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Long-Term Care Planning: Never Too Soon

The senior citizen population of the U.S. is expected to reach some 71.5 million by 2030. Fortunately, the "graying" U.S. population is demonstrating a newly heightened awareness of long-term care planning. Long-term care has long been one of the ignored areas of estate planning. People tend to dislike thinking about getting older and needing a plan in place if they become infirm. So they don't. Then, the burden of their care — financial, emotional and physical — lands on their children and grandchildren. Too often, their families place them in a care facility which they might not have selected, had they been able to choose.

Long-term care planning is also important for older adults with disabilities; their numbers will also increase to roughly 21 million by 2040. By 2050, it is estimated that there will be at least 25 million people in the U.S. who are using long-term care, either at home or in an assisted living or skilled nursing facility. How will those 25 million people pay for their care?

Many of them hope to rely on Medicare or Medi-Cal, but Medicare only pays for up to 100 days of care in a skilled nursing facility after three days in a hospital, and only if that skilled care has been deemed necessary. After the first 20 days, Medicare also has a co-pay which must be met.

Simply stated, Medicare is not a meaningful source of assistance when long-term care services are needed.

The average cost of a nursing home stay in California is $250 per day. Assisted living facilities in California cost an average of $2,900 per month. Adult day services typically run at least $80 a day. Hourly home care costs run between $15 and $30 for a home health aide, who assists with activities of daily living (bathing, dressing, etc.), but is not a registered medical professional and cannot meet more than basic health care needs.

If a more skilled home care provider is needed, the cost is typically between $20 and $40 per hour.

Medicaid, known as Medi-Cal in California, can pay the cost of skilled nursing care, but only after careful planning steps are taken and eligibility is achieved.

Good long-term care sidesteps complete reliance on federal support. A person's plans may include long-term care insurance, which covers care typically not covered by "regular" health insurance, Medicaid or Medi-Cal. Long-term care insurance helps cover care for someone who cannot perform at least some of the activities of daily living — bathing, dressing, restroom use, eating and moving from chair to bed and back again.

If you are considering a long-term care policy, know that not all insurance agents are aware that you will need a policy that covers both in-home and assisted living care for at least three years (and longer, if possible).

There are multiple long-term care policy options, including policies that provide life insurance benefits if long-term care coverage is never needed. Consult with your estate planning attorney to determine what policy best fits your estate needs for the future.