Long Term Care
People are living longer these days. Now that's good news, but the flip side of that is there is a higher probability and risk of the development of serious health problems. Long-term care (sometimes called, "custodial care" or "personal care") is the assistance or supervision you may need when you are not able to do some of the basic "activities of daily living" (ADLs) like eating, bathing, dressing, or moving from a bed to a chair.1 Unfortunately, traditional health insurance policies and Medicare usually do not pay for long-term care expenses and Medi-Cal (called Medicaid outside of California) will pay for necessary health care that is not covered by Medicare, but only if you meet federal and state poverty guidelines. While many people think "nursing home" when discussing long-term care, the truth is that adult day care and assisted living facilities - as well as in-home custodial care - also fall under the umbrella of long-term care.
We believe that long-term care insurance can be a very valuable planning tool within your overall financial plan. Realize that long-term care costs are rising faster than the general rate of inflation.2 The California Department of Insurance advises that nursing home rates increased at an average rate of over 5% per year during the last 20 years and are likely to continue to increasing by at least that much in the future.1,3 Unless you expect to be in a financial position below the federal and state poverty guidelines or, alternatively, in a strong enough cash position to self-insure in the event of poor health - a solid insurance policy with inflation risk adjustments included in the contract can be an added layer of security to protect yourself, your family, and your heirs from potentially damaging costs of unprotected long-term care needs. There are a number of policies to choose from and significant costs associated with purchasing long-term care insurance. We recommend a very careful review of your current and future financial situation to determine if long-term care is right for you.
2. "How much does long-term care cost?", retrieved 10/21/2008 from Insurance Information Institute, Inc, website: www.iii.org/individuals/longtermcare/ltc_cost/
3. Issuers Bulletin for 2002, California Partnership for Long-Term Care, based on data from the California Office of Statewide Planning and Development