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6-Ways-The-Fed-Hurts-Retirees

Saturday, July 20, 2013 - 9:14 AM
The following article contains some interesting information which we all may already know but new to some:

 

http://money.msn.com/retirement/6-ways-the-fed-hurts-retirees

 
7
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,150
1. Sunday, July 21, 2013 - 7:01 AM
The section of the article regarding the effect of the historically low interest rates have had on long-term care insurance premiums is especially troublesome. This is the first time I've seen a major media outlet mention this. Did one of the politicians comment, or inquire of Chairman Bernanke, regarding this?

"But thanks to falling interest rates, long-term care insurance premiums have skyrocketed", says Jesse Slome, executive director of the American Association for Long-Term Care Insurance.  "Lower rates have wreaked havoc on long-term care insurance costs," Slome says. "Rates today are about 50% higher than they were five years ago." As interest rates have fallen, insurers have seen the return on their investments slip. "For every 1% decline in rates, insurers need to hike premiums by between 10% and 15%", according to Slome.

Is this why the long-term insurance program was dropped so abruptly from Obamacare?

President Obama drops long-term health insurance program, part of Obamacare plan criticized by GOP - NY Daily News

 
11
ShorebreakShorebreak2,695 posts since
Apr 6, 2010
Rep Points: 14,611
2. Sunday, July 21, 2013 - 1:08 PM
Have you read the statements of insurance companies. They have not invested large sums in the bond market but in the stock market. The stock market has more than doubled the last 4 years but their long term nursing home rates have not. 
3
Ally6770Ally6770942 posts since
Jan 16, 2010
Rep Points: 2,740
3. Sunday, July 21, 2013 - 1:50 PM
The following article might give some insight as to why LT stocks are not doing well:

http://www.forbes.com/sites/baldwin/2013/03/29/dodge-the-long-term-care-insurance-mess
2
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,150
4. Sunday, July 21, 2013 - 3:32 PM
The Forbes article mentioned in post #3 above uses the 'broad brush' technique to criticize LTC policies in general. My premium, nor my coverage, hasn't changed on my LTC policy. The insurance company that has written my policy is rated A+.  I think it's smart of them not write any additional policies due to the cost. Perhaps that will keep them from raising the premiums on current policy holders. My home owners and auto insurance premiums have increased significantly in the last five years. What else is new?   
3
ShorebreakShorebreak2,695 posts since
Apr 6, 2010
Rep Points: 14,611
5. Sunday, July 21, 2013 - 3:39 PM
Re: rosie43 @ 2. Sunday, July 21, 2013 - 1:08 PM.

"Have you read the statements of insurance companies."

Yes I have read the statement of the company that has written my LTC policy.

Equity securities 0.6%

Fixed income securities 80.3%

This is the eighth largest, in assets, insurance company in the U.S.
3
ShorebreakShorebreak2,695 posts since
Apr 6, 2010
Rep Points: 14,611
6. Sunday, July 21, 2013 - 4:09 PM
Shorebreak:  You seem to have done your homework on your Long Term Insurance but what if we don't get to live "long term"?  Does your family get back any of those expensive premiums you must be paying for your peace of mine of having a place to go in your senior years?  Seems like a roulette game to me and I bet the companies win more than they lose.  However, if it gives you what you need, that is what is most important.
2
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,150
7. Sunday, July 21, 2013 - 4:34 PM
Re: paoli2 @ 6. Sunday, July 21, 2013 - 4:09 PM

"Does your family get back any of those expensive premiums you must be paying for your peace of mine(sic) of having a place to go in your senior years?"

My "expensive" monthly premium is $153.48 and has an inflation rider whereby my coverage increases at least 5% per year at the same premium. My current daily coverage is greater than the monthly premium. Unless the company raises everyone's premiums they can't raise mine. Why would family members get back any premiums anyway?
3
ShorebreakShorebreak2,695 posts since
Apr 6, 2010
Rep Points: 14,611
8. Sunday, July 21, 2013 - 5:02 PM
SB:  How can I say this without your misunderstanding?  None of us know when or "if" we will ever need a nursing home or long term facility and you are paying ahead of time for yours.  What if, a person departs this life before they need these facilities?  Is it like an insurance policy where you can name a beneficiary to receive back at least "some" of the premiums you would have paid them for years in some type of amount?   Are you at peace paying $153.48 a month for something you "may" not use?  I would think there should be some type of a Rider that if a purchaser passes before ever getting benefits of what they are paying for, they could name a beneficiary to get back at least a part of the money.   Let's say they paid in $20,000.00 over the years, a beneficiary could get back maybe $10,000.00 if the policy never has to pay for long term benefits.  Only seems fair to me.  If it were a couple, that could be a lot of money put out for just "in case".  I think you got a good policy especially since one doesn't seem to have a large choice of the best companies but nothing I could consider being there are two of us to pay on.
1
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,150
9. Sunday, July 21, 2013 - 5:33 PM
It sound like Shorebreak got a good deal. Insurance is for the "what ifs" in life. I'm sure you have homeowners insurance, and you don't get your money back if your house never burns down, but would you really want your house to burn down just so you could collect on your policy? Same principle applies with long-term care insurance. The average nursing home costs about $70,000 per year, and the average stay is about three years, and costs are rising.
3
WilWil242 posts since
Feb 26, 2010
Rep Points: 1,285
10. Sunday, July 21, 2013 - 5:41 PM
Re: paoli2 @ 8. Sunday, July 21, 2013 - 5:02 PM

Using your logic one should get all social Security and Medicare deductions that a parent has paid into the system if they expire before using those programs. Additionally, I should receive all my premiums for car insurance back if I didn't get into a fault accident before I'm too old to quit driving. None of this is "life insurance" which is the example you are using. Apples and oranges as Wil basically is referring to in his post.
3
ShorebreakShorebreak2,695 posts since
Apr 6, 2010
Rep Points: 14,611
11. Sunday, July 21, 2013 - 6:19 PM
Wil:  I learned the hard way not to trust insurance. We paid for over 30 years for homeowner's and flood insurance and when the one time came when we needed "one" of them to pay off, they abandoned us and refused to pay for the damage the hurricane caused to our home.  They each blamed it on the other and left us with nothing.  Insurance does not always pay off just because it says it will.  So I don't trust insurance of any type. 

SB:  We are getting back as much as we can from Social Security and Medicare and  as for car insurance, if you have kept up with the latest, you would know some companies are finally giving benefits to people who have no or few accidents.  At least with SS & Medicare there is a better chance of knowing we will benefit for so many years for what we put in. (I cannot say this will be so for the next generation).  However, the LT thing with an average stay (as Wil posted) of about 3 years is not something I could agree to.  For that kind of money, I would insist on living much longer and making what I paid in more beneficial.  Most decisions I make are for my own peace of mine.  If having LT insurance gives you peace of mine then good for you.  I was just remarking about my own personal feelings about it.
2
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,150
12. Sunday, July 21, 2013 - 7:43 PM
Re: paoli2 @ 11. Sunday, July 21, 2013 - 6:19 PM

Oh well, I'll just know my assisted living quarters will be pleasant and affordable. Now, where is that remote for Netflix?
3
ShorebreakShorebreak2,695 posts since
Apr 6, 2010
Rep Points: 14,611
13. Sunday, July 21, 2013 - 10:53 PM
It is all about peace of mind. 
3
Ally6770Ally6770942 posts since
Jan 16, 2010
Rep Points: 2,740
14. Monday, July 22, 2013 - 9:25 AM
Shorebreak:  Did you just refer to your Long Term Care as "Assisted Living"?  I read up on those policies out of concern for "others" and one has to be real careful about which they buy.  They all don't cover "Assisted Living".  If all you want is that, wouldn't it be cheaper to hire some nice illegal immigrant to come in and take care of you?  She could cook, clean, give you meds, and call the docs when you need them and do everything "Assisted Living" people would do.  In our home, we already have it.  It's "me"!  DP gets all this and more and he doesn't have to pay insurance premiums just put up with a bad attitude once a year.  (Not mine, his!)
3
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,150
15. Monday, July 22, 2013 - 12:44 PM
 

In response to Wil’s post “the average nursing home costs about $70,000 per year, and the average stay is about three years, and costs are rising.”

$70,000 average for room and board at a nursing home may be inline but when one goes into a nursing home it is usually due to a medical condition where the patient requires round the clock assistance which probably is not accounted for in the $70 k cost.

Speaking from my present situation; my 89 year father was admitted to a nursing home December 2012. He has a leg condition where he can’t walk and requires dialysis. The room and board fee is about $50k per year. On top of that is the medication he requires (so far for 6 months about $25k). In addition, the dialysis treatments and physical therapy he requires, dr. appointments etc…. His total expense for one year is looking like $150K to $170K per year.

Another relative (in her mid 80’s) recently had a stroke and is partially paralyzed on one side. Her nursing home expenses are still being reviewed but looks to be in the neighborhood of $140,000 to $150,000 per year.  Taking into account all related expenses when being admitted to a nursing home you are probably wise to allocate closer to $150k per year so you don't have sticker shock.

 
2
FARFAR108 posts since
Feb 26, 2013
Rep Points: 387
16. Monday, July 22, 2013 - 2:15 PM
Re: Paoli2 @ 14. Monday, July 22, 2013 - 9:25 AM

I fully intend to have assistance, living at home, which is also covered by my LTC policy at the same rate.  Now "Where is that remote"?
2
ShorebreakShorebreak2,695 posts since
Apr 6, 2010
Rep Points: 14,611
17. Monday, July 22, 2013 - 2:45 PM
SB:  You seem to have all your ducks in a row with "assisted living".  Just make sure she knows where you keep hiding that remote. :)
2
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,150
18. Saturday, August 3, 2013 - 3:13 PM
Just throwing in my 2 cents about Long Term Care insurance.  My mother and her neighbor both had it.  The neighbor was placed in a nursing home--the long term care company said he wasn't placed there "the right way" and refused to pay a dime.

My mother needed long-term care for the last two years of her life.  We jumped through every hoop and provided every receipt, every form, everything, and the long term care insurance company maintained that she hadn't met the requirements, so they refused to pay.

The secret, apparently, is that they pay "on day 91" and after.  The problem is that when you're dealing with regular insurance, their goal is to send you home as soon as possible, or they send you to a rehab center, who then sends you home.  Even with terminal lung cancer, they would send her home for a few days, a week, then she'd be back in the hospital, because her insurance refused to pay the 90 days straight. We hired nurses to be at her home to provide the continuity of care towards the 90 days, but there was always some excuse from the company, and they'd start the 90-day clock over again. 

The last 5 years of her life, the premium for LTC was over $7,000 a year.  For nothing.

So before you plunk down the money for the insurance, really find out what they pay for, when, and how you qualify and hopefully you're considering a better company than these two.
3
carlycarly26 posts since
Sep 2, 2011
Rep Points: 88
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