Long Term Care Insurance: Channeling the Rumsfeldian ‘Known Unknowns’

Source: izquotes

With another healthcare open season just around the corner, Gorgeous and I are in the middle of some Big Discussions. Our talk is about the future, specifically a desire to predict the status of what our health will be in later years. It’s admittedly a bit of a rhetorical exercise that harks somewhat “nostalgically¹” back to Donald Rumsfeld’s “Known Knowns” press conference during the Iraq war. You might recall this is when he inartfully attempted to explain the U.S. military practices and policies during that period.

So to paraphrase ‘ol Rummy…

Our known knowns are that each us are currently in pretty good health. We exercise regularly, eat a predominantly low-fat diet with an emphasis on vegetables, poultry, and fish; and are for the most part slim and trim. Except for my having a slightly elevated cholesterol count, the yearly lab tests ordered by our doctor show normal and within-range results for both of us. This is all good.

Our known unknowns is simple: we have absolutely no freakin’ idea what our health will be next year as we much as do for 20 years from now.

We can certainly make some educated guesses based on family history, but it still all comes down to our having some, well, unknowns. Which brings me to an unrelated but clearly relevant grievance: what good is it in being married to a professional psychic if she can’t predict our own future?! I feel like one of the shoemaker’s children.²

But let’s get back to our Big Discussion. It isn’t about whether we should switch to a different health plan for next year (though I think we will). No, it’s more about values and how each of us places a slightly different priority on money spent vs. benefits received. Our talk centered on the amount of money we’re jointly spending for our long-term care (LTC) insurance coverage. Simply put, it ain’t cheap.

This topic came up during an evening cocktail hour on our porch just as the sun was setting and the sky turned to this beautiful shade of auburn, which in fact matched the same hue as the splendid Spanish Tempranillo rosé that we were sipping. As I sat holding my glass and expounding on the virtues of our separate LTC policies, Gorgeous interrupted with a succinct and forthright thought:

“I’m paying an awful lot every month, and it’s going to be such a long time before I get to use it!”

Well… I hadn’t seen that one coming.

Perhaps it was the wine? It was a wee bit closer to 14% alcohol rather than the typical 12-13% normal for such summer vintages.

I also hope and trust that it wasn’t the expert knowledge proffered by her raconteur husband. I do always use the best words.

Source: leadingresults

In all of the literature I’ve read about LTC coverage, its one distinguishing characteristic is the cautious phrasing that they adopt about benefits someone might later need for care in a nursing home, rehab facility, or similar. All of the descriptions are written with a heavy use of the word “if.”

No one plans to have a physical or mental infirmity unless there are earlier signs which point to such a possibility. So it’s certainly my hope and desire that neither of us ever have to invoke our policies!

Our subsequent laughter aside, plus a reassurance from Gorgeous that this indeed wasn’t some stray psychic prediction, it did get us both talking about the relative merits of purchasing insurance that one hopes to never use. Are we throwing good money after bad? Or are we buying a safety net in case something does happen? The answer lies within your own personal set of values.

My ex-wife used to pull her hair out because of all the extra insurance policies I carried during my working years: Life, Accidental, and Disability along with our regular healthcare coverage. When it came to making sure I could sleep at night, I was metaphorically going for extra strength Ambien rather than a small dosage of Melatonin. Sure I was over-insured, I knew that. But I placed a very high premium on knowing I had that net below me just in case.

A former co-worker of mine has been absolutely firm about his reasons for never purchasing LTC insurance (Hi, S). He feels that this money should be saved separately for such an event, and that such savings should be used along with any other means and assets which you may have at your disposal. I can’t really find fault with his argument. Again, these are value-based judgments.

But as I’ve pointed out to my friend in earlier discussions, he at least has two grown children who will ostensibly be there to help him make any difficult decisions later in life should the need arise. At last check, I have no children — to my knowledge anyway (please contact me if you know otherwise!). So without any offspring to handle such matters in my own case, I place a high value on knowing that I’ve done at least something in the event that I cannot fend for myself in later years. Again, it’s all about sleeping at night.

Source: CNN

My LTC policy is part of a group policy purchased via my employment with the federal judiciary. It started in 2000 when I was 41 years old. My current yearly premium is $780. For that amount I am paying for a $290 daily care benefit with a lifetime maximum benefit of $530,120.00.

Gorgeous started her policy in 2016 when she turned 54. Her yearly premium is $1644. For that amount she pays for a daily care benefit of $200 with an unlimited lifetime maximum benefit amount. Her policy is also group coverage. Unlike mine, it is administered through the federal government’s Office of Personnel Management (OPM). She is eligible for it by virtue of being a spouse of an annuitant.

As the above amounts plainly show, it is best to purchase LTC insurance when you’re younger. The longer you wait the more you will have to spend. In both of our cases, we have the opportunity to raise and even lower the amount of coverage in future years during specific periods if we wish to do so. Because premiums are subject to inflation and “market conditions,” we expect significant increases for premiums in the years ahead. This might force one or both of us to lower our coverage.

However, in spite of my lovely wife’s cocktail hour panicked exclamation, she currently has no plans to change or cancel her coverage. Her known known is that she wants the security of knowing that she has a safety net purchased for herself in spite of its yearly cost.

And me? I just want to be able to finish a glass of rosé without being interrupted.

What are YOUR known unknowns?

Until next time…

¹ Hindsight is a fascinating concept. Your humble blogger is completely amazed by how much he now misses and even <gasp> appreciates the George W. Bush administration

² The answer I’m repeatedly given is that the energy we each emit becomes too intense, and therefore the intimacy of our relationship hinders any ability for her to be able to make predictions. The lesson here? Don’t marry a psychic if you want to know who’s going to win the fourth race at Del Mar tomorrow. 

 

 

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23 thoughts on “Long Term Care Insurance: Channeling the Rumsfeldian ‘Known Unknowns’

  1. I wouldn’t be sleeping very well, either, if I had those concerns – in good current health, or otherwise. How can you possibly make informed choices with the current state of policy upset?

    I’m from Canada where at the very least, if I cannot afford private nursing at the end of my days, I’ll have a bed and three squares a day and medication in a public facility. For free. It will be my worst nightmare, no question, but at least I will not end up sleeping on a park bench.

    I hope. I dunno. My fears of the provincial run long-term care facilities are indeed the stuff of nightmares. And there is no hyperbole here. My son works in one of these “warehouses” and has declared he will do anything within his means to see that his parents never need cross the threshold.

    Liked by 2 people

  2. My husband is anti-LTC insurance. We do have savings, but it wouldn’t pay for six months of LTC. I panic when very now and then over this lack of a safety net, but I turn 61 on Thursdayand IRS a bit late now.

    Liked by 1 person

  3. We have long-term care insurance (closer to the $ amount Gorgeous pays since we started later too). I hate writing that check but we don’t have kids either so at least one of us will probably end up needing assistance. I wish I knew which one so the other could stop paying. Since I don’t have an intimate relationship with your wife, maybe you could ask her? 😄

    Liked by 3 people

    1. Ha! Yes, in your case she would know! But then she’d no doubt charge me… at least the shoe maker’s kids weren’t charged for not having shoes!

      Gorgeous pays her amount monthly, and I pay quarterly. Let’s just say it’s not the highlight for either of us that particular day. 😦

      Like

  4. Reading your post, I kept clicking my heels and repeating “I’m glad to be Canadian….and to have four sons (each of whom has promised not to allow me to become a bag-lady)!” Very thought-provoking post, Marty. BTW – I always admire Gorgeous more and more when I read about her here!

    Liked by 1 person

  5. When my Long Term Care premiums were being hiked by more than 100% a year ago (from $119.75/month to $275/month), I opted out of continuing the plan and selected the $478/day up to a $14,340 maximum (yes, that’s right, 30 days) with no more premiums. I had only signed up for it since I lived alone in the Bay Area and wanted to not be an immediate burden to my family or friends.

    Since I am now closing in on 60 and have a chunk of (virtual) change in my retirement pot, I am guessing I can carry myself a little longer and go from there. My medical power of attorney and POLST (Physician Orders for Life-Sustaining Treatment) clearly state I do not wish for extreme medical interventions.

    All that being said, I am still planning to be around and mobile enough to watch all those DVDs I had been saving for those evenings with that special someone (who knew it would be a cat?). And all that yarn I have stashed isn’t going to knit itself, is it?

    Liked by 1 person

    1. I had you pegged as being in the judiciary’s plan rather than OPM’s. The former was unavailable to Gorgeous last year, so we turned our attentions to the OPM plan as a way to take “advantage” of group coverage. Given what was happening to premium’s in that plan at the time, it was a rather inauspicious time to enroll in it. Our only price comparison for it was AARP’s partner (NY Life) who couldn’t come close to the quote from OPM.

      I myself only suffered from a 10% hike in the judiciary’s plan. But then if you Google that plan you’ll see plenty of unhappy people who are fighting for payment on claims. So who knows if I’m better off or not.

      Your own choice is certainly an unconventional one, Eddie. But I nonetheless do understand your reasons. That you have your legal documents in order is a good reminder for the rest of us. We need to do that also.

      I think your plan of being mobile and watching the DVDs is the most logical and healthy-sounding. And, yes, that yarn isn’t going to knit itself.

      Liked by 1 person

  6. I worked for an LTC company before I retired. I have a policy as does my husband. Since I waited until just before my 60th birthday I pay closer to gorgeous and get those same thoughts she does even without wine and a sunset. (Perhaps she can predict my future?) I don’t have children either although my husband does. Unfortunately they live across the country so it’s not the safety net some folks have. Navigating care is more costly than most people think. We are hoping we live to a ripe age and then just die. BTW My bro and sis-in-law are 87. They have LTC but have never touched it although there have been a few issues. I wish we would get some level of health care in this country. People should not have to worry about a bed and meals when they get sick or disabled. Guess that’s a pipe dream. We are all one disastrous catastrophic illness from poverty. More wine.

    Liked by 1 person

    1. You hit the nail right on the head, Kate. That we have to practically mortgage ourselves (in some cases literally) is precisely why it’s not right to have SOME kind of National health care plan. I hope it’s not a pipe dream, but I do admit the landscape is bleak. My father lived to 88 and died peacefully in his sleep one morning. He went out on his own terms, which is the best any of us can hope for.

      Can I fill your glass?

      Liked by 1 person

  7. We have LTC for my parents but we let ours lapse a few years ago. The rates kept spiking and the replacement policy costs had become utterly egregious. I think it’s wise to keep it though. Smart planning on your part.

    Liked by 1 person

  8. Insurance is such an interesting concept. It’s the one thing we buy in the hopes that we never have to actually use it.
    Husband and I have always been over-insured in terms of life insurance. Given our somewhat risky lifestyle, which includes long distance cycling, I consider it prudent and it helps me sleep at night.

    Like Maggie said, I’m relieved that I’ve never had to think about health insurance as well.

    Liked by 1 person

    1. In spite of all the political anger that spews out of the mouths of our leaders here about health insurance, my strong belief is that we will eventually sees a single payer, national health insurance program for complete coverage that is similar to yours. It probably won’t happen for another ten or 15 years, but I think ultimately it’ll happen. Until then, however, sleeping is important.

      Like

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