This week the news media lost its collective mind over a silly, old social media trope about a guy who says he won't live out his days in a nursing home, rather he'll simply stay at a Holiday Inn.  It's cheaper, and the service is better, so it says.  But it's a false narrative.

I wrote an extensive blog on this in 2016.  The e-mail I copied into that post from three years ago and the "new" Facebook post getting all the current attention are identical, word-for-word.  It's certainly not original, it's specious and misleading, and the numbers are (still) way out of date.

A TV station in Houston, KHOU, even found an internet post from 2004 with nearly the same wording as this old-is-new-again misleading social media joke.

​You can't compare "independent retirement living" with CARE in a nursing home - or an assisted living facility.  Hotel staff - nor cruise ship staff - will bathe and dress you, help you to and from the toilet, nor will they make sure your dementia doesn't lead you out the front door into traffic - or over the rail into the ocean - in the middle of the night.  Once you need CARE, you'll be on the curb - or the dock.

CLICK HERE to read my 2016 blog post for more details on why this is a ridiculous idea.

We are hearing stories almost daily of unscrupulous agents urgently telling their clients to immediately replace their in-force long-term care (LTC) insurance for a variety of reasons, all bad:

• A premium rate increase itself is never a reason to replace your coverage.  You will pay much more - in some cases two to three times more - for a new policy with the same benefits.  Even with a rate increase, your policies still have an "original issue age" price, and will cost you less than a replacement.  If you need to lower your premium after a rate increase you can always reduce your current policy's benefits to a more affordable level, which again will be cheaper than a new policy with lower benefits.
• Just because premiums have increased for older policies, does NOT mean they will continue to increase in the future, or increase at the same rate and frequency.  In fact, today's new rates (which the older policies are being adjusted up to) are already showing evidence of being more rate stable than ever.
• A lower financial-strength rating on the current policy compared to a replacement company is also not a good reason to replace your coverage.  The risk of financial failure of large insurance companies is rare.  (If you are told a scary story about a Pennsylvania company (PennTreaty) that is being liquidated with $8-billion-something dollars in claim liabilities, you should understand that 90% of all policyholders will still receive all of their benefits if they go on claim in the future, and the other 10% will receive most of their benefits through the state insurance guarantee associations.  That company also represents only a couple percent of all LTC insurance in-force.)
• Finally, we're hearing that some agents are trying to scare Genworth policyholders into replacing their coverage because a Chinese investor is trying to buy the company.  First, Genworth will remain a US company, subject to all federal and state insurance regulations.  The policy reserves that provide the foundation for current and future claims payments are protected by law, no foreign OR US buyer can strip the legal reserves out of any insurance company.  Did you know that John Hancock is owned by a Canadian company (Manulife)?  And that Transamerica is owned by a Dutch company (Aegon)?

A huge mistake that many people make when considering LTC insurance is "over-quoting".

Most people do not need to buy coverage for 100% of the cost of the highest-possible cost of care (skilled nursing home), and even shorter benefit periods (3-4 years) will cover the vast majority of care needs.  It's kind of like thinking, "If I can't afford a Mercedes, then I'll just wait for the bus."  It shouldn't be a zero-sum, all-or-nothing decision - that's a HUGE mistake.  A Malibu with cloth seats and a 4-cylinder is great transportation ...
​
$3000 a month of LTC insurance benefits will pay for five hours of home care seven days a week, or 10 hours every-other day.  It will cover more than 1/2 of a good Assisted Living Facility in most of the country, and provides a 33% "discount" to a $9000/month bill in a nursing home.

LTC insurance claims data show that 60%+ of claims start at home. Guess what, about 60% of claims also END at home.  Only about 20% of LTC insurance claims end in a nursing home.
The average LTC insurance claim is less than four years, even less than three years for men.  Cover that first before you worry about Alzheimer's care for 6+ years.  If you only buy a 3-year policy (couples can "share" up to a total of 6 years for the price of 3 each), and if you do get Alzheimer's, you will still have much more private-pay flexibility than having nothing.

We need to stop worrying about the cost of care in a facility where most of us are NOT likely to end up (especially with reasonable - and affordable - planning).  We do need to worry about where we will get an extra $3000-$4000 a month to pay for part-time home care so our spouse can have a life, get a good night's sleep, stay healthy, etc., and so our adult kids can be care managers not caregivers.  Home care comes first.  Always.  And this is also where families are personally and financially most at risk when someone they love needs care.

Solve the part-time home care problem first.

What does this have to do with LTC?  Nothing ... but it's sports history and so much fun for true baseballs fans (excluding Indians').  A fantastic 7-game World Series, and an epic game 7.  I'm a St. Louis boy, born and raised, and therefore a dyed-in-the-red Cardinals fan ... BUT I couldn't be happier for Chicago Cubs fans everywhere!!!

​As an insurance broker who has sold LTC insurance since 1992, and who has focused exclusively on LTC insurance since 2000, I have been following the FLTCIP rate increase news since it is such a large player in the marketplace.  The "average" increase for current policyholders is over 80%, with some as high as 125%!
 
Here's my take:  Welcome to LTC insurance. 
 
The FLTCIP is basically having to realize the same increases, for the same reasons as the rest of the private LTC insurance marketplace.  125% is NOT an outlier.  Several other companies including some of John Hancock's individual policies, and Genworth’s have had 80%-100%+ increases.  Others have had those amounts as well cumulatively over 2 or 3 increases in the past 10 years ..........

This was an interesting article about alternative retirement living up until the author started comparing it to assisted living and nursing homes.  (Link to full CNBC article at the end of this post.)

​The only reasonable land-based analogy here is "independent living". Even mentioning assisted living, or worse nursing homes, is completely ridiculous. While a cruise ship is staffed for "medical care" that means, acute, temporary medical conditions, not long-term, custodial care. NO cruise ship will provide help for you to physically get out bed, bathe, dress, etc., the types of basic care services provided in assisted living. And NO cruise ship wants a long-term passenger with safety issues related to Alzheimer's or dementia. And if you're so poor off to be in a skilled nursing home, you probably can't even get on the ship.

Here is a quote from today's CNBC article: