In a recent article on Marketwatch.com by Retirement Reporter Elizabeth O’Brien, she discussed what the costs for long-term care insurance look like, and how people plan for their health care needs in the future when they are no longer able to care for themselves.

In O’Brien’s article, she references the average cost for a 55-year old couple on a common LTC plan to be around $5,000 per year in premium dollars. While that is a sizable amount for people to budget with insurance, O’Brien comments, “Consumers should think of long-term care insurance as one way to help defray the cost of home health aides or a care facility and to protect their hard-earned nest eggs in the process…”

The article continues on covering the common misconceptions about Medicare and custodial care. Unfortunately, many people believe Medicare covers long-term care expenses. The reality is, while Medicare may cover up to 100 days of skilled nursing, it is not going to cover long-term custodial care. There is a difference between skilled care and custodial care.

O’Brien offers from her research that the median annual cost for private rooms runs over $91,000, and a home health aide could run upwards of $45,000 or more. Without a solid nest egg in place, these costs could easily wipe out any savings available to most families.

An interesting point in the article is how people could end up with a “default long-term care plan”.

“Everybody has a long-term care plan, said Eileen Dunn, a geriatric care manager with Associates of Clifton Park, a Clifton Park, N.Y.-based company that sells long-term care and other insurance to clients of financial advisers. Those who do not consciously make a plan are on the “default plan,” Dunn said. “When something happens, you’re not going to have a choice.” That is, you’re not going to have a choice but to spend down your assets” (O’Brien, 2015, pp. 7)

If you have accepted the default plan as your option, then you should at least research “spend down” requirements for your State, so you know what will happen and how it will affect your family. You can usually get these requirements from the State welfare offices.

The choice is yours, make yours!

Choice 1: I am willing to lose the things I worked for in life.

Choice 2: I want to protect my assets and have a choice.

If you selected Choice 2 and would rather have options in your care, fill out the form to the right and contact a California Long Term Care specialist today to get the conversation started.

Reference:

O’Brien, E., (June 2015) Can you afford $5,000 a year for long-term care insurance? Retrieved 8/9/2015 at http://www.marketwatch.com/story/can-you-afford-5000-a-year-for-long-term-care-insurance-2015-06-25

Katie O’ Rourke
Managing Partner

My husband and I are in our fifties.  A few years ago we were looking for affordable California Long Term Care premiums. We did our research,  decided to take the plunge and purchased Long Term Care insurance (LTCI).  Most of our friends are in the same age range.  I am often asked at social events how much the yearly premium is and people are surprised to hear that our premiums for our plans are $100 each per month. 

The average premium for LTCI is between $150 – $300 per month.  Everyone I talk to has heard that LTCI is expensive and expects to hear a number much higher. However, with the help of a licensed agent, you can find affordable California Long Term Care Insurance for around $150 per month.  

The premium depends on many factors. For example my car insurance could be a lot more expensive than it is but I chose coverage that keeps the premium lower and searched for discounts that would help, like a good student discount for our teenager.  LTCI is similar.  Some companies offer better deals than others depending on your situation.  Your health and marital status can impact the premium.  However, the biggest factor besides the coverage you select is your age; the younger you are when you purchase LTCI the lower the premium you pay throughout your lifetime. 

Besides the peace of mind, another thing that helps us my husband and I feel better about purchasing LTCI is that the premiums are tax deductible as a business expense. 

What I want you to take away from this blog is despite the conventional thinking, affordable California Long Term Care Insurance premiums are possible. We can find the best plan for your budget and give you details on the tax treatment for individuals and businesses.

To speak to a representative or schedule an appointment, simply fill out the form to the right to contact us.