Long-Term Care (Own Your Future)
What about Long-Term Care?
Medicare does not cover ongoing help for the basic activities of daily living (also called ADLs) such as bathing, eating, and toileting. This is called long-term care and it is very expensive. The health care industry indicates 40 is a good age to look into purchasing a long-term care insurance policy to cover this type of assistance. The younger you are, the lower the premium you will have to pay. Should you wait until you are in your 60s, your premium may become unaffordable. If you wait until you are in your 50s or 60s, you may have health conditions that could disqualify you from purchasing long-term care insurance. There are also long-term care insurance plans that are pre-paid policies. You pay premiums for a set amount of time and then you do not pay anymore. This may be a type of policy to look at if you are in your 40s or 50s. The premium will be more but it will be paid up in advance.
HICAP Program Managers, the California Department of Aging, and the California Department of Insurance have assembled a guide to long-term care entitled "Taking Care of Tomorrow." HICAP advises you read this book before you make any long-term care decisions. Call HICAP at 1-800-434-0222 for your free copy of the book or to schedule a long-term care insurance counseling appointment.
What is Long-Term Care (LTC)?
Long-term care usually refers to ongoing supervision or assistance with everyday activities like dressing, bathing, and toileting. It is generally not necessary for a licensed person to provide these services. This type of care is often needed as the result of injury, illness, or advancing age that may render a person unable to safely and to effectively care for themselves.
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When should I start planning for Long-Term Care?
The earlier you plan for your potential long-term care needs, the more options you may have in the future when it comes to protecting assets and to receiving the type of care you would prefer. What is best for you will depend on your individual needs and circumstances.
Some people choose to plan for their future needs by purchasing Long-Term Care insurance. Long-Term Care insurance is sold to people as young as 30, and the insurance industry recommends that age 40 is a good time to purchase a policy. The younger you are when purchasing a policy, the lower your premiums.
If you are exploring the purchase of a Long-Term Care insurance policy, here are a few questions to consider:
- Do you have enough income to pay the premium for the rest of your life, regardless of rate increases or a change in life circumstances, such as the death of your spouse?
- If your assets are modest, are you better able to afford the premium for a policy with benefits that last 1-4 years versus benefits that last as long as you live?
- Do you have family members who are willing to assist you in the event you need long-term care?
- If you have few assets, could you better finance long-term care through savings, investments, a reverse mortgage, or Medi-Cal?
Where will I receive Long-Term Care?
It is important to think about what type of living arrangements you might prefer and need in the event you require long-term care. Most people wish to stay in their own homes as long as possible, but in some circumstances that may not be feasible due to the scope of a person's physical and cognitive care needs. Living arrangements may include:
- Independent living
- People may receive long-term care at home while living in senior retirement communities, retirement apartments, mobile home parks, or a private residence.
- Congregate facilities
- Retirement apartments where housekeeping, meals, laundry, and other amenities are available.
- Residential care facilities
- These facilities provide room and board, assistance with personal care, and any other necessary supervision.
- Assisted living facilities
- These facilities provide assistance with personal care in addition to the services provided in the congregate facilities.
- Continuing care retirement facilities
- These are retirement communities where an individual purchases his or her own housing unit. Residents pay a large one-time entry fee plus a monthly maintenance fee in exchange for the assurance of lifetime long-term care.
- Skilled Nursing Facilities (SNF) commonly known as nursing homes
- These are licensed by the California Department of Health Services to provide both skilled nursing and custodial care.
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How do I pay for Long-Term Care?
Long-term care is very expensive, so it is important to plan for its costs earlier rather than later. Payments for long-term care can come from a combination of:
- Private pay. Many people pay for at least part of their care out-of-pocket. People with higher income and assets may have enough resources to cover all of their long-term care costs.
- Home Equity Conversion (HEC) or Reverse Mortgage.
- Medi-Cal or Medicaid. NOTE: Medi-Cal will only pay for long-term care in a Skilled Nursing Facility (SNF).
- Insurance:
- A life insurance policy with long-term care benefits
- A life insurance policy with a "living benefit" rider
- A Viatical Settlement
- Annuities
- A Long-Term Care insurance policy
If you choose to purchase a Long-Term Care insurance policy, be aware that the cost will vary according to the type of policy and the coverage provided as follows:
- Policies that only pay for nursing home care are less expensive than those that cover care at home, in the community, and at a nursing home.
- The older you are when you purchase coverage, the more expensive the premium will be.
- The policy premium will be lower if you select a longer elimination period (waiting period before the policy will begin paying benefits).
- A higher daily benefit amount (the amount of money the policy will pay for your care per day) will raise the premium.
- The longer the benefit period, the more expensive the policy (i.e. plans that cover long-term care for a smaller, fixed number of years are less expensive than those that cover longer periods of time or lifetime care).
- Choosing inflation protection will increase your premium.
It is generally advised that the premium for a long-term care policy not exceed 7 percent of your annual income.
It is very important to understand your options before commiting to any particular financial or insurance product. You may need to consult with an accountant, financial advisor, or an Elder Law attorney regarding your unique situation.
For Long-Term Care insurance policy counseling, contact the Health Insurance Counseling & Advocacy Program (HICAP) within California at 1-800-434-0222. In other states, this service is provided through your local State Health Insurance Program (SHIP).
Prior to your HICAP Long-Term Care counseling appointment, it is suggested you read the publication "Taking Care of Tomorrow: A Consumer's Guide to Long-Term Care." Contact HICAP for a free copy or find it on-line at: www.aging.ca.gov/publications/hicap/hicap_TCOT_main.asp.
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What if my finances are limited?
If your finances are limited, you may be able to receive help covering long-term care through:
- Fraternal and faith-based organizations
- The County of Ventura Human Services Agency, which administers the local Medi-Cal and In-Home Support Services (IHSS) programs. 1-866-904-9362.
- The Veterans Administration if you or your spouse served in the military. Call the County of Ventura Veterans Services office at 805-477-5155 or the Department of Veteran Affairs at 1-800-827-1000 to learn more.
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What is Long-Term Care Insurance?
Long-term Care insurance is designed to help pay for long-term care. It is generally expensive and not an affordable or appropriate option for everyone. People of advanced age or who already have pre-existing health conditions are unlikely to qualify for Long-Term Care insurance.
Policies in California are labeled according to where benefits will be paid as follows:
- Nursing Home and Residential Care Facility Only- these policies will only pay for care in a nursing home or a place licensed as a Residential Care Facility for the Elderly (RCFE), also known as an assisted living.
- Home Care Only - these policies will only pay for care in your home and must include benefits for home health, adult day health care, hospice, respite care, personal care, and homemaker services.
- Comprehensive - these policies pay for nursing home care, assisted living, home care, and community care like adult day care.
Detailed information about Long-Term Care insurance is available in the publication "Taking Care of Tomorrow," which can be found online at www.aging.ca.gov/publications/hicap/hicap_TCOT_main.asp.
Call HICAP at 1-800-434-0222 to schedule a Long-Term Care insurance counseling appointment.
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What is the California Partnership for Long-Term Care?
The California Partnership for Long-Term Care is a program of the California Department of Health Care Services (DHCS) that provides a way for California residents to purchase high-quality Long-Term Care insurance that exceeds the requirements of state law. Policies may be used outside of California, but their built-in asset protections apply within California only. These policies may only be sold by insurance agents who have taken additional, specialized training.
There are two kinds of Partnership policies:
- Nursing Home and Residential Care Facility Only policy
- Comprehensive policy that covers care in a nursing home or residential facility as well as benefits for in-home and community based services such as adult day care.
Features of Partnership policies include:
- Standardized terms and a core set of benefits
- Automatic inflation protection
- Tax qualified (policy holder is able to deduct at least part of their premiums as medical expenses on their state and federal income taxes)
- Assisted living care is a required benefit
- Premium increases are limited
- Asset protection is guaranteed
Parnership policies have unique asset protection insuring that for every dollar paid out in benefits you will retain an equal amount of your assets in the event you need Medi-Cal later on. Without such a policy, you would have to spend down your resources to the maximum allowed by Medi-Cal if you still need long-term care once your benefit period ends. With a Partnership policy, your protected assets will not be counted if you apply for Medi-Cal and can be left to your heirs as part of your estate. Asset protection purchased in California, however, will only be honored in California.
To learn more about Long-Term Care insurance and Partnership policies, call HICAP at 1-800-434-0222 to schedule an appointment.
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