What is Long Term Care Insurance? (Part 1)

CA Medicare.com Announcement

Long Term Care is designed to provide you the funding for assistance with basic activities for daily living.

As opposed to other type of health care, the goal of long term care is not to cure an illness, but allow an individual to attain and maintain an optimal level of functioning.

Today, people are striving for longevity by being more conscious of the choices they make to keep their health on track. The other side of the coin, however, is that most people need healthcare later on. Unfortunately, this type of long term care can often deplete their live savings as well as the risk of leaving their homes to a place they don’t want to live in.

Here are some quick statistics to back that up that statement:

  • Someone turning age 65 today has almost a 70% chance of needing some type of long term care services and supports in their remaining years.
  • Women need care longer (3.7 years) than men (2.2 years)
  • One-third of today’s 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years

According to the US Bureau of Census, California has the largest senior population of any state in the country and experts predict that this number will double over the next ten years. There is also the fear that with greater life expectancy, federal and state funding may become depleted to pay LTC costs as the baby boomers age. Medi-Cal has become the largest payer of LTC services when people can’t afford to pay.  Medi-Cal is the dominant source of payment for long-term care, followed by out-of-pocket payments by individuals and families.

Medi-Cal funding will be squeezed even more over time and the sad truth is, is that if you are low income with limited assets, you’re not a candidate for LTC insurance.

Due to Medi-Cal funding, many people may opt to move into their children’s homes to be taken care of. In 2009, over 42 million people did that and that number has grown substantially. Unfortuantely, the stress of caring for a parent often leads to anxiety and depression.

LTC insurance may not be an option for those with a higher income since they can self-insure. That being said, from personal experience I would take pause of your comfort level of losing more than half million in cash. As a graduate of the College of Financial Planning, I recommended Long Term Care Insurance to my own dad but he felt he had the net worth to cover the potential liability. He was correct, he does, that being said my mom is under pressure to come up with cash when so much of their portfolio is either non liquid or subject to unfavorable taxable consequence. The tremendous pressure she is under only is magnified by the cost of care.

How Are benefits Triggered?

  • You are unable to perform, without substantial assistance from another person, at least two Activities of Daily Living for a period that is expected to last at least 90 consecutive days due to a loss of functional capacity

Or

  • You require substantial supervision to protect yourself from threats to health and safety due to a severe cognitive Impairment

Activities for Daily Living:

  1. Bathing
  2. Continence
  3. Dressing
  4. Eating
  5. Toileting
  6. Transferring

Severe Cognitive Impairment means a loss or deterioration in intellectual capacity that is comparable to and includes Alzheimer’s disease and similar forms of irreversible dementia; and is measured by clinical evidence and standardized tests that reliably measure impairment in your:

(a) short-term or long-term memory;

(b) orientation as to people, places or time;

(c) deductive or abstract reasoning; and

(d) judgment as it relates to safety awareness

Now that you’ve gotten a snapshot of what LTC Insurance is, be sure to check out Part 2 of this series to learn about the cost of LTC Insurance, If you are interested in learning more about LTC Insurance, and prefer to speak to a licensed agent to discuss your situation, call our office at 1-800-356-3416 or fill out this contact form to get a LTC Insurance pamphlet, free at charge.

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