How Will I Pay For Care If I Need It?A Plan For Long-Term Care Before You Need It.
Most long-term care is paid by families, from savings or insurance. Maartin compares long-term care insurance, hybrid life policies and Partnership plans, so you choose while you are still able to qualify.
The Short Answer
Long-term care is help with daily living, like bathing and dressing, at home or in a facility. Medicare and most health insurance don’t cover it. Families pay from savings, long-term care insurance, a hybrid life policy with care benefits, or Medi-Cal after spending down their assets. Applying while healthy keeps more options open.
Source: Medicare.gov and the California Department of Insurance
Three Numbers Worth Knowing
- 70%
- Someone turning 65 today has almost a 70% chance of needing some type of long-term care, according to the federal government.
- 100 Days
- The most Medicare may pay toward skilled nursing home care, and only while you need daily skilled care.
- 30 Days
- Your window to return a new individual long-term care policy in California for a full refund.
Source: ACL.gov and the California Department of Insurance
Who Pays
Four Ways California Families Pay For Care.
Each one has its own rules, and a plan usually leans on more than one.
Medicare
Pays for skilled nursing home care for a short time only, up to 100 days, when you need daily skilled care. Ongoing help with daily living is left to you.
Medi-Cal
Pays for care once you meet federal and state poverty guidelines, which often means spending your savings down first.
Your Savings
The source most people use. Paid care at home, in assisted living or in a facility comes out of income and savings.
Insurance
Long-term care insurance, or a life policy with care benefits, pays toward the cost so your savings can last longer.
Two Ways To Insure It
Traditional Long-Term Care Insurance Or A Hybrid Policy?
California’s Department of Insurance describes the trade-offs this way.
| Question | Traditional LTC InsuranceA Policy Just For Care | Hybrid Life And LTCLife Insurance With Care Benefits |
|---|---|---|
| How Benefits Pay | Pays or reimburses covered care at home, in assisted living or in a nursing facility, depending on the policy. | Advances part of the death benefit for care costs, and may extend benefits once that runs out. |
| If You Never Need Care | Use it or lose it. | Your family receives a death benefit instead. |
| Cash Value | None. | Builds cash value, like the whole or universal life policy it is built on. |
| Cost | Lower cost for a larger care benefit. | Generally more expensive than traditional coverage. |
| Inflation Protection | California requires the insurer to offer 5% compound inflation protection. | Generally offered on extended benefits, and generally left off the part paid from the death benefit. |
| Premiums | Guaranteed renewable, but the insurer can raise premiums with the Department’s approval. | Set by the life policy you buy. Ask what is guaranteed and what can change. |
A chronic illness rider on a life policy is a third option: similar to long-term care insurance but legally separate, and its benefits can be used for any purpose.
Policy Features
What To Check In Any Long-Term Care Policy.
California law sets several of these protections. Maartin walks through each one with you.
- Which settings it covers: care at home, assisted living, a nursing facility, or all three
- The elimination period you pay before benefits start, most often 0, 30, 90 or 100 days
- Inflation protection, which California requires insurers to offer at 5% compound
- Whether it is a California Partnership policy, which protects an equal amount of assets if you later need Medi-Cal
- Guaranteed renewable status, and the insurer’s rate history, which the Department of Insurance publishes
- Your 30-day free look to return the policy for a full refund
Working With Maartin
Planning For Care, Step By Step.
- 01
Decide Where You’d Want Care
At home, in assisted living or in a facility. The setting drives the cost and the coverage you need.
- 02
Price The Need
Start with what care costs where you live. See long-term care costs in California.
- 03
Compare The Options
Traditional, hybrid and Partnership policies side by side, with what each costs and what each pays. See life insurance for the hybrid side.
- 04
Apply While You Qualify
Insurers review your health when you apply, so the choice is widest while you are still able to qualify.
Questions about Medi-Cal and your estate go to your attorney, and Maartin works alongside them.
Questions
Common Questions
Does Medicare pay for long-term care?
Medicare and most health insurance, including Medigap, don’t pay for long-term care, the non-medical help with daily living that most care involves. Medicare may pay for skilled nursing facility care for a short time, up to 100 days, when you need daily skilled care.
What is a hybrid long-term care policy?
A whole or universal life policy that lets you use part of the death benefit for long-term care. If you never need care, your family receives the death benefit. The Department of Insurance notes these policies generally cost more than traditional long-term care insurance.
What is a California Partnership policy?
A long-term care policy approved under the California Partnership for Long-Term Care, a Department of Health Care Services program. Partnership policies include automatic inflation protection, and the benefits they pay protect an equal amount of your assets if you later apply for Medi-Cal.
Can my long-term care premiums go up?
Yes. Individual policies are guaranteed renewable, so the insurer can cancel only for unpaid premiums, but it can raise premiums with the Department of Insurance’s approval. The Department publishes a rate history guide each year so you can see how each insurer has priced its policies.
When should I look at long-term care coverage?
While you are healthy enough to qualify. The Department of Insurance suggests that if you feel you have a greater risk, you consider applying while you are still able to qualify. Planning also fits naturally into legacy planning.
Is there free help with long-term care insurance questions?
Yes. HICAP, the Health Insurance Counseling and Advocacy Program sponsored by the California Department of Aging, gives free counseling on long-term care insurance. Call 1-800-434-0222 to reach your local office.
Sources
- Personal resources pay for most long-term care
- Long-term care is help with daily living
- Almost 70% chance of needing care after 65
- HICAP phone number (Department of Aging)
- Department of Insurance publishes an LTC rate history guide annually
- Traditional LTCi: use it or lose it, no cash value, lower cost, 5% compound offer
Thinking About Care?
Plan For Care
While You Can.
Bring any policies you own and your questions, and see your options for paying for care side by side.
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