Cost of Long Term Care


A lot of people incorrectly assume that health insurance and Medicare will cover long term care. They cover medically necessary care for up to 100 days, or until you stop improving or stablize. After that, you’re on your own.

The majority of Americans over 60 do not have long term care insurance yet 70% will need care. So, why do people not buy insurance?

Most will say the cost of the policy. An average policy, depending on age, health and benefits chosen, will cost $1,000-$3,000 per year per person.

But what about the fact that the same people who say they will “self-insure” for long term care will never “self-insure” a parking meter… they always put money in the meter, even though they could easily afford and “self-insure” the parking fine.

We make decisions based mostly on emotion. That’s what causes people to buy stocks when they are high and sell when it crashes, the opposite of what seasoned investors do.

What if you “self-insure” for long term care, how much will it cost you? The national average for nursing home care is $89,000/year with some areas over $140,000/year. Home care and assisted living average $50,000/year. See how much care cost in your state: download the Cost of Care brochure.

For every $1,000 of monthly retirement income you want to generate from your own savings, you will need about $230,000 in assets, according to the Schwab Center for Investment Research. For example, if you want only $3,000 a month, or $36,000 a year, you would need savings of $690,000. That’s a conservative estimate, assuming that you earn 5.2% on your investments and live off the earnings without dipping into the principal.

If you cannot afford a long term care insurance policy, how are you going to afford paying out of pocket? The other option is spending all your cash for your care. This includes anything of cash value: savings, investments like stocks, bonds, life insurance, annuities. Medicaid allows you can keep only $2,000.

There are 30 states with filial laws that allow the state to make your children repay Medicaid for your care expenses, although this is rarely done. Fifteen years ago the #1 reason people bought long term care insurance was they did not want to be a burden on their family. Today, the #1 reason is people do not want to outlive their money (and end up on Medicaid-Welfare Health Care).

Some people will buy long term care insurance for asset protection. Most states have a Partnership program that will protect assets from Medicaid if you own a Partnership long term care insurance policy.

You have five options to pay for long term care:

1. Self-insure.

2. Long term care insurance and Partnership.

3. Life insurance with long term care rider.

4. Annuity with long term care rider.

5. Medicaid.

The life insurance and annuity do not qualify for the Partnership (neither do group LTC policies). The life/LTC or annuity/LTC are often bought because: the person’s health will not qualify for traditional LTC insurance, or the person has too many cash assets and they’d never spend down to qualify for Medicaid. An old life policy or old annuity can be converted to one with long term care benefits without paying capital gains.

You can continue down the same road, uninsured, until either a diagnosis or a serious change of health, like a stroke, will disqualify you from insuring. Then you will only qualify for state assistance. At that point you would have to have used, sold or given away your assets 5 years before applying for Medicaid. Who has the ability to see 5 years into the future?

*  The best age to insure: the age your health will still insure you.
*  The best benefits to get: enough to cover what you cannot afford to pay out of pocket.

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30 States Have Laws Requiring Children to Repay Medicaid for Parents Care



Filial responsibility laws date back to 17th century English law requiring children to financially support their parents when they couldn’t support themselves.

Because of age, or maybe an illness like Alzheimer’s, millions of Americans are no longer able to take care of themselves.

Spending one’s own money for care can wipe out a life’s savings in a short time. It could be someone in your family.

What happens when the money runs out? Out of love, you may feel a moral obligation to help. In some states, however, you may be legally responsible for paying your parents’ long-term care.

In these days of economic uncertainty it is essential that people have a sense of security in terms of their future. Long term care insurance is a way to preserve that.

Like car insurance, the prices for long term care insurance will vary by company. The premium will depend on your age, health and the benefits you want.
The LTC Partnership Program provides asset protection in most states.

Since care cost differs by type and location it is important to get the right information to make an informed decision.

Other than transferring your assets to an irrevocable trust five years before you apply for Medicaid, the only way to protect your estate from Medicaid is with a Partnership long term care policy.


Be Prepared: Get Long Term Care Insurance Quotes





Dying at Home

Most people (70%) want to die at home, in a familiar place surrounded by loved ones. However, only about 25% do. Nearly 50% of Americans die in a hospital, and another 20% die in a nursing home or long-term care facility.

The trend is for more people to die at home, with a 29.5 percent increase from 2000 to 2014, according to the Centers for Disease Control and Prevention. During the same time period, the percentage of deaths in hospitals, nursing homes and long-term care facilities has dropped.

Seven out of ten Americans die from chronic disease, and more than 90 million Americans are living with at least one chronic disease. The Centers for Disease Control (2007) listed the ten leading causes of death in America (in order):
heart disease
chronic lower respiratory disease
7. diabetes
kidney disease and sepsis.

Almost a third of Americans see ten or more physicians in the last six months of their life. And almost 30% of Medicare’s budget each year is spent on patients who are in the last 12 months of their lives.

According to about 70% of Americans over age 65 will require long-term care. If a person has an extended illness requiring long-term care, long-term care insurance will help cover those expenses whether in a hospital or at home. Studies show that those with long-term care insurance stay at home longer because the insurance provides more money for care. This includes extra money for home modifications like a wheel-chair ramp, a medical alert system and a stair lift.


It is often the lack of money that prevents people from staying at home when they need care. Who pays for long-term care? In some cases they will spend all their savings and now are forced to rely on Medicaid (welfare health care). With a Partnership asset-protection insurance policy you will be exempt from the Medicaid spend-down requirement, the exemption is based on the total benefits your policy has paid out for care.

More than 80% of patients with chronic diseases say they want to avoid being in a hospital or intensive care unit when they are dying. While dying at home is usually preferred by the patient, it can be difficult for the caregiver. Hospice services can help.

Hospice care is for those in the last six months of their lives. More than 88% of hospice patients are Medicare beneficiaries.

Traditionally, for a patient to qualify for Medicare-supported hospice, a doctor must certify that the patient has: a home, a diagnosis of six months or less to live, a full-time caregiver, and a willingness to give up curative care and receive only palliative care.

In 2016 the Medicare Care Choices Model began offering some patients “concurrent care”: the choice of continuing curative care while starting palliative care and hospice care. An evaluation of concurrent hospice in non-elderly patients showed this plan improves quality of life and reduces costs.

The Medicare hospice benefit emphasizes home care, with almost 60% of patients receiving their care at home as of 2014. Medicare coverage is limited, additional care would be paid for out-of-pocket. Do you really want to spend-down your hard-earned savings and investments leaving open the option that Medicaid will require your estate to repay Medicaid for your care costs? There are 30 states with a filial responsibility law that could require your family to reimburse Medicaid.

Home care is much less expensive. Inpatient hospice services are used when the patient’s pain and symptoms must be closely monitored in order to be controlled, when medical intervention is required to control pain or symptoms, or when the family needs a rest from the stress of care giving.

A hospice team arranges for doctors, nursing care, medical equipment like wheelchairs and walkers, medical supplies, prescription drugs, hospice aide and homemaker services, physical and occupational therapy, speech-language pathology services, social workers, dietary counseling, grief and loss counseling for the patient and family, short-term inpatient care, and short-term respite care.

After evaluation by a doctor, a patient can enroll in hospice care for two 90-day benefit periods, followed by an unlimited number of 60-day benefit extensions. A patient can decide to stop hospice care at any time.

A recently proposed bill, The Patient Choice and Quality Care Act of 2017 (H.R. 2797), aims to give patients and families living with advanced and life-limiting illnesses the information and services they need.

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California Partnership Plan: Changes Needed

After age 65, 70% of people will need long term care at some point. The costs are potentially staggering. Financial advisors recommend long term care insurance to protect oneself against the excessive costs of nursing home care or home services.

Medicare pays for doctors, hospital costs, drugs, and some other health care needs, but not for long term care –

Long term care is the care needed by someone who has difficulty with two or more activities of daily living (ADLs) over a period of 90 days or more. Over 12 million people in the United States need long term care now, with almost half of them under 65 years old.

One of the incentives for people to get long term care insurance is state Partnership plans, which allow insureds to protect their assets if they use up their insurance and need to apply for Medicaid (called Medi-Cal in California).

In the 1990s, California, New York, Indiana, and Connecticut were pioneer states in creating Partnership programs, where insurance payouts for long term care can be deducted from the insured’s assets if the plan runs out and Medicaid is needed. Partnership programs save states money by encouraging people to buy long term care insurance.

To encourage more Americans to plan for the risk of needing long term care Congress passed the Deficit Reduction Act of 2005 (DRA). The new law permits the creation of beneficial public/private partnerships; a joint-effort between states and insurance companies who offer Qualified Long Term Care Insurance Partnership Policies. States would then amended their Mediciad law(s) to allow for the Partnership.

Insurance companies have agreed to offer high-quality, affordable long term care insurance protection that meets the stringent requirements set by the federal legislation and states.

Not all policies sold in your state are Partnership qualified. The most common non-Partnership policies are sold through employers, unions, associations – these are group policies and only individual policies are Partnership. Not all insurance companies policies qualify for Partnership in every state, check with us about your state or a specific company.

Partnership policies not only offer benefits to pay for long-term care costs. They offer the special additional benefit of Asset Protection should you ever need to apply for Medicaid assistance.

Now most states have Partnership programs, but California’s program needs to be updated.

To qualify for the state Partnership, California requires a long term care insurance policy to have a minimum of  $190* a day in coverage and a 5% compound interest inflation protection for someone under age 70. But these requirements may make the premiums out of reach for average Californians.

In  Partnership states created after 2005,  inflation protection is the only requirement for a plan to qualify for Partnership and 3% compound is about half the cost of 5% compound, making a comparable California Partnership policy about twice the cost.

The requirements can change from year to year. But another problem is that California long term care insurance Partnership policies do not have reciprocity; that is, if the insured moves to another state, although the insurance policy moves with the insured, the Partnership asset protection no longer applies. You would have to move back to California to use the Partnership asset protection part of the policy.

All the other Partnership states have reciprocity – even the other Partnership pioneer states New York, Indiana, and Connecticut.

California spends over $14 billion annually on long term care through its Medicaid program (called Medi-Cal). The only state that spends more is New York at over $15 billion. Total long term care Medicaid spending for the United States is over $118 billion.

In 2005, about 1.5 million Californians used long term care services. That number is expected to skyrocket: 6.5 million Californians will be 65 and older by 2025. Nearly a million will be 85 and older, and many of them will need long term care.

It is obviously in the interest of states to encourage people to get long term care insurance. However, the policies have to be affordable or people will not insure. Also, since people move around, reciprocity between states is essential. California needs to make these changes to its Partnership program so it can include more people.

To find out more about Partnership plans nationwide, click here.

*2016 minimum daily requirement

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5 things state lawmakers want to do about long-term care insurance

Legislators are wrestling with purchasing incentives, benefits options and rate stability

State lawmakers have a huge stake in improving private long-term care planning.

genworth nursing cost 2016States now spend about $100 billion per year, or about 6 percent of their $1.7 trillion in annual revenue, on Medicaid nursing home benefits and other Medicaid long-term care benefits for the poor, and for residents who have used “Medicaid planning” to protect their assets.

The share of state revenue going to fund Medicaid long-term care benefits could rise sharply starting around 2031, when the baby boomers begin to flow into the 85-and-older age category.

Read Rest of Story Here

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Medicaid cuts may cause nursing home closures

A proposed 25 percent cut in Medicaid rates would close 93 percent of nursing homes in Oklahoma, according to the Oklahoma Association of Health Care Providers (OAHCP). The proposed cut may eliminate 16,900 jobs and force 16,800 patients to move. Many of the state’s doctors could be forced to drop out of the Medicaid program because of inadequate reimbursement where they would be operating at a loss. Cutting Medicaid payments will also affect pharmacies, dentists, medical equipment companies, and home health services.

The legislature decides how much funding will go to the Oklahoma Health Care Authority. Patients, staff and families are writing letters to members of the state legislature, encouraging them to balance the budget without making these cuts. Oklahoma has a $1.3 billion budget shortfall

According to the Oklahoma Association of Health Care Providers, there will be some closures even without the rate cut. The nursing home industry is underfunded, and some facilities already lose money on Medicaid recipients. Part of the problem, too, is the number of people on the state’s Medicaid rolls. Most states cut off enrollment for people who make 133 percent above the poverty line. Because Oklahoma accepted federal stimulus money in 2010, the state must allow enrollment in Medicaid up to about 185 percent above the poverty line.

At the end of 2015, nearly 72 million people nationally were on Medicaid. Medicaid expansion is covered by the federal government, but states will pay an increasing percentage of the cost over the next few years.

The average daily rate for nursing home care ranges from $94 to $550 a day. This chart shows the costs by state.

Funding options include long term care insurance, self-insuring, life insurance or annuities with a long term care rider, and Medicaid. This chart shows a comparison of benefits.


Most states have a long term care insurance Medicaid asset protection program. Find out more about Partnership here. Why Partnership? Read this: Son Hit With Aging Parent’s $93K Nursing Home Bill





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Alzheimer’s costs soar

A new report from the Alzheimer’s Association this week says that government spending for Alzheimer’s patients this year will reach $236 billion, $10 billion over projections. These costs include hospital and nursing home stays plus hospice care. Alzheimer’s is currently the sixth leading cause of death in America.

Over two-thirds of those costs will be paid by Medicare and Medicaid. One out of every five Medicare dollars is spent on Alzheimer’s disease. However, Medicare only pays for acute health care costs. Alzheimer’s patients often need long term care to help them with activities of daily living such as eating and bathing. People who are unable to afford long term care can sometimes qualify for help from Medicaid, after spending down their savings. Those who have long term care insurance have a better chance at getting quality care, and state Partnership plans protect one’s assets.


It is estimated that family spending for Alzheimer’s patients averages $5,000 a year. However, that figure doesn’t account for time spent, as family members often provide a lot of the care.

By 2050, the number of people age 65 and older with Alzheimer’s disease may nearly triple, and costs could rise to over $1 trillion. The rapid rise in such costs forces policy makers to choose between spending for the elderly or for the needs of young people.

The costs alone give us reason to support research on Alzheimer’s and dementia. We all hope for medical breakthroughs.

However, it looks like it will be a long time before we have a cure for Alzheimer’s.

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