Despite the fact that the American population is aging rapidly, only about 1 in 30 Americans and about 7% of adults over the age of 50 are carrying Long-Term Care insurance. Studies show that someone turning 65 today has almost a 70% chance of needing some type of long-term care service. Women need care longer (3.7 years) than men (2.2 years).
Many older Americans will develop health problems that make it difficult for them to complete everyday activities. When two or more activities of daily living (ADLs), such as dressing, eating, bathing, transferring, toileting or continence are not possible, the long-term care insurance will kick in to cover these costs.
Many consumers mistakingly think that Medicare picks up part of the cost of long-term care; it covers only short-term rehabilitation centers. Medicaid will pick up long-term care. However, in California, Medicaid is only for low-income people. There is a 5-year look-back period of your assets and it has to be below the 138% Federal Poverty Level, thereby not having more than $2,000 in your bank account and owning only your home and one car. Following a long-term care Medicaid beneficiary’s death, the state Medicaid agency attempts reimbursement of care costs through whatever estate of the deceased still remains. This is often the home.
Most older people with disabilities rely exclusively on help from unpaid family members and friends. When they need more assistance than these caregivers can provide, they often turn to paid long-term care services, such as formal home care, residential care, and nursing home care. These services are expensive. In 2020, the average cost for homemaker services was $4,957 monthly, assisted living facilities cost monthly $4,500 while a semi-private nursing home in Los Angeles was $109,500 annually. To calculate your long-term care cost by zip code, you can use this calculator developed by Genworth.
Many Californians have not even had a conversation with their family about their long-term care wishes and how to finance them. Have you written down your long-term care wishes and instructed your family on what to do in the event that you need this type of service? Do you prefer to receive your long-term care at home, assisted living facility, or a nursing home? If you want to remain home, do you expect your spouse or children to care for you, or do you want outside help? Have you designated the funds that are needed for this kind of home care? If you are considering a nursing home do you want a private room or can you handle a semi-private room? Have you discussed with your family how to finance the long-term care needs? An open discussion with your family will clarify for everyone what your wishes are and how you plan to finance your long-term care bills. You might even draw a letter of instruction in your estate plan so that there will be clear directives on how to handle your long-term care needs.
Private Long-Term Care insurance provides financial protection to anyone who needs long-term care needs. Policies cover home care, assisted living, and nursing home stays; lifetime coverage is rare due to the high premium cost. The average reimbursement rate in 2015 was $150 per day, and three-quarters of the long-term care insurance plans cover some inflation protection. Annually premiums may rise only if the insurance carrier can provide that claims for a class of policyholders- defined by issue age and year – exceeded expectations. However, annual premiums rise with age at issuance and pre-existing conditions.
There are not many long-term care insurance companies in California to buy long-term care insurance from. Mutual of Omaha is one of the strongest carriers, Nationwide Life Insurance Company, John Hancock, and One America offer competitively priced life insurance with long-term care riders. These companies have stringent underwriting criteria, with the ideal age for applying to be between the ages of 53 and 56 years old, only 50% of those 65 years and older will be able to get long-term care coverage and this figure drops to 30 % for those 70 years and older.
As with health insurance, buying long-term care insurance is very complex, many variations are to be evaluated such as elimination period, inflation riders, survivor rider, shared care rider just to mention a few. Also, did you know that long-term care is fully tax-deductible for C-Corporations, and for individuals, there are also tax deduction incentives?
Please contact us at Solid Health Insurance Services so that we can run you a quote and show the long-term care options available to you here in California. Please contact us at 310-909-6135 or email us at info@solidhealthinsurance.com for us to better assist you.