You may think you are too young yet to be seriously considering the likelihood that you will need long-term care at some point down the road. However, you may want to make a point of thinking about the possibility to ensure that you can afford to pay for it when the time comes. Unless you have the ability to cover long-term care (LTC) costs out of pocket you will probably need to rely on a long-term care insurance policy or Medi-Cal. In this blog, we will explain how long-term care insurance works and why you might need to plan ahead to qualify for Medi-Cal.
Why Should I Consider Purchasing Long-Term Care Insurance?
The reason you might wish to consider purchasing long-term care insurance begins with the probability that you will need care and the high cost of that care. When you enter your retirement years (at age 65) some say you stand at least a 50 percent chance of eventually needing some type of long-term care. Each year thereafter those odds increase. Keep in mind that if you are married, your spouse shares the same odds of needing LTC, thereby increasing the likelihood that you will incur LTC expenses at some point. In California, the average cost of a year in LTC is over $100,000 for 2019. In the Sacramento area, the cost was closet to $150,000 for a private room in 2018. As a senior over 65, you will probably rely on Medicare to pay for most of your health care expenses; however, Medicare will not cover expenses related to LTC. If you retain private health insurance, the odds are very high that it will also exclude expenses related to LTC. Unless you can comfortably pay out of pocket for LTC, that leaves purchasing an LTC insurance policy or relying on Medi-Cal as your options for covering LTC expenses.
What Is Long-Term Care Insurance?
Long-term care insurance, as the name implies, is a separate insurance policy that specifically covers costs associated with LTC. Like other types of insurance, an LTC policy can be complicated to understand, and no two policies are exactly the same. It is imperative that you are clear about the benefits offered by a policy before you commit to purchasing it. To begin with, you need to be clear on what the policy covers. For example, an LTC insurance policy may cover any, or all, of the following:
- Nursing home care
- Home health care
- Respite care
- Hospice care
- Personal care in your home
- Services in assisted living facilities
- Services in adult day care centers
- Services in other community facilities
You need to be equally clear on the policy’s limitations and exclusions as every LTC insurance policy will have some. Although not universally true, most LTC policies, for example, will not cover:
- A mental or nervous disorder or disease, other than Alzheimer’s disease or other dementia.
- Alcohol or drug addiction.
- Illness or injury caused by an act of war.
- Treatment in a government facility or that the government has already paid for.
- Attempted suicide or intentionally self-inflicted injuries.
- Care or services outside of the United States.
Other concerns with an LTC insurance policy include things such as an initial waiting period, maximum benefits, termination, and cost. Many LTC policies will not cover expenses for an initial period of that could be as short as a week or as long as six months (or longer), meaning you would be responsible for expenses during that waiting period. Also be on the lookout for yearly or policy maximums that would obligate you to pay any costs that exceed that maximum. Some LTC policies also terminate at a certain age (90 or 95 is common) which could be problematic if you live to 100 – or longer. Finally, make sure you have a firm grasp of the overall cost of an LTC policy. Your premiums may be less if you purchase a policy when you are relatively young; however, if you have to pay that premium for 20 years or more before using the coverage you will have paid a considerable amount in premiums by then – and most policies will cancel if you miss a payment.
Is Medi-Cal Planninng a Better Option?
Paying for an LTC insurance policy can be prohibitive for many people, particularly if they wait until they are older and the premiums are high. What many people do not realize is that while Medicare won’t cover LTC expenses, Medi-Cal will. Medi-Cal (California’s Medicaid program) eligibility can be problematic though if you failed to plan ahead. If you believe there is even a possibility that you will need to rely on Medi-Cal in the future, including a Medicaid planning component in your estate plan is imperative to ensure that your assets are protected and that you are eligible for Medi-Cal when the time comes that you need long-term care.
Contact Roseville Medi-Cal Attorneys
Please download our FREE estate planning checklist. If you have additional questions about long-term care insurance, contact us at the Northern California Center for Estate Planning & Elder Law today by calling (916)-437-3500 or by filling out our online contact form.
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