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long-term care insurance

Of Taxes and Best-Laid Plans and Lamps…

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WonderAccountant is having a tax frenzy. Honestly…I don’t understand how anyone can do that crazy-making tax-prep ditz for a living!

I thought I’d set up my spreadsheets to totally simplify this year’s antics, but apparently I failed. One thing I didn’t realize is that repairs and maintenance on the house are now tax-related because we’re now a sole proprietorship, not an S-corp. It’s been many a year since I incorporated The Copyeditor’s Desk. We decided to de-incorporate, though, because she felt we would do better on the personal tax side if we did that.

This afternoon the young(ish) eldercare lawyer is supposed to call. I want to discuss the matter of the long-term care insurance, which everyone is telling me to get rid of. Naturally, when I called to cancel it, Metlife had a trained poodle on the phone coming up with every which way to keep me paying premiums.

So the next step was to plow through a four-inch-deep pile of paperwork from Metlife and its predecessor, TIAA-CREF. Metlife is truly notorious for trying to weasel out of paying benefits.

It was my understanding that if you quit paying, the issuer was supposed to pay back your premiums ($19,000, so far, since I started with TIAA in 2001). But…no. However, according to the original policy, which as far as I can tell was unchanged when Metlife bought TIAA’s LTC insurance business, they apply the balance to any nursing home bills you rack up — but they do not repay the unused premiums to you.

Well, after all these years, 19 grand would pay for 2.8 to 3.6 months of nursing home bills (private room/shared room)

Most people die within 3 months of admission to a nursing home. So what remains there would probably cover most of the bills.

If I quit paying premiums now and instead put the money in a CU savings account, at $133/month, that would add up to $1596 a year.

American baby-boomers can expect to live to be about 85, on average. So that would add $15,960 to the 19 grand already in Metlife’s coffers, for a total of $34,000 available (supposedly) to cover nursing home bills. Assuming I can get Metlife to return my money to me if I cancel their policy. At about $5,000 a month (by then, presumably), that would cover about 7 months in a home.

Some people, of course, are stuck there for a good deal longer than that.

My healthier relatives — the Christian Scientists who did not drink and did not consume coffee and walked daily and ate what we today call “whole foods” — lived to be 94. They each effectively dropped dead of heart attacks. Neither one went into a nursing home. But…let’s suppose you weren’t made of quite THAT sturdy stuff, but still you managed to stumble along to, say, about age 92 or so… Hmmm…. That would leave time, at $133/month, to accrue $27,132 for nursing home coverage. Let’s figure the price will be around 6 grand a month by then, eh?

$27,132 plus 19 grand (assuming Metlife even still existed to cough it up, assuming Metlife would cough it up) would give you $46,132 as a nursing home fund. Assuming nursing homes cost about 6 grand a month by then, that would last you about 7 1/2 months. According to my English-major arithmetic, which is nothing to place a bet on.

So…you’re takin’ your chances. My father was in a nursing home about two weeks before he croaked over. But…heaven help us! D-XMiL is a hundred and five years old and still alive, laying in a bed in a nursing home unable to see or hear. God help her. And she’s been in that state for years.

Interesting. Assuming inflation drives nursing home costs to “only” $5000 a month in 10 years (not a safe assumption) and to 6 grand in 15 years, the number of months that saving program would cover is almost same.

Jeez. Think o’that…

So after a brief telephone chat, our proposed new estate-planning/elder-care lawyer engineered a meeting in a couple of weeks. He thinks — contrary to the advice of the financial dude and the accountant but in accord with Consumer Reports’ opinion, that it’s actually a good idea to continue paying LTC premiums, if you can afford it. I can, but it frosts my cookies. PLUS: reviews of Metlife are awash in horror stories. Apparently they do every goddamn thing they can to avoid paying as agreed in their contract.

In less tenebrous climes…

Isn’t that a great word? Translations of the Greek epics describe Hades — which was just an underworld populated by the shades of the deceased, not Hell as in a place of torture — as “tenebrous.” Shady. 😀

In less tenebrous climes, the new glass shade arrived to replace the one I busted a couple weeks ago. None of us — we’re talking moi and not one, not two, but three lamp store and repair folks — could find one just like the deceased. The closest I could find is not opaline — it’s just milk-white — and is shallower & flatter than the late lamented shade. However, if you’d never seen the old shade, you sure wouldn’t know any better. I think it will do the job just fine. And to my amazement, it fits in the fixture and accommodates a 3-way bulb just fine.

The Lamps Plus dude proposed to adjust the fixture to make it fit exactly, which I suppose would be nice. But the fact is, it looks fine and I fail to see why it needs any adjustment.

And also in the lights department: The middle bathroom in my house is illuminated by a pair of matching wall fixtures, one on each side of the mirror over the sink, that each use a couple of small halogen lights. Naturally, one of those crapped out this morning.

So it was off to French’s Electric Co to try to snare replacement bulbs. Good luck, I figured, since every light bulb that works has been taken out of our sticky little hands.

To my surprise, they had a few! 40 watts, said he. So I bought the whole boxful, sensing that these will not be around much longer.

Indeed, when I got home I found that 40 watts was what the fixture was rated for…but that the other bulb in the lamed fixture was a 120-watt number. Jeez. So I replaced them both, elegantly not touching the glass on the things. Perfect!

Then I noticed that another bulb was out on the other fixture. Replaced that. Noticed that the two bulbs in there were also 120 wats. Hm.

BUT…the result was gorgeous! Much brighter than the incumbents…so much so that one could in theory paint one’s face in front of that mirror, which until today has not been an option. It’s been much too dim in that bathroom to make up your face.

I hope these will last. The upshot, though, was that I used two of the four lights I’d bought, trying to stockpile three of them for future use. So now I’ll have to go back over to French’s and buy another box of them, hoping to have enough to last into my dotage.

What a stockpile I have in the storage room! Almost every drawer is jammed with incandescent lightbulbs. That’s how much I hate, loathe, and despise the eye-stinging light from those horrid LED things. Once my stash is gone, I guess, I’ll have to switch to candles.

Since I habitually turn off the lights whenever I leave a room (unless I have to go out after dark and need to make it look like maybe someone’s home), light bulbs last a LONG time at the Funny Farm. A couple of those bulbs in the bathroom had been there since I had the fixtures installed — sixteen years ago. So I expect eight or twelve extras will last until I croak over. And then some.

De-Banking and Re-Banking

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Possibly the term is de-credit-unioning…but that’s a little clumsier than de-banking, for a title. 😉

The plan under way just now is to abandon the Arizona State Credit Union, now annoyingly called “OneAZ,” and move my vast wealth over to the Desert Schools Credit Union. Probably I should have done this a long time ago, but out of inertia I’ve remained with the state employees’ credit union. Closing out a personal account and a corporate account represents a substantial amount of hassle, especially since a LOT of direct deposits come in and even MORE automated direct payments go out. Canceling each of these and re-establishing them at a new institution presents a lengthy series of headaches.

However, OneAZ (isn’t that cutesiness enough to  just gag you?) has gone too far in its latest manifestation of customer disservice. They’ve decided that we no longer will be allowed to deposit checks by scanning to a computer and uploading to an account. All electronic deposits now must be made by smartphone.

Well. I don’t have a smartphone and I don’t want one and even if I did want one, believe me, there’s no way in Hell I could afford one. I’ve tried an Android smartphone and after several expensive months of wrestling I simply could NOT learn how to work it. We’re told the iPhone is more OldBat-friendly. Yeah: for a thousand bucks.

Jayzus. A thousand dollars for a telephone!

At any rate, what this means is that every time a check comes in, I have to traipse across the city to hand the damn thing to a teller, in person. The nearest branch is at the ASU West campus, a 15- or 20-minute drive through a depressing slum — so, 30 minutes to deposit one check, with no other errands to do on that side of town.

I get a constant flow of little nuisance checks. Medicare and Medigap do not accrue all the eligible payments for any given Adventure in Medical Science. They send you a tiny little check here and a tiny little check there and an even tinier check again. Most recently, they sent me a goddamn check for $3.17! The gasoline to drive to the credit union and back would cost more than that!

Desert Schools is located in the North Central corridor, putting it reasonably close to the Funny Farm. And, more to the point, putting it in the general direction of other errand destinations where I go several times a week: two grocery stores, an Ace Hardware, drugstores, a Costco…. And several more or less acceptable restaurants;. It’s halfway to a Sprouts; a Nordstrom’s Rack; the FedEx guys, an upscale Fry’s and a downscale Fry’s (the local name for Kroger’s); and the now much-discombulated Biltmore Fashion Square, home to a Macy’s, a Saks, a Williams-Sonoma, a Pottery Barn. L’Occitane, a Cost Plus, a Pier One, and on and on.

So as a practical matter, Desert Schools is much more convenient, now that I’m not working at the West campus. I’ve stuck with them for a good 20 years, because their service has been primo, and for many years they had a banker stationed in the lobby who was about the best thing that ever came along. But recently they promoted the guy, and they replaced him with one of the dumbest cows I’ve ever seen. She is just stump stupid, and when you have a question or a problem, she not only is no help, she’s actually…shall we say, counterproductive.

This leaves as the only reason to drive out there the depositing of checks, which one really should not have to do at all because in any reasonable system one would be able to upload a jpeg or two and be done with it.

LOL! Desert Schools has also changed its name, but at least not in an annoying way: they now call themselves simply “Desert Credit Union,” presumably signalling that potential customers no longer need be educators to qualify for membership.

One must admit, the products they offer are significantly better than OneAZ’s. They can take wire transfers, although only to personal accounts. Since we recently de-incorporated The Copyeditor’s Desk and turned it into a sole proprietorship, that won’t matter: clients can simply wire direct to me as a human being rather than as a business entity. This, oh hallelujah, would revive my China trade!

WonderAccountant wants me to keep a separate business account, though I fail to see why I couldn’t simply segregate CE Desk transactions into a savings account within the personal account. You can make electronic payments directly out of a credit-union savings account; besides, I charge business expenses to the corporate AMEX card, so you’d think that would maintain enough of a corporate veil. As it were. Why do you need a corporate veil for a sole proprietorship, anyway? All its assets belong to the proprietor…

At any rate, this little  transfer scheme looks to me like a long, sticky mess.

BECAUSE…I have quite a few automated direct deposits and quite a few automatic payments, not the least of which are the utility bills, which are engrossed by each utility provider from their direction. This means I’ll have to call the city water department, the power company, and the gas company to give them new account information…and as you know, anything that sounds as simple as that invariably turns into a headache-breeding tangle. And I have Metlife ripping off $128 a month for long-term care, which I need to cancel anyway.

So that will be a hassle. Nay, a series of hassles.

Vaguely, I recall that we were told, when we signed up for long-term care insurance originally through TIAA-CREF, that paying into it created a kind of fund that would be paid back to us if we decided to stop paying premiums. However, TIAA-CREF abandoned the long-term care insurance business and transferred their customers to Metlife, which subsequently also abandoned LTC insuring. They kept their existing customers, but we’re told customer service is execrable and they do everything they can to get out of delivering the coverage you paid for half your life. So even if they don’t return some of the money I’ve poured into their coffers, at least I won’t be wasting any more money there.

Getting through to Social Security to have those monthly payments moved over surely will mean a major bureaucratic runaround, and probably a trip to a Social Security office and several hours wasted sitting around a waiting room.

And heaven only knows how long it will take to move all those automated deposits and payments around and make them work properly.

So. My plan is to leave about a thousand dollars in the OneAZ personal account and maybe about $500 in the business account. That should (…i hope…) be enough to cover about a month’s worth of auto-payments until such time as I can make SS change its records, but it also should put enough in the new accounts to cover the credit card bills and the auto-payments that get changed with minimal argument or foot-dragging.

It’s going to be a project, probably extending over several weeks…maybe even a couple of months. But I expect the result will represent an improvement.

Government Long-term Care Coverage: Better than nothing?

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We’re being told that one of the future benefits of the new health-care plan (assuming it survives the Republican onslaught and general hysteria) will be an opportunity to buy long-term care insurance at an affordable price.

That’s a much-needed program. But one has to wonder: apparently the average benefit will be about $50 to $75 a day. That’s as nothing: in Maricopa County, where Phoenix resides, typical cost for a nursing home is over $200 a day! And that’s just the base rate: everything, but everything costs more. If you  need a wheelchair, you have to rent it. Any therapy or special care beyond just leaving you sitting there and maybe wheeling you down to the dining room is extra. At that rate, a $50/day stipend won’t hold off bankruptcy for long.

We’re told it may be enough to cover adult day care, which apparently ranges in cost from $20 to $75 a day, depending on where you live. This arrangement, which essentially entails institutionalizing an infirm senior during the day but allowing her or him to return home at night, would require someone to schlep you to a day care center every day. You have to possess all your marbles, be continent, and be mobile, a combination that doesn’t necessarily describe most elders who need daily care.

In-home care, which might keep you out of an institution or at least stave off the evil day, costs $112 to $192 a day, only a few dollars less than the average $205 a day for a private room in a nursing home.

The Congressional Budget Office estimates that for the program to break even, premiums will have to average $1,477 a year. That’s $123 a month.

My long-term insurance with Metlife costs just under $80 a month, and it will pay up to $128 a day for nursing care for an unlimited number of years, plus caregiver training, respite care, durable medical equipment, and installation and maintenance of an emergency response system.. The cost is relatively low, compared to the CBO’s estimate for the federal program, because I bought in when I was fairly young.

So, by comparison the government plan will be expensive and its benefits skimpy. Given that nursing home care can quickly bankrupt you, even a little help would be good. But if you’re on the hook for $150 a day even after having paid $128 a month for coverage over many years, you’re looking at drawing down $4,500 worth of your assets a month for nursing care. That’s $54,000 a year.

A $50/day benefit comes under the heading of too little, too late.

Long-term care insurance

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Metlife sends a notice inviting me to designate someone who can be alerted if a payment on my long-term care insurance is missed. Good thought: obviously, if you get into a predicament where you need long-term care, you may not be competent to pay your bills. I have the premium, which comes to about $75 a month, paid electronically, and so its unlikely the bill will go unpaid unless M’hijito has to take over my affairs and changes things around.

This policy, which I originally bought from TIAA-CREF but was sold to Metlife, will not cover the exorbitant cost of nursing-home or nursing care 100%. However, it does cover enough that my Social Security and (if my mutual funds ever recover) a 4% drawdown from savings will take up the slack. Because my house is paid for, if the utilities are turned off the house will cost nothing while I’m incarcerated in a nursing home. Well, that’s not so: it will cost the property tax and Gerardo’s bill to come around and clean up the desert landscaping once every month or two.

The cost of nursing care in this country is just astonishing, and because much of it is delivered by minimum-wage workers laboring in extremely difficult conditions, it behooves you to get yourself into the highest-quality nursing home available. And of course, the higher the quality, the higher the cost. By 2004, the average annual cost of nursing home care was over $70,000. This amount increases at about 6% a year; the annual cost is now said to hover around $76,500. In the Phoenix area, if I get sick this year it will cost me about $76,200 to get myself cared for.

Home nursing care, which sounds ever so much more desirable if you’re lucky enough to find someone competent, honest, and caring to do the job, runs about $43,885 a year nationwide and $45,800 in the Phoenix metropolitan area. Assisted living would cost me around $29,700, significantly less than the nationwide average of $33,100.

Is there any question about why some old folks ship out on luxury liners in their sunset years?

Neither Medicare nor health insurance will cover nursing care, at least not for any length of time. In theory Medicare will cover 100 days following an acute illness, but you have to show signs of recovery to get even that much coverage—and of course if your problem is acute senility, “recovery” is not in the picture. When my mother was dying of cancer, we found that Medicare and Blue Cross did everything they could to get her off their rolls, to the extent that my husband, who was a lawyer, and I spent so much of our time and energy fighting bureaucrats that I was left with almost no time to spend with my mother in her last weeks. SDXB had to arrange to have his mother divorce his father when the old man was dying of Parkinson’s, in order to force the VA to cover the his care and avoid pauperizing her.

Medicaid will cover nursing home care, but only after you have utterly pauperized yourself. You must be left penniless, meaning you have had to sell your home, your car, and expendall other assets on medical and nursing home bills. In Arizona, if you’ve made the mistake of gifting your children, as is allowed under federal law, with a few thousand inheritance-tax-free bucks over the two years prior to your falling ill, you can be disqualified from this state’s equivalent of Medicaid on the theory that you must have been trying to cheat the system.

So as you can see, if you’re “lucky” enough to make it to advanced old age, you’d better have long-term care insurance. Fourteen percent of people over 71 suffer from dementia, and that doesn’t count strokes, broken hips, chronic heart failure, Parkinson’s disease, or any of the multitude of other causes that put the elderly out of commission.

The problems with long-term care insurance are a) there are lots of shysters out there selling products that will not provide adequate care; b) premiums are high and must include a provision to adjust upward for the skyrocketing cost of care; and c) the older you are when you buy a policy, the pricier the premiums will be.

In general, you should plan to buy long-term care insurance in your early fifties. Obviously, if you purchase a policy when you’re too young, you’ll pay premiums over a long period when your chance of needing the coverage is almost nil. If you wait until you’re too old, you may be disqualified from buying a policy or pay an exorbitant premium.

You need to investigate any insurance company carefully before buying a long-term policy from it. Be sure it is financially sound and highly rated by Moody’s and A.M. Best. In addition, it’s important to fully understand what you’re buying. Most states have an agency on aging or an insurance commission. These agencies can provide you with information on what to look for and what to avoid in long-term care coverage. AARP also offers a lot of valuable information, but you should be aware that this organization is in the business of selling long-term care insurance.

It’s never too early to look into this issue. And if your parents are baby-boomers, now is the time to find out whether they’re covered and to urge them to get coverage if they’re not. Ten million baby boomers are expected to develop Alzheimer’s disease, and as we’ve noted, that’s not the only ailment that can render an elder helpless. The cost and anguish entailed in having to care for an adult who is fully disabled by senility or other illness are devastating—you should not assume that you will be able to care for your parents in your home, especially since you and your spouse will probably have to work to keep a roof over your heads and you will be trying to deal with raising children at the same time.

My insurance covers nursing home care and in-home care. It also will pay a relative or friend a small stipend to care for me at home, and pay to have the person trained in caregiving. As I look at the budget items I can cut if I’m laid off in the next few weeks, one of the items I do not consider to be an option is the long-term care insurance.