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LTC_Picture.gif (23262 bytes) Long-Term Care

What Is Long-Term Care?

Long-Term care is the kind of assistance you receive when you need help with personal care. The need for this assistance usually results from a disabling or long-term medical or physical condition. Long-term care services may include, but are not limited to help with daily activities such as bathing, dressing, walking, toileting, eating, etc. The care can be provided in your home, nursing home, residential care facility, adult day care center or community-based care.

Why Should I Be Concerned?

The possibility of needing long-term care because of illness or physical disability is something most people would rather not think about. But, as we get older, and because we are living longer, the likelihood that we will need some kind of assistance is very real. Therefore, it is important to understand the issue of long-term care because of the high risk and significant cost of long-term care expenses.  For many Californians, paying for long-term care, either for themselves or for a loved one, has meant sacrificing a lifetime of accumulated savings or losing their financial independence through transferring their assets.

Will You Need Long-Term Care?

Anyone may need long-term care services. An accident or a sudden, serious illness can create  the need for services, as can the slow progression of chronic diseases such as rheumatoid arthritis, Alzheimer's disease or Parkinson's disease. Age or frailty may also be contributing factors. Women are more likely to need long-term care services than men. One reason may be their longer life expectancy, since women on average outlive men by about eight years. One out of every three men, and one out of every two women who are 65 or older, will need long-term care during their lifetime, and most will receive the care in their own home.

What is the Cost of Long-Term Care?

The cost varies by state, however, the statewide average annual cost in California was $43,800 during 1998. The length of care varies by individual, but averages 2.5 years.

Will Medicare pay for Long-Term Care?

Most long-term care is provided in nursing homes to people with chronic, long-term illnesses or disabilities. The type of care they receive is personal care, and is also referred to as "Custodial" care. Medicare does not pay for custodial care. Medicare pays for less than 5% of all nursing homes costs. To qualify for the Medicare nursing home benefit, you must spend three full days in an acute care hospital within 30 days of your admission to a nursing home. You must also need skilled nursing care seven days a week, and/or rehabilitation services at least five days a week. The longest nursing home stay that Medicare may pay for in full is 20 days. After the first 20 days, Medicare will pay only a small portion of the nursing home bill. You will  have to pay a copayment for each day of the next 80 days if Medicare continues to pay for your stay. 

Will Medicare Pay For Care In My Home?

Yes. But only if you meet certain requirements of the Medicare program. To qualify, you must be homebound, and require skilled nursing or rehabilitation services. The services you receive must be from a home health care agency that participates in Medicare. You may also receive some personal care along with the skilled services. However, Medicare does not pay for general household services such as laundry, shopping or other home care services that are needed primarily to assist people in meeting their personal care needs. Medicare may not pay for all the services that a home health care agency provides.

Do Medicare HMO's pay for Long-Term Care?

Members of HMO's generally have no more coverage for long-term care than someone with any other type of health care coverage. These HMO's usually provide only those home health and skilled nursing facility services that are covered by Medicare.

Who Currently Pays For Long-Term Care?

Just over half of all nursing home costs in California are paid for privately by individuals and their families out of their own pockets. Medicare covers less than 5 percent, normally for short-term skilled nursing home care following a hospital stay. The remaining cost of long-term care is paid for by Medi-Cal, the program that pays for the health care needs of the poor. To become eligible for Medi-Cal, you must "spend-down" or deplete, most of your assets to the poverty level.

Does Disability Insurance Cover Long-Term Care?

No. Disability Income insurance doesn't pay for medical care, personal care or long-term care. The purpose of this type of insurance is to replace earned income. Disability Income insurance generally pays a percentage of an employed person's earned income if they are disabled while still employed. Once you retire, you may no longer be eligible for disability income benefits. Unfortunately, because it's called "Long-Term" disability insurance, some people may assume they are also covered for long-term care services.

Testimonials (Source: California Partnership for Long-Term Care)

"My mother had a stroke and was confined to a nursing home for almost seven years. It took most of her savings to pay for her long-term care expenses before she could be assisted by Medi-Cal. She was caught, like so many of us, in that middle income bracket-- that is, not eligible for Medi-Cal, but without the means to afford a lengthy stay in a nursing facility. For people like us, there has to be a better way..."

--Alvin Larsen, San Diego, CA

"When my mother was 87, she went suddenly blind and was later diagnosed with Alzheimer's disease. When she no longer showed signs of improvement and her care became custodial she no longer qualified for Medicare assistance. Medicare only paid for 10 days of skilled nursing help. So, we used her long-term care insurance policy. It was an old policy that didn't include inflation protection so it only paid for half her nursing home costs, which totaled over $3,200
a month. The bills were staggering on her fixed income..."

--Diane Smith, Carmichael, CA

"I'm in the process of getting long-term care coverage for myself because of what's happened to my wife. We were both very active. We never really thought about what might happen down the road. And suddenly, there it was. She developed diabetic neuropathy and then had a stroke. Now she's totally wheelchair-bound. I've hired someone to come in and help with her bathing and other care twice a week. But it's an eight-day-a-week job. And somewhere down the road, realistically, she may need to go into a nursing home. Unfortunately, it's too late for my wife to get long-term care insurance, but I'm going to get it for myself."

--Emmett Morrison, Folsom, CA

What Are Your Options In Planning For Long-Term Care?

Pay for the care yourself (currently about $44,000 per year in California.) ?
           1. At that rate how long could you keep paying for before depleting your  
           2. How about the annually increasing cost of care (about 5-8% each year)?
           3. Would you rather have someone else pay for it?
Spend-down your assets, and apply for Medi-Cal assistance ?
          1. Do you want to spend-down your children's inheritance?
           2. How important to you are quality care and financial independence?

           3. Are you aware that Medi-Cal can put a lien on your house after your death 
                to recover costs?

Ask family members to provide the care themselves or help you financially ?
         1. Would your family members have the time and energy to bathe you, dress 
                you, etc.?
          2. Can they spend 8 or more hours a day to care for you?
          3. Can they afford to pay $44,000 per year for you if you needed full-time 
Purchase long-term care insurance ?
          1. Would you like to have peace of mind and not be a burden to your family?
          2. Would you like to preserve your assets, independence and protect your 
               children's inheritance?
          3. Would you be willing to sacrifice a small portion of your earnings  in order to 
               protect your life savings, your house, your lifestyle and your financial 

Should I purchase long-term care insurance?

If you answered yes to any questions in the section above, you should seriously consider applying for long-term care insurance. It is important to remember that you first need to "apply" for long-term care insurance before you purchase the policy. Insurance companies follow internal underwriting guidelines when processing your application in order to determine whether to accept or decline an applicant.

Your health at the time of application is one of the most important factors that determine whether or not your application is accepted and a policy is offered to you. Again, you cannot initially purchase long-term care insurance. You must first apply for it. Most policies are " "guaranteed renewable", which means that as long as you pay your premiums are paid on time, the insurance company cannot terminate your policy.

Factors to consider when choosing a long-term care policy

There are three types of long-term care policies offered in California:

   1) The Home Care policy covers care in your Home & care in Adult Day Care centers
   2) Nursing Facility policy covers care in Residential Care Facilities & Nursing Homes
   3) Comprehensive policy covers care provided in all of the above facilities.

When choosing a long-term care insurance policy, you should consider certain factors, which will determine your benefits under the policy as well as your premium. Here they are:

  1. What "elimination" period should you choose? This is similar to choosing a deductible amount, except that it is expressed in number of days instead of dollars. The higher the elimination period you choose, the lower the premium.
  2. What "benefit period" should you choose? The benefit period is the number of years that benefits will be paid by the insurance company once you become eligible for benefits. This could be anywhere from one year to lifetime.
  3. What daily benefit should you choose? This represents the daily dollar amount or maximum daily benefit amount that the insurance company would pay. You can also choose to include the "inflation" rider, which automatically increases the daily benefit amount on each policy anniversary (usually by 5%.)

If you currently have funds invested in bank certificates of deposit (CD's), you may want to consider transferring some of these funds into a single-premium life insurance policy that also provides long-term care benefits. For example, depending on your age at time of application, if you transfer $50,000 initially, you will have a death benefit of $100,000 - $150,000 available to you immediately in case you need care at home or in a nursing home. The monthly benefit available to you would be about 2% of the death benefit. Any unused portion of the death benefit is paid income-tax free to your estate upon your death. Funds in such policies earn a competitive interest rate that accumulates on a tax-deferred basis. In most cases, the interest rate you earn would be 1%-2% higher than those earned on bank certificates of deposit. The main advantage of this type of policy as opposed to traditional long-term care policies, is that you do not need to pay annual premiums that may be increased by the insurance company in the future. Also unlike CD's, where interest is taxable each year, interest on the life policy is only taxable if withdrawn, or in certain cases if the policy is surrendered for its cash value.

How do I get a "Free Quote" on long-term care insurance?

To receive a free quote, simply click on the button immediately below this paragraph, then complete the form that appears on your screen while following the instructions on the form. You can also request a quote for you spouse on the same form. Requesting a free quote does not place you under any obligation.

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For More Information Contact:

Henry Best Insurance Services
25820 Tennyson Lane, Stevenson Ranch, CA 91381
Tel: (818) 613-5380 in Los Angeles
Tel: (888) 736-3417 "Toll-Free" outside Los Angeles
FAX: (661) 284-3520



Raonbow Line.gif (4491 bytes)

For More Information Contact:

Henry Best Insurance Services
25820 Tennyson Lane, Stevenson Ranch, CA 91381
Tel: (818) 613-5380
FAX: (661) 284-3520


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Copyright 1998-2003 Henry Best Insurance Services
Last modified:  November 11, 2003