Valerie K. deMartino
4326 Atlantic Avenue
Long Beach, CA  90807

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"Long Term Care Planning"
by Valerie K. deMartino

No one wants to end up in a nursing home or long-term care facility. Even worse, is having the estate you worked many years to accumulate bled dry by the cost of a nursing home or other long-term care arrangement. You may never need long-term care. However, studies have shown that about 19 percent of Americans over age 65 have some degree of chronic physical impairment. Among those aged 85 or older, 55% require long-term care. Most people are cared for at home. A study by the U.S. Department of Health and Human Services indicates that people over age 65 face at least a 40% lifetime risk of entering a nursing home. About 10% will stay there five years or longer. The population over age 85 is now the fastest-growing segment. The odds of entering a nursing home, and staying for longer periods, increase with age. Because women generally outlive men by several years, they face a 50 percent greater likelihood than men of entering a nursing home after age 65.
In light of the high risk of needing nursing home care, everyone should consider the cost of long-term care in their future financial planning. Medicare may not cover your entire stay in a nursing home. Medicare only pays if you require 'skilled' nursing and go into a nursing home within 30 days after being discharged from a hospital after hospitalization lasting 3 or more days. If you meet those requirements, Medicare pays for the first 20 days and requires a co-payment of $114 a day for days 20-100. After the 100th day, you are on your own until you require another 3+ day hospital stay, which starts the 100-day cycle again.

As you age, it is more likely you will require custodial care rather than skilled nursing. Custodial care is not covered by Medicare or health insurance. The cost of in home care is very high. The cost of assisted living depends on the level of care. Many people think they can just transfer all of their assets to their children and qualify for Medi-Cal. Without discussing the many other reasons this is not a good idea, Medi-Cal will not pay for assisted living, in home care, or custodial care. Thus, you need to plan ahead to be sure you either have long term care insurance or sufficient assets and/or income to pay for your care in the event of your disability, including Alzheimer's or senile dementia. It's impossible to predict what kind of care you might need in the future, or know exactly what the costs will be. If you do not have sufficient assets or income to cover the potential cost of long-term care, whether in a facility or at home, consider long term care insurance. Long-term care insurance covers the services that are required when a person cannot perform certain "activities of daily living" or has senile dementia or Alzheimer's disease. Today's long term care insurance policies cover skilled, intermediate and custodial care in state-licensed nursing homes, as well as home care. Many policies also cover assisted living, adult day care and other care in the community, alternate care and respite care for the caregiver.

The cost of a long-term care insurance policy is based on the type and amount of services you choose to have covered, how old you are when you buy the policy and any optional benefits you choose, such as Inflation Protection. Premiums generally remain the same each year. That means that the younger you are when you first buy a policy, the lower your annual premium will be. There are no policies that guarantee to cover all expenses fully.

Before you begin shopping, you should find out how much nursing home or home health care costs in your area today so you know what amount of coverage you should buy. Look for a policy that includes:

  • At least one year of nursing home or home health care coverage in your locality. Benefits should not be limited primarily to skilled care.
  • Coverage for Alzheimer's Disease
  • inflation protection
  • A guarantee that the policy cannot be canceled because of your age or health.
  • A free look period (the right to return the policy within 30 days after you have purchased it and to receive a premium refund).
  • No requirement that you first be hospitalized or receive skill before you qualify to receive home health care.

Insurance policies are legal contracts. Read and compare the policies you are considering before you buy one and make sure you understand all of the provisions. Reading marketing or sales literature is no substitute for reading the actual policy. Discuss the policies you are considering with your advisors. Ask for the insurance company's financial rating and an outline of coverage so you can easily compare. Good agents and good insurance companies want you to know what you are buying. Compare policies in the following areas:

1. What services are covered?
2. How much does the policy pay per day for nursing home care? For home health care? For an assisted living facility? For adult daycare? For respite care? Other?
3. How long will benefits last in a nursing home? At home? In an assisted living facility? Other?
4. Does the policy have a maximum lifetime benefit? If so, what is it for nursing home care? For home health care? For an assisted living facility? Other?
5. Does the policy have a maximum length of coverage for each period of confinement? If so, what is it for nursing home care? For home health care? For an assisted living facility?
6. How long must you wait before preexisting conditions are covered?
7. How many days must I wait before benefits begin for nursing home care? For home health care? For an assisted living facility? Other?
8. Are Alzheimer's Disease and other organic mental and nervous disorders covered?
9. Does this policy require: An assessment of activities of daily living? An assessment of cognitive impairment? Physician certification of need? A prior hospital stay for nursing home care? Home health care? A prior nursing home stay for home health care coverage? Other?
10. Is the policy guaranteed renewable?
11. What is the age range for enrollment?
12. Is there a waiver-of-premium provision for nursing home care? For home health care?
13. How long must I be confined before premiums are waived?
14. Does the policy have a non-forfeiture benefit?
15. Does the policy offer an inflation adjustment feature? If so, what is the rate of increase? How often is it applied? For how long? Is there an additional cost?
16. What does the policy cost?
  • With inflation feature
  • Without inflation feature
  • With non-forfeiture feature
  • Without non-forfeiture feature
17. Is there a 30-day free look?

There are policies that cover both husband and wife. There are also policies where you can get your money back if you do not use it, but this adds as much as 50% to the premium.

If you are self-employed, the premiums may be tax deductible!

LEGAL NOTICE: This site is designed to acquaint you with Valerie deMartino and the services she can offer. It is NOT intended to provide legal advise or create an attorney client relationship. The information on this site is intended for education and discussion only. You should consult a professional about your particular facts, circumstances and goals. Ms. deMartino is licensed to practice law only in the State of California and cannot advise you on the laws of other states. This website is not intended to be advertising and is not intended to solicit anyone desiring representation based upon viewing this website in a state or other jurisdiction where it does not comply with local laws and ethical rules.