WHAT IS LTC?
LTC coverage pays for extended assistance with basic Activities of Daily Living (ADL), such as dressing, bathing, or eating due to a chronic disease, injury or frailty of old age. LTC plans can help pay for extended care at home, in an assisted living facility, adult day-care center, or nursing home. For an informative “Shopper’s Guide to LTC Insurance,” see
www.naic.org/1pubcat/consumer.htm
AND an overview of LTC information from AARP:
www.aarp.org/confacts/health/privltc.html
AND from the Health Insur. Assoc. of America:
www.hiaa.org/cons/guideltc.html
DO I NEED LTC?
Estimates of LTC need vary considerably. As a rule of thumb, at any given time, about 5% of the elderly are in nursing homes. The probability is about 50% that people over 65 will need some kind of LTC (higher for those over 85). Of those who need it, about 20% need nursing home care, 80% need some home or assisted living care. Typically, people with assets under $100K don’t need LTC insurance because Medicaid will cover about half of all nursing home care and once someone has spent down his/her assets, Medicaid may cover more. People with assets over $2M can cover their own costs if they need care. People in the middle range are the ones who should consider the advantages and disadvantages of LTC insurance. Some are surprised to find that their own health insurance generally does not cover custodial (LTC) care, nor does Medicare (Medicare may cover a small fraction of the costs of certain kinds of skilled care). One’s current health may be a factor to consider when evaluating future healthcare needs. A “5 Minute Needs Analysis” gives a quick estimate, and also generates rates and feature comparisons for three large commercial LTC insurance carriers:
www.longtermcarequote.com/form_quote_ltcq.html
To follow a series of tables that show some of the issues involved in
assessing LTC costs and benefits, see
www.ucfaculty.org/current_issues/LTC/ltc_tables.htm
WHAT IS THE COST OF NURSING HOME CARE?
One year in CA might cost between $156 and $160 per day ($50-60K/year). The average nursing home stay is roughly 2½ years. Rounding up, $180,000 is a generous estimate of total LTC actual costs in CA for 3 years. Home care might last longer but is usually less expensive than nursing home care. Future cost projections should include an inflation factor of at least 5% per year (in CA some estimate 9%). For an up-to-date estimate of the costs of care per state, fill in the blanks for a “5 minute LTC Needs Analysis”:
www.longtermcarequote.com/form_quote_ltcq.html
HOW MUCH DOES LTC COVERAGE COST?
Some people want to protect themselves for the full (100%) cost of LTC, while others opt for less insurance, ranging from 60% to 90%. LTC premiums increase with duration of coverage from 3 years to 5 years to lifetime. For a comparison of some LTC premiums for PERS and TIAA-CREF, see
www.ucfaculty.org/current_issues/LTC/ltc_tables.htm
AND for more information on premiums, etc., see
www.tiaa-cref.org/ltc/ltc_quote.html
AND
www.calpers.ca.gov/longtermcare/apply/rates/default.asp
For an estimate of the premium ranges by age group for LTC insurance
coverage that compares minimal coverage with generous coverage, see
www.pianomusic.org/premranges.html
For annual premiums on selected commercial carriers, see
www.kiplinger.com/retreport/archives/1999/February/premiums.htm
Some carriers such as PERS and TIAA-CREF offer discounts on two policies when spouses enroll at the same time.
SHOULD I SELF INSURE?
Many people decide to self-insure for either part or all LTC costs. Some set aside an LTC savings account or adjust their overall investing level. Others choose the highest level of coverage, pay the lower premium for optional inflation, and self-insure (invest) the difference between this premium and the flat 5% inflation premium in a conservative fund. By plugging in numbers from a spreadsheet program (Excel), you can estimate LTC costs and personal savings. Learn how at
www.ucfaculty.org/current_issues/LTC/ltc_worksheet.htm
UC has updated its benefits website, and it is now easy to estimate your UCRP pension and other UC assets. Visit www.ucop.edu/bencom, select the “Your Benefits Summary,”insert your SS and UC PIN numbers, and access your personal information. You can also estimate your salary at retirement. If your yearly pension plus other assets won’t cover the future cost of LTC plus your other obligations in the year in which you retire, then you might consider very seriously the advantages of LTC.
WHEN CAN I ENROLL?
Between April 1 and June 30, 2001, all public employees, including UC employees and other non-CalPERS members, retirees, their spouses, parents, and parents-in-law can apply for PERS LTC coverage. Application kits are available by phone or online. Call 1-800-338-2244. Order the PERS kit today (it takes time for delivery), then study LTC plans, shop around, compare rates, features, tax implications, access requirements, restrictions.
www.calpers.ca.gov/longtermcare/apply/
DISCLAIMER: The DFA has tried to present accurate information, but we are not recommending any one plan over another or the purchase of LTC. We urge that anyone considering LTC not rely on the accuracy of this data, but confirm, check, and recheck all rates, restrictions, and numbers–including from other LTC insurers. Also, please consult your own financial advisor.