Many people today are familiar with the term “long-term care” because they or someone they know is caring for an elderly relative. Others have read about it or seen ads for insurance that pays for this kind of care. As people live into their 80s and 90s, the need for long-term care services has been increasing. Today, living to be 100 is no longer unusual. Many baby boomers know this very well because they’re often juggling the care of an older family member along with their own employment and the needs of their family; thus the label the sandwich generation. In fact, many baby boomer women can expect to spend almost as many years providing this kind of care as they do raising a child.
When Long-Term Care is Needed
Long-term care (LTC) generally involves helping a person do ordinary tasks, like bathing, dressing, and getting in and out of bed. It also includes supervising someone with a dementia like Alzheimer’s Disease. In the language of LTC, there are usually six activities of daily living or “ADLs” that are used to determine when someone needs this kind of care. These ADLs are bathing, dressing, transferring, continence, toileting, and eating. Needed assistance with these tasks can be very minimal, such as helping someone with balance problems to get into and out of a tub or shower, or doing the task for a person who can’t do it for themselves. People are generally said to be functionally impaired when they can’t do two of these six ADLs.
Long-Term Care Insurance (LTCI)
Long-term care insurance is a specialized type of insurance designed to pay for care when a person’s ability to take care of themselves begins to decline. California has some of the strictest standards in the country for this type of insurance. A comprehensive long-term care insurance policy will cover care at home, in an assisted living facility, or in a nursing home For more information about these products, visit the Long-Term Care section of our website and visit the California Department of Insurance website.
The Cost of Long-Term Care
Long-term care is expensive, often costing $80,000 a year or more for someone who needs 24-hour care in a nursing home, depending on where you live. Care at home is generally less expensive than care in a nursing home, but the cost depends on how much care is needed, and whether family members are able to provide some of it. In general, paid care at home for eight hours a day costs about $50,000 a year. Full-time care at home, however, is the most expensive care because it requires three shifts of caregivers in each 24-hour period. Costs for assisted living falls somewhere between these costs, depending on where you live and how much care is being provided. Read Taking Care of Tomorrow, a good primer about long-term care from the California Department of Aging.
Some companies sell life insurance or an annuity that also has benefits for long-term care. Those are very complicated and expensive financial products that should be reviewed by a trusted financial advisor before you buy one. You need to know all of the tax implications and other details before buying one.
Before buying any long-term care insurance you need to know whether it is a suitable product for you, which is a very individual decision. You will need to choose a package of benefits that is appropriate for your financial needs. For instance, if you rent, have an annual income of less than $30,000, and few assets, the benefits you could afford to buy, if any, would be substantially less than someone with a much higher income, a house that was paid for, and assets of $1 million or more. The Health Insurance Counseling and Advocacy Program (HICAP) is a free, state funded program with specially trained counselors that provide one-on-one appointments where you can get more information and individual assistance. HICAP counselors do not sell, recommend, or endorse any insurance product, agent, or insurance company. There is a HICAP in every county in California. You can reach your local HICAP at 800-434-0222.
If you decide to buy this type of insurance, you must be able to afford the premiums now and in the future, for the benefits you select. People who bought these policies many years ago have had to pay very large increases in their annual premiums because insurance companies failed to accurately estimate their costs for these benefits. Some people are now paying 85% more than they originally agreed to pay. There is no limit or “cap” on how much premiums can increase in the future. Premiums for policies sold today are much more expensive than in the past, and companies use lab tests and physical and cognitive exams to screen out applicants that might need this kind of care.
If you already have long-term care insurance and have been notified of a premium increase, a HICAP counselor can help you understand your options. You should never drop a long-term care insurance policy without clearly understanding all of the options that can lower the amount of your increased premium.
Long-Term Care: A National Issue
Financing long-term care is a difficult national issue. Many people are unable to pay the extraordinary costs when they occur, and yet insurance to pay for this care is expensive and out of the reach of many people. Women in particular are less likely to be able to pay for long-term care. Women generally have less income and assets, and are less likely to have adequate pension benefits when they retire. Charging women higher premiums, as some companies have begun to do because women use more long-term care, will make this type of insurance even more inaccessible.
Politicians and policymakers need to look at the whole spectrum of long-term care in a more holistic and coordinated fashion than they’ve done in the past. That will mean pulling all of the private and public resources together to find an integrated solution that will not impoverish families trying to care for their loved ones in the last years of their life, and will allow our elders to live out those years with dignity and respect.