Long-Term Care Insurance

Here is a very informative article about the rules in California for long term care. In this article you will find overviews and specifics of care for your loved ones.

The Partnership for Long-Term Care


The California Partnership for Long-Term Care (the Partnership) is a program of the California State Department of Health Services (DHS). DHS is charged with protecting the overall health of Californians. The Partnership is dedicated to protecting the welfare of Californians against the potentially devastating emotional and financial costs associated with paying for long-term care. Partnership-certified policies are designed to offer you the assurance of purchasing a quality product as well as the flexibility to select a policy designed to meet your specific needs. This course provides vital information you need to plan for how you are going to receive and pay for your (or your loved one”s) long-term care or that of your clients.

Section 1: The Risks of Needing Long-Term Care

What is long-term care?

Long-term care is the assistance needed over an extended period of time to manage, rather than cure, a chronic condition, such as, arthritis, a stroke, dementia, or the frailties of aging or accidents. Long-term care is not typically covered under health insurance policies, HMO plans, Medicare or Medicare supplemental policies, which are designed to provide coverage when you receive care from a doctor or treatment in a hospital. If these policies cover nursing home care or home care at all, it is only for a short-term or limited basis.

Long-term care is primarily the assistance or supervision you may need when you are not able to do some of the basic “activities of daily living” (ADLs), such as bathing, dressing, toileting, or moving from a bed to a chair. You might need assistance with ADLs if you suffer from an injury like a broken hip, prolonged illness, a stroke, or advanced age and frailty. Other people may need long-term care because of mental deterioration, called “cognitive impairment” that can be caused by a brain disorder such as Alzheimer’s, or a mental illness.

Long-term care is sometimes called “custodial care” or “personal care.” Family members and friends frequently provide it. “Formal” long-term care (the kind of care you must pay for) is most often provided by unskilled workers such as homemakers, companions, or personal care aides. While less common, “Formal” care can also include skilled care from medical professionals such as nurses and physical therapists.

Long-term care services can be provided in your own home or in a community program like an Adult Day Care Center, in an assisted living facility licensed as a Residential Care Facility (RCF) or in a nursing facility. Long-term care is not necessarily “long term.” For instance, about half of all nursing home stays last six months or less. Some people only need care for a few months, for example, whilerecovering at home from a broken hip. Others, however, may need care for the rest of their life.

Will I need long-term care and if so, will I need to be in a nursing facility?

Unfortunately, while none of us want to consider the probability, everyone is at risk of needing long-term care. A 1990 study, “The Risk of Nursing Home Use in Later Life,” found that nearly half of people over 65 years of age would spend some time in a nursing facility. At age 75, the risk increases to 50 percent, and at age 90, this risk increases to 75 percent. These statistics only cover care in nursing facilities and j do not include people who only receive care at home. Your personal risk of needing long-term care depends on many factors, such as longevity, your gender, marital status, and health history.

  • Longevity: The longer you live; the more likely it is that you will need long-term care. Those who live to be 95 years old or older are much more likely to have spent five or more years in a nursing home than those who live to their mid-70’s. Fewer facts are known about i the use of home care services, although for every person in a nursing facility, there are four people receiving the same care in their homes.
  • Gender: According to a study completed by the New England Journal of Medicine, one out 1 of every two women over the age of 65 will spend some time in a nursing facility. Women are at a much higher risk of needing to pay for formal long-term care for several reasons. Women have longer life spans and often out-live their spouses. When they need long-term care in their older years there is often no one to care for them at home and, as a result, are more likely to need institutional care. Additionally, women are more prone to chronic diseases such as arthritis and osteoporosis, conditions that frequently result in a need for long-term care.
  • Married or Single: If you have a spouse (or other family or friends) who can provide your care whenever it is needed in the future, you are more likely to be able to remain in your home rather than move into a RCF or a nursing facility to receive your long-term care.
  • Health factors: Certain health conditions, such as severe Arthritis, Alzheimer’s or stroke, can cause a need for long-term care. If you know that certain health conditions run in your family, you may have a greater risk of needing long-term care than another person of the same age and gender.

Who will take care of you?

Almost none of us are willing to accept that we are likely to need care in a nursing facility in the future. Most of us are in denial that we will ever need assistance with eating, dressing, bathing, toileting, or moving about our homes. If we ever need such assistance, we believe we will be able to receive it at home. Many of us assume our adult children will take care of us. Yet, many family members will find it difficult to provide an adequate level of care, even though they will likely want to try. In addition, family caregivers frequently see dramatic changes in their own lifestyles that negatively impact their relationship with their spouse, children, and even the loved ones for whom they are caring. Because caregivers are often full-time employees, their job productivity and ability to advance in their careers is also negatively impacted. Some have to quit work entirely.

How Much Does Long-Term Care Cost?

In 2008, the cost of nursing home care in California averages $210 a day. Costs may be lower in rural areas and higher in suburban and urban areas. A short 30-day stay could cost $6,000 or more; a three-month stay, $18,000 or more; and, a year stay, about $73,000 or more. Nearly 55 percent will stay at least one year. Twenty-one percent of the people who go into a nursing home will remain longer than five years.
That means more than half the people who go into a nursing home will spend between $73,000 and $365,000 or more. Consider this: care in your own home can be even more costly than care in a residential care or nursing facility, depending on how many hours of you have to pay for care.

The cost of care in the future will be much higher than it is today. California nursing home rates increased at an average rate of 5.4 percent per year over the past 20 years.(2) These costs are likely to continue to increase by at least 5 percent per year in the future. A 5 percent annual increase means a year of care that costs $73,000 today will cost twice that amount in 14 years, or $144,000 a year, and $315,000 a year 30 years from now!

Who Pays For Long-Term Care?

Medicare: Medicare may pay for skilled care in a nursing home for a very short period – but no longer than 100 days – and only when the patient meets all the Medicare requirements for daily skilled care. For Medicare to pay for any days in a nursing facility, you will have had to spend at least three days in the hospital for the condition requiring admittance into the nursing facility. When Medicare pays for nursing facility care, it only pays the full costs for the first 20 days. For the next 80 days, your co-payment is $124 per day (based on the co-pay amount for Calendar Year 2007 that increases annually), Medicare will pay the balance up to their maximum. Your Medicare supplement plan will pay this co-payment for you, but will not pay for additional days in the nursing facility beyond what Medicare will pay for. Most Medicare HMOs will cover nursing facility care or care at home for 100 days, if skilled care is required.

While people do get personal care services while receiving skilled care in a nursing facility, Medicare will not pay unless there is also a need for daily skilled services that only a nurse or therapist can provide. Medicare may pay for some personal care services at home but again, only if you also need skilled care on a daily basis that only a licensed person can provide. For more details, see the Medicare benefits book available from your Social Security office or by calling the Social Security Administration, toll-free at (800) 772-1213.

Medi-Cal: Medi-Cal (called Medicaid outside California) pays for necessary health care that is not covered by Medicare, but only if you meet federal and state poverty guidelines. In 2007, a single person over 65 would qualify for Medi-Cal if he/she had $2,000 or less in non-exempt assets. A spouse, living in the community, however, can keep up to $101,640 in non-exempt assets and $2,541 in monthly income, when his or her spouse is in a nursing home and applies for Medi-Cal. These guidelines and t amount of assets and income a person may keep can change annually. For more information, please access the following publication on the Internet at http://www.dhs.ca.gov/publications/forms/pdf/mc7inf.pdf

Note: In general, the value of a person’s house is not counted when applying for Medi-Cal. The state will recover the costs paid by Medi-Cal from a person’s estate, which can include the house Recovery will not occur while there is a surviving spouse or dependent child.

Personal Resources: Most people pay long-term care expenses from their own income and resource When care is provided by family members and friends at home, other costs such as those for skilled a equipment, transportation, and other costs not paid by Medicare are also paid from the patient’s personal income or savings. People who use up their assets paying for long-term care are “spending down” and may become eligible for Medi-Cal as a result.

In Summary:

With long-term care such a significant uncovered risk, what then are the options? Generally, there are four: depending on family, using personal savings, counting on government programs or purchasing private insurance.

Depending on family can work when care needs are limited and can be met in the home on a schedule basis, but rarely works for extended periods. Not unsurprisingly, it is the stress placed on caregivers, typically a wife or daughter, that ultimately forces the need to bring in outside services or to consider institutionalization. Sadly, the emotional, financial and time burden that ultimately develops rarely equates to the loving picture that many have in mind when they think that their family will care for the elder.

Using persona] savings is equivalent to self-insuring in that personal funds are put at risk in order to cover the potential cost of care. This is the position that most individuals are in, though few would choose to characterize it this way. Given how rarely people self-insure against the risk of large medical expenses or auto and property loss, it’s curious how many seem willing to accept the long-term care risk.

If the need for long-term care never arises, then accepting the long-term care risk is a bet that will haw paid off. But the same could be said of the commonly insured risks, with the exception that they typically have a lower chance of occurrence. The real difference is that most people see long-term care as a distant concern that they will deal with later. Unfortunately, later is often too late.

Counting on the government is hardly more encouraging. Medicare pays around 17 percent of the nation’s long-term care costs and provides only limited benefits for skilled services following treatment for an illness or injury. On average, Medicare pays for 23 days of care under its nursing home benefit and benefits are not available after 100 days. Home health care benefits under Medicare are similarly limited, as they have strict requirements and limitations that relate to the need for skilled, rehabilitative care.

Medi-Cal holds even less promise. Under current rules, individuals are allowed to keep less than $2,000 in assets in order to qualify for Medi-Cal nursing home benefits. Estate planning tactics, in which assets are transferred in order to qualify are being subjected to ever-tightening rules, and today the state can recover anything transferred within three years of establishing Medi-Cal eligibility. A provision under HIPAA attempted, unsuccessfully, to criminalize the practice known as Medi-Cal Estate Planning, but clearly showed Congress’ position toward using a welfare program for middle-class purposes. Add to that, a declining base of taxpayers to fund benefits for future retirees and it’s difficult to make a case for this, or for any government program as a payer for long-term care.

The last option is private insurance. Some life insurance policies allow for the acceleration of a death benefit to pay for long-term care expenses. There are also large deposit-based plans that essentially prepay expenses and return a portion of the premium if long-term care expenses are not needed. But the most direct and efficient insurance to protect against the risk is long-term care insurance.

Section 2: What and Who is the California Partnership?

The California Partnership for Long-Term Care (the Partnership), a program of the California Department of Health Services (DHS), is an innovative partnership between consumers, the State of California and private insurance companies, plus the California Public Employees Retirement System (CalPERS). These insurers offer a long-term care policy that meet special requirements set by the DHS. Companies participating in the Partnership must have their Partnership policies approved by both the Department of Insurance and the DHS. The CalPERS policy is only approved by DHS.

Each Partnership-approved policy includes high quality insurance benefits to help pay for die care you may need and automatic inflation protection to ensure that the benefits keep pace with the rising cost of care. Partnership policies also include a unique state guaranteed asset protection feature that protects you against impoverishment due to the costs of long-term care, even if you use up all the benefits of your policy.

Simply put, it’s a joint venture between the State of California and Private (Participating) LTC carriers.
Long Term Care in California - Organizations

(1) Technically, policyholders could actually qualify for Medicaid before their insurance benefits are exhausted if they have more insurance than they have assets to protect.

(2) Issuers Bulletin for 2005, California Partnership for Long-Term Care, based on data from the California Office of Statewide Health Planning and Development.

Here at Santa Barbara Health Insurance Services we know that no web site can substitute for courteous service from an experienced professional. Our staff is always happy to help with your California health insurance, California dental insurance, or term life insurance needs. Feel free to call us any time at (800) 765-1540.