The Problem with the Long Term Care Need

The problem is how to manage an event that is increasingly likely to occur as we age. Because we are likely to live a long life, we are likely to get old. If we get old, we are likely to become sick or injured. If this happens, we are likely to need care. Who will pay for that care? Who will provide it? How can the potentially severe consequences of needing care be minimized for one’s family and one’s financial plan? An extensive study on aging was published in the New England Journal of Medicine in 1991. This study concluded that 43 percent of people age 65 will enter a nursing home before they die, and, in addition, many more will need home health care. Half of those who will enter will stay for at least one year and their average stay will approach three years.

The average cost of a nursing home in California is now roughly $84,000 per year and is rising yearly at a pace above the rate of inflation. Medicare only covers long-term care for a matter of weeks, if at all, and is now under severe financial pressure. Medicare supplements and other private insurance policies also give minimal benefits. Medi-Cal only covers cost as a welfare supplement for the poor.