More on Long Term Care
Jul. 12th, 2009 08:30 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
livingdebI've thought of more issues relating to long-term care.
What is insurance for?
Many people have homeowner's insurance and auto insurance because their lender or the law requires it. But there's no sense in trying to insure everything. After all, the expected return on insurance is negative because it is biased toward the insurance companies, who want to make a profit.
Insurance is best for rare but debilitating situations: everyone contributes a little, and then you are protected if this horrible thing happens. Good examples are homeowners insurance and health insurance, especially if they have high deductibles.
For things like vision care, it's better to self insure--suddenly needing glasses is probably not going to break you, and if it is, you can't afford the insurance anyway.
For things like the kind of life insurance that's not term, it's also better to go without, even though you probably can't afford to self-insure, because everybody dies, so it's not a good deal. (Term life insurance, which you keep for a few years until your dependents grow up or your other assets allow you to self-insure can still make sense.)
So which one is long-term care insurance more like? That requires the answers to two questions.
How bad can it be?
I mentioned the statistics in my last entry. The cost averages $125/day in my state, more in other parts of the country. The national average is a bit more: $52,000 per year (~$142/day). So 46% of those admitted to a nursing home are impoverished within 3 months; 72% within a year. According to the National Insurance Institute, long term care is the biggest risk to income, assets, and independence.
In conclusion, it sounds pretty bad.
What are the odds?
Here are some more statistics I've found. Not that I trust any of them, but you work with what you can find.
Supposedly 42 percent of folks age 65 and older have a chronic condition causing disability, 83 percent age of those 85 and older. And 40 percent of all those on long term care are not elderly but between the ages of 18 and 64. That's pretty extreme.
But then the average amount of nursing home care needed for men is 2.2 years and for women 3.5 years. The average LTC insurance claim is 3 years. The average time an individual spends in nursing home care is 875 days (2.4 yrs), but total care statistics show more home and community based care than nursing home care.
Once source gave these odds (ironically, trying to talk people into getting the insurance:
Destroyed house - 1:12000
Totalled car - 1:2400
Hospitalization - 1:11.4
Long-term care - 1:1.67
Conclusion: apparently most people need long term care at some point, and a pretty high percentage need so much that it would be a real financial burden to them.
What are the options?
There's not a lot of information on other options. Here are some I've learned about:
* Medicare and health insurance plans - These actually do pay for some long-term care if it is related to something that resulted in a hospital stay. For example, Medicare pays for 100% of the costs for the first 20 days (with a co-payment after that) but only for 100 days or until you stop improving. Medicare won't pay for home or an assisted-living care.
* Free care from family, friends, and neighbors (used by the vast majority of people who need it) - I would hate to ever ask for this; it's very expensive for the caregiver in lost wages, plus they tend to get depressed. Plus, it's usually provided by one's spouse or female child, and I don't have any of those.
* Continuing care retirement communities - I know some people who found a good one; but it's probably too expensive for me. You give them a huge pile of money up front plus pay a monthly rental fee and move in while you're still totally healthy. Then if your health worsens, you can be moved to a section of the community with more care for the same or similar price.
* Medicaid - (the source for 54% of people in nursing homes) - This is only for the indigent, though you may become indigent as your resources dwindle; like Social Security, you might not want to count on this anyway.
* self-insured (the source for 35% of people in nursing homes) - This can include siphoning off your retirement savings and getting a reverse mortgage.
* long-term care insurance (the source for 9% of people in nursing homes)
* life insurance with long-term care rider (1%) - I don't need life insurance.
* annuity with long-term care rider (1%) - I find annuities to be far too expensive.
* suicide (ideally physician-assisted suicide) - once you are beyond recovery, that's when things get really expensive if you keep hanging on, but if you're in pain, not able to have a nice life, and there is no chance of recovery short of a sudden medical discovery, the testing of which you would also have to outlive, this one makes sense.
It does seem that divorce is the only way to protect a living spouse from losing all of their assets to your care, although I suppose they could protect their assets by caring for you themselves.
What makes you need long-term care?
I wonder how many times people just need it temporarily while recovering from something, and how often people use it as a half-way house to death. Here are the reasons I've read about that could lead to long-term care:
* Alzheimer's
* Parkinson's disease
* stroke
* heart attack
* injury - motor vehicle collision, fall, sports injury
* illness
* surgery
* old age and frailty
And the following can make you ineligible to purchase insurance, implying they are at least related to long-term care even if they don't require it:
* AIDS
* Lou Gehrig's disease
* Cirrhosis of the liver
* Dementia
* Diabetes under treatment with insulin
* Diabetes Type II and heart problems
* Frequent or persistent forgetfulness
* HIV
* Memory loss
* Metastatic cancer (spread from original site/location)
* Multiple sclerosis (MS)
* Muscular dystrophy
* Organic brain syndrome
* Senility
* Transient Ischemic Attach (TIA) within the past 5 years
* TIA in combination with diabetes or heart surgery
* TIA two or more times
Most of these sound rather permanent.
What are my risks?
You can beat the system if your risks are much higher than average. What are my risks?
I'm a typical American in some ways and thus at risk for heart disease, cancer, and car wrecks. In addition, my mother, her mother, and her mother's mother all had diabetes. And I am a poster child for osteoporosis (and thus debilitating falls) - my dad (who's male and has dark skin and thus would not be expected to be at risk) has it so genetics may be involved, plus I'm female, have very light skin, and have tiny, scrawny bones.
Nevertheless, I'm going to guess that my risk of becoming debilitated is below average--I plan to stay thin, do weight-bearing exercise, drive defensively, and ingest plenty of calcium and vitamin D. But my risk of needing long term care if that does happen is above average because of not building a support network through making babies, etc.
What are some other issues?
* Long term care may not be available by the time I need it - there are already shortages, demand is expected to double, and much of the work is already done by immigrants, implying it's hardly the most fun job in the world. One source says that unpaid care is also less likely to be available in the future because of declines in birth rates, decreases in family size, and increases in divorce rates, childlessness rates, people who never marry, and women in the workforce.
* Insurance companies can go out of business. Also, because they overestimated how many people would drop their coverage, their underwriting was bad and rates had to increase (or coverage had to be denied). Small insurance companies are riskier, too. My company seems relatively okay,* not that this means much. However, recalibration and increased consumer protection is expected to reduce these problems somewhat.
* Many people who can afford coverage when they're young will not be able to afford it when they retire. You don't always have to choice to work as long as you want to, either.
* Apparently, if you have this insurance, you'll have a "care coordinator" who is usually a local nurse who is vary knowledgeable about local resources including not only nursing homes and home care professionals but also carpenters who specialize in home modifications.
So, in summary, this risk sounds too common for long-term care insurance to be a good idea, especially when you add in the risk of depending on an insurance company and of hoping that there will be enough people around doing those jobs to even be available. I'm inclined to continue my current plan to wing it--ahem--use a combination of prevention, self-insurance, and suicide.
However, I am still a little enticed by the idea of paying for some insurance for three years to get the benefit of a higher expected value in addition to the services of a care coordinator.
What is insurance for?
Many people have homeowner's insurance and auto insurance because their lender or the law requires it. But there's no sense in trying to insure everything. After all, the expected return on insurance is negative because it is biased toward the insurance companies, who want to make a profit.
Insurance is best for rare but debilitating situations: everyone contributes a little, and then you are protected if this horrible thing happens. Good examples are homeowners insurance and health insurance, especially if they have high deductibles.
For things like vision care, it's better to self insure--suddenly needing glasses is probably not going to break you, and if it is, you can't afford the insurance anyway.
For things like the kind of life insurance that's not term, it's also better to go without, even though you probably can't afford to self-insure, because everybody dies, so it's not a good deal. (Term life insurance, which you keep for a few years until your dependents grow up or your other assets allow you to self-insure can still make sense.)
So which one is long-term care insurance more like? That requires the answers to two questions.
How bad can it be?
I mentioned the statistics in my last entry. The cost averages $125/day in my state, more in other parts of the country. The national average is a bit more: $52,000 per year (~$142/day). So 46% of those admitted to a nursing home are impoverished within 3 months; 72% within a year. According to the National Insurance Institute, long term care is the biggest risk to income, assets, and independence.
In conclusion, it sounds pretty bad.
What are the odds?
Here are some more statistics I've found. Not that I trust any of them, but you work with what you can find.
Supposedly 42 percent of folks age 65 and older have a chronic condition causing disability, 83 percent age of those 85 and older. And 40 percent of all those on long term care are not elderly but between the ages of 18 and 64. That's pretty extreme.
But then the average amount of nursing home care needed for men is 2.2 years and for women 3.5 years. The average LTC insurance claim is 3 years. The average time an individual spends in nursing home care is 875 days (2.4 yrs), but total care statistics show more home and community based care than nursing home care.
Once source gave these odds (ironically, trying to talk people into getting the insurance:
Destroyed house - 1:12000
Totalled car - 1:2400
Hospitalization - 1:11.4
Long-term care - 1:1.67
Conclusion: apparently most people need long term care at some point, and a pretty high percentage need so much that it would be a real financial burden to them.
What are the options?
There's not a lot of information on other options. Here are some I've learned about:
* Medicare and health insurance plans - These actually do pay for some long-term care if it is related to something that resulted in a hospital stay. For example, Medicare pays for 100% of the costs for the first 20 days (with a co-payment after that) but only for 100 days or until you stop improving. Medicare won't pay for home or an assisted-living care.
* Free care from family, friends, and neighbors (used by the vast majority of people who need it) - I would hate to ever ask for this; it's very expensive for the caregiver in lost wages, plus they tend to get depressed. Plus, it's usually provided by one's spouse or female child, and I don't have any of those.
* Continuing care retirement communities - I know some people who found a good one; but it's probably too expensive for me. You give them a huge pile of money up front plus pay a monthly rental fee and move in while you're still totally healthy. Then if your health worsens, you can be moved to a section of the community with more care for the same or similar price.
* Medicaid - (the source for 54% of people in nursing homes) - This is only for the indigent, though you may become indigent as your resources dwindle; like Social Security, you might not want to count on this anyway.
* self-insured (the source for 35% of people in nursing homes) - This can include siphoning off your retirement savings and getting a reverse mortgage.
* long-term care insurance (the source for 9% of people in nursing homes)
* life insurance with long-term care rider (1%) - I don't need life insurance.
* annuity with long-term care rider (1%) - I find annuities to be far too expensive.
* suicide (ideally physician-assisted suicide) - once you are beyond recovery, that's when things get really expensive if you keep hanging on, but if you're in pain, not able to have a nice life, and there is no chance of recovery short of a sudden medical discovery, the testing of which you would also have to outlive, this one makes sense.
It does seem that divorce is the only way to protect a living spouse from losing all of their assets to your care, although I suppose they could protect their assets by caring for you themselves.
What makes you need long-term care?
I wonder how many times people just need it temporarily while recovering from something, and how often people use it as a half-way house to death. Here are the reasons I've read about that could lead to long-term care:
* Alzheimer's
* Parkinson's disease
* stroke
* heart attack
* injury - motor vehicle collision, fall, sports injury
* illness
* surgery
* old age and frailty
And the following can make you ineligible to purchase insurance, implying they are at least related to long-term care even if they don't require it:
* AIDS
* Lou Gehrig's disease
* Cirrhosis of the liver
* Dementia
* Diabetes under treatment with insulin
* Diabetes Type II and heart problems
* Frequent or persistent forgetfulness
* HIV
* Memory loss
* Metastatic cancer (spread from original site/location)
* Multiple sclerosis (MS)
* Muscular dystrophy
* Organic brain syndrome
* Senility
* Transient Ischemic Attach (TIA) within the past 5 years
* TIA in combination with diabetes or heart surgery
* TIA two or more times
Most of these sound rather permanent.
What are my risks?
You can beat the system if your risks are much higher than average. What are my risks?
I'm a typical American in some ways and thus at risk for heart disease, cancer, and car wrecks. In addition, my mother, her mother, and her mother's mother all had diabetes. And I am a poster child for osteoporosis (and thus debilitating falls) - my dad (who's male and has dark skin and thus would not be expected to be at risk) has it so genetics may be involved, plus I'm female, have very light skin, and have tiny, scrawny bones.
Nevertheless, I'm going to guess that my risk of becoming debilitated is below average--I plan to stay thin, do weight-bearing exercise, drive defensively, and ingest plenty of calcium and vitamin D. But my risk of needing long term care if that does happen is above average because of not building a support network through making babies, etc.
What are some other issues?
* Long term care may not be available by the time I need it - there are already shortages, demand is expected to double, and much of the work is already done by immigrants, implying it's hardly the most fun job in the world. One source says that unpaid care is also less likely to be available in the future because of declines in birth rates, decreases in family size, and increases in divorce rates, childlessness rates, people who never marry, and women in the workforce.
* Insurance companies can go out of business. Also, because they overestimated how many people would drop their coverage, their underwriting was bad and rates had to increase (or coverage had to be denied). Small insurance companies are riskier, too. My company seems relatively okay,* not that this means much. However, recalibration and increased consumer protection is expected to reduce these problems somewhat.
* Many people who can afford coverage when they're young will not be able to afford it when they retire. You don't always have to choice to work as long as you want to, either.
* Apparently, if you have this insurance, you'll have a "care coordinator" who is usually a local nurse who is vary knowledgeable about local resources including not only nursing homes and home care professionals but also carpenters who specialize in home modifications.
*A survey of my company at Free Advice (it sure looks like only 11 people took this survey--all the numbers are multiples of 9 which = 1/11) shows:
- extremely satisfied - 27%
- very satisfied - 18%
- somewhat satisfied - 9%
- unsatisfied - 0%
- very unsatisfied - 45%
Those numbers look pretty terrible, so I checked a few others to compare.
State Farm: 25%, 16%, 12%, 13%, 34%
GEICO: 32%, 18%, 12%, 7%, 31%
Liberty Mutual: 17%, 8%, 6%, 9%, 60%
USAA: 50%, 9%, 9%, 8%, 24%
I also found another chart, which I apparently didn't copy, showing that my company is relatively large with relatively few complaints compared to other large companies.
So, in summary, this risk sounds too common for long-term care insurance to be a good idea, especially when you add in the risk of depending on an insurance company and of hoping that there will be enough people around doing those jobs to even be available. I'm inclined to continue my current plan to wing it--ahem--use a combination of prevention, self-insurance, and suicide.
However, I am still a little enticed by the idea of paying for some insurance for three years to get the benefit of a higher expected value in addition to the services of a care coordinator.
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no subject
on 2009-07-13 02:40 am (UTC)