Long Term Care consists of a wide range of services provided to people who have either lost some or all of their ability to care for themselves due to an accident, illness or simple frailty as a result of the aging process.
Most people think that Long Term Care Insurance is something that only older people should consider. Christopher Reeves of former Superman fame, whose riding accident paralyzed him for life and Michael J. Fox who was recently diagnosed with Parkinson’s disease, have people of all ages realizing the need for long term care doesn’t just affect the elderly. The truth is a long-term care need could happen to any of us at anytime. In fact, 45% of people who are receiving care today are under the age of 65 (United States Senate Special Committee on Aging, 6/28/01). This makes Long-Term Care Insurance the type of protection that everyone, regardless of age, needs to carefully consider as a part of their overall financial planning.
People require long-term care services for a variety of reasons. Sometimes an automobile accident or a recreational accident such as skiing can cause the need for care. Other times, it can be caused by illnesses such as ALS (Lou Gehrig’s Disease), Parkinson’s, Multiple Sclerosis, stroke, heart attack, breast or prostate cancer. These illnesses even happen to young and middle-aged adults. Who do you know with these or other problems?
Some people believe because they have disability insurance they don’t need long-term care protection. However, disability insurance replaces your income to help you continue to meet your everyday bills and financial needs. It does not pay long-term care costs. If you require long-term care, your family still needs food, clothing and a roof over their heads. That’s what disability insurance is designed to provide.
The costs of long-term care services can be expensive. Expenses can rapidly erode your hard-earned assets and ultimately effect your standard of living and /or any inheritance you may have planned to leave your children, grandchildren or favorite charity. Many people underestimate the exorbitant cost of prolonged care for themselves or a loved one.
In California, the average cost of care at home or in a nursing home today is more than $73,000 per year (2), and is projected to double in 14 years to more than $146,000 per year and triple to more than $200,000 per year in 20 years (4). A January 20, 2003 Los Angeles Times article stated that costs are rising about 7% a year and projected long-term care costs could exceed $569 per day by 2023. In some areas of the country like New York City, nursing home costs already exceed $274,000 per year (2, 3).
Once you start depleting your principal savings to pay for care, you also begin to reduce the income generated from those savings. Long-term care insurance will help you protect your assets from depletion and the rising costs of long-term care and insure a greater level of independence and dignity should the need for care arise. The total premiums paid over ten or twenty years would be less than 6 months of long-term care in the future. Many people use a small portion of the interest they earn on their assets such as annuities, to fund their long-term care insurance premiums. This planning option, in most cases, allows you to protect your savings and investments with a small fraction of the interest earned. A long-term care insurance policy allows you to pay pennies today for a dollar's worth of care tomorrow.
If you are not financially prepared for the costs of long-term care, you should carefully consider a Long Term Care Policy, otherwise your care options are extremely limited. Do you have family close by who have the time to take care of you? Are they in a financial position to help? What would you do? Does the Medi-Cal/Welfare option appeal to you? Medi-Cal does not cover assisted living facilities or home health care. Medi-Cal only covers you in a Medi-Cal approved nursing home where you lose virtually all control over your care and where that care is provided. A Long-Term Care policy will provide you with peace of mind, financial and emotional independence, choices and the freedom to be involved with the decisions that effect you!
