4 Ways to Pay for Long-Term Care

November is Long-Term Care Awareness Month. While you may think this is a marketing scheme cooked up by the insurance industry, we think of this as a time to draw attention to the realities of aging for millions of babyboomers and their parents. Our life expectancy has dramatically increased, which is great if you’re healthy and have enough money to enjoy a rich quality of life. Sadly, this is too often not the case.

1 in 3 Americans dies with dementia

The reality is that 1 in 3 Americans dies with Alzheimer’s or other forms of dementia. Alzheimer’s is the only disease among the top 10 causes of death in America that cannot be prevented or cured. People with dementia, especially those with Alzheimer’s disease, may need 24-hour care for years, which places a huge burden on their families. There is an endless list of other diseases and conditions that compromises health and leave people unable to care for themselves. Many mistakenly believe that Medicare will cover long-term care expenses, but in fact, Medicare falls short on many fronts when it comes to extended care.

The time to begin thinking about long-term care is now

You may be healthy and feel great today, but these days, as we grow older and hear about friends, family and colleagues suffering debilitating strokes, being confined to wheelchairs with conditions like MS or requiring increased care from diseases like Parkinson’s, we realize just how vulnerable we are. As an insurance broker who has been encouraging my clients to look into LTCI for many years, I believe the need has never been greater—fortunately, the insurance industry is responding—by creating ways to make long-term care insurance more accessible.

4 ways to pay for long-term care in California

Outlined below are four ways to pay for long-term care in California. Note that Medicare isn’t listed because it’s health insurance–not LCTI. You can’t count on Medicare to pay for the long-term care that you may require.

• Private pay
• Long-term care insurance in California
• Medical
• Veterans’ benefits

1. Private pay long-term care insurance

If you have lots of money, you could self-insure and plan to simply pay for your LTCI; however, in 2013, California nursing home costs averaged about $214 for a shared room and $286 for a private room. Please note that that’s per day. In the Bay Area? Much, much higher. When you figure that average nursing home stays are 2-3 years; 3 years at the very lowest rate = $214 x 3 years x 365 days = $231,045. If your spouse or partner needs the same care, you’d have to double that fee to $462,090. Now think about this—that cost covers your room and ostensibly your food, but not the services that you likely will need, such as an attendant and transportation. There will be costs for your clothes, toiletries, hairdresser, etc. Is private pay really a good option for you?

It’s been my experience that it’s precisely this group—those with significant assets and potential private-pay candidates, who are most interested in long-term care insurance. In most cases, these are people who have worked hard to accumulate a degree of wealth, are realistic about the chances of their needing long-term care and want to preserve their assets. These are thoughtful people who understand that looking into long-term care insurance is being proactive and prudent.

2. Long-term care insurance In California

Long-term care insurance in California can pay for care at home or in an assisted living facility or nursing home. Policies can be customized so that you can:

• Include a longer waiting period to reduce premiums.
• Purchase policies of different lengths, such as a 3-year policy or a lifetime policy.
• Buy a life insurance rider to leave an inheritance for loved ones or pay last bills.
• Include an inflation rider so that your coverage increases as California long-term care fees increase.

Premiums for long-term care insurance in California vary depending on your age, health and the features you choose. Some carriers offer deep discounts when couples apply together.

3. Medi-Cal instead of long-term care insurance in California

Medi-Cal is an important program that pays for health care and nursing home care for those who are impoverished. To qualify for the program, you must have next to no assets and little income.

• To qualify, you must spend down nearly all of your assets.
• All of your income, such as your social security check or pension, will go directly to the nursing home, not to you.
• If you’re truly impoverished, living below the poverty line or close to it, Medi-Cal is a fantastic safety net and you should further explore its benefits.

4. Veterans’ benefits to pay for long-term care In California

The federal government does provide limited veteran’s benefits to pay for long-term care in California.

• This program, called Aid and Attendance, is limited to veterans and their spouses who have few assets and very low income.
• The veteran must have served a minimum of 90 days, with at least one day during wartime.

This is a just a summary of California’s long-term care payment options. If you’re not wealthy, a veteran or living below the poverty level, long-term care insurance can be a very affordable option. Do you have questions about long-term care insurance? Contact Carly Ebenstein at CJB Insurance Services: 510.342.2670.