 100 percent homecare & assisted living benefits. This benefit gives a lot of flexibility, but costs about as much as a nursing home. 6. Choose the longest waiting period you can live with. We chose 180 days, figuring we could pay the first 6 months of LTC ourselves. 7. Get lifetime benefits if you truly want to protect against the worst possible catastrophe. 8. I think all the new tax-qualified plans cover the following, but ask anyway about:         a. cognitive impairment, e.g., alzheimer’s         b. guaranteed renewable for life         c. no exclusion for any current medical condition         d. coverage if unable to perform 2 of 6 or 7 activities of daily living (ADLs) such a bathing, dressing, transporting, eating, etc.         e. waiver of premium after receiving benefits for some period (in our case 90 days) Good luck and hope all your premiums turn out to be wasted money. Ted says… <snip> – Hide quoted text — Show quoted text ->I would also suggest they have an annuity with certain provisions, >especially, flexible, switchable and quickly annuitizeable to shift estate >values of accountable resources and protect large portions of the estate >for the commutiny spouse in case of nursing home situation.  Sort of like >the probervial "spare tire".  Remember the rule of thumb—- if you can >access cash— so can the nursing home….but if you turn lump cash into >income for the community spouse—- that cannot be guarnished. >Medicaide is a viable alternative if you PLAN it right…. they have a 3 >year lookback period now, so you better do it right. >All the above is guesswork due to the fact I dont know incomes, assets, >coverages now, ages, their wishes for the estate, estate of retirement, >real estate other than homesteaded home (dinosaur), etc……. > Can somebody please let me know what the best resources are regarding > understanding living trusts and nursing home insurances.   My parents > are actively researching these topics and I offered to help.  They > need information about their options to protect themselves and our > family from potential long-term nursing home/healthcare costs should > they become extremely sick later on in their retirement years.  They > have apparently been solicited by an insurance provider which offers > insurance policies that pay for long-term nursing home or home care. > I want to be sure that this is a viable option.  I’d also like to > uncover other potential resources.   > Please post a reply or email. > Thanks, > Lawrence

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> Can somebody please let me know what the best resources are regarding > understanding living trusts and nursing home insurances.

Maybe I can help a little with the trust part; but not the insurance part. Laws regarding trusts are state specific; so you need to consult an attorney who specializes in trusts.  My Dad wanted to put most of his assets in a trust for his sons. I called the State Bar Assoc., and asked for the name of the best trust lawyer in my small misshapen little state.  As things turned out, this was a very smart move, although I was ignorant at the time. A living trust was set up, with the trustees managing, and with my Dad able to draw on the assets while alive. As it turned out, I was sued after my Dad’s death over the terms of the Will/trust. By that time the trust had been distributed to the sons. Despite rigorous attack by an expensive team of Maryland’s most notorious Junkyard Dog law firm, the terms of the Trust and the Will were upheld by the Court. So my advice:  Consult a good trust attorney, and have him explain your options. Jim Md.

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>>We have chosen a better option for us. It is called a Life Care

Community. Description is too long for this note, but if anyone is interested we could open a thread on this topic.<<   I would like to learn more about this topic.

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> A Life Care Community is an option for 65+ folks with at least a middle > income status.

Thanx for a good summary of life care communities. I looked at several of these a few years back; and maybe you can  explain something to me.  I was put off by the up front payment. I remember one typical community had a $120K buy-in fee, ninety percent of which was refundable upon leaving or expiring. Meanwhile, the price of the apartment increases; but the occupant doesn’t realize the benefit of that increase. Assume, for example a ten year stay under the above terms. At seven percent, the initial $120K would be worth $236K, if, say, invested in Treasuries.  The tenant is repaid ninety percent of $120K, or $108K.  So the community has realized a rental profit of 236 minus 108 equals $128K over ten years. In addition, the apartment has gone up in price over the ten year span, so the new tenants pay the appreciated price. Do I have this wrong? Jim Md.

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<snip> – Hide quoted text — Show quoted text -> I remember one typical community had a $120K buy-in fee, ninety percent of > which was refundable upon leaving or expiring. Meanwhile, the price of the > apartment increases; but the occupant doesn’t realize the benefit of that > increase. > Assume, for example a ten year stay under the above terms. At seven percent, > the initial $120K would be worth $236K, if, say, invested in Treasuries.  The > tenant is repaid ninety percent of $120K, or $108K.  So the community has > realized a rental profit of 236 minus 108 equals $128K over ten years. In > addition, the apartment has gone up in price over the ten year span, so the > new tenants pay the appreciated price. > Do I have this wrong? > Andy writes: >   Not wrong, but not complete.  From 1985 to 1995 the price of >   the real estate may not have appreciated at all, and over much >   of that period, may have gone down. (Lots of people found this >    out first hand, including me). >   So there would have been no gain from the appreciated value. >   AND the tenant has realized a place to live, which may be worth >   10 – 15K a year if he had to pay rent. >   Given that scenario, 120K paid in 1985 MIGHT result in 105K >   back in 1995, PLUS the use of an apartment for 10 years with >   a value of 12K a year. That’s a bit more in the tenant’s favor. >   Just depends on whether the units appreciate faster than the >   same cash put in an income producing investment. Hasn’t happened >   that way in a long time……. >   I think that speculation in residential property appreciation has >   become too much of a crap shoot for me to feel comfortable with, >   anyway. >   HOWEVER,  the initial poster did not mention if he was REQUIRED to >   sell the property back to the establishment. If he could also sell >   on the open market, he could realize any increase in value himself. >   And, if the values went down, could at least partially recover his >   investment from the establishment.

The initial poster says: In the usual arrangement, you are NOT buying real property, you are buying the right to live in the community. So you have no property right that you or your estate can resell. So yes, the community gets the benefit of any price increase, but also takes any losses. To me, this whole analysis is academic. I want, and am willing to pay for, absolute assurance of a standard of care that I can thoroughly investigate before need, at a price that I know I can afford, *No Matter How Long I Live*. So the buy-in is a bargain to me. — George Richmond

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>  But then I remembered my mother, who spent every dime > she and my father had saved on nursing home costs, and wound up with > barely enough to cover her funeral costs.

Good point! > Yes, I think you do. Housing rarely appreciates as fast as other > investments, and lately, at least around here, 2% is about right.

I have to agree. > I’d also > like to know where you get those 7% treasuries <g>.

My Treasuries for the past year have paid 6.85 percent. > To me the biggest advantage is the minimization of down-side risk.

Hard to have too much of that. There is a large life-care facility near here called Charlestown in Catonsville, Md., a Baltimore suburb.  It seems very nice.  Thanx. Jim Md.

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- Hide quoted text — Show quoted text -> A Life Care Community is an option for 65+ folks with at least a middle > income status. > Thanx for a good summary of life care communities. > I looked at several of these a few years back; and maybe you can  explain > something to me.  I was put off by the up front payment. > I remember one typical community had a $120K buy-in fee, ninety percent of > which was refundable upon leaving or expiring. Meanwhile, the price of the > apartment increases; but the occupant doesn’t realize the benefit of that > increase. > Assume, for example a ten year stay under the above terms. At seven percent, > the initial $120K would be worth $236K, if, say, invested in Treasuries.  The > tenant is repaid ninety percent of $120K, or $108K.  So the community has > realized a rental profit of 236 minus 108 equals $128K over ten years. In > addition, the apartment has gone up in price over the ten year span, so the > new tenants pay the appreciated price. > Do I have this wrong? > Jim > Md.

Andy writes:

  Not wrong, but not complete.  From 1985 to 1995 the price of   the real estate may not have appreciated at all, and over much   of that period, may have gone down. (Lots of people found this    out first hand, including me).   So there would have been no gain from the appreciated value.   AND the tenant has realized a place to live, which may be worth   10 – 15K a year if he had to pay rent.   Given that scenario, 120K paid in 1985 MIGHT result in 105K   back in 1995, PLUS the use of an apartment for 10 years with   a value of 12K a year. That’s a bit more in the tenant’s favor.   Just depends on whether the units appreciate faster than the   same cash put in an income producing investment. Hasn’t happened   that way in a long time…….   I think that speculation in residential property appreciation has   become too much of a crap shoot for me to feel comfortable with,   anyway.   HOWEVER,  the initial poster did not mention if he was REQUIRED to   sell the property back to the establishment. If he could also sell   on the open market, he could realize any increase in value himself.   And, if the values went down, could at least partially recover his   investment from the establishment.   Lot’s of what-if’s there……                Andy in Dallas *                                                  * *  Please post any replies directly to:            * *  address insertion has added "nospam"            * *  in order to try to lessen the junk mail.        *

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