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Long-Term Care Insurance: Options Abound, As Do Complications

Long-term care insurance has become a critical topic as health care costs continue to rise. 

The U.S. Department of Health and Human Services estimates the average annual cost of U.S. nursing home care to be $74,820. But in California, the Department of Health Care Services estimates that cost to be $91,250. 

Recently, public debate about long-term care insurance has intensified, with news outlets including the Los Angeles Times, CBS and USA Today and organizations such as the American Association of Retired People (AARP) and the SCAN Foundation weighing in on the subject.

Much of the debate centers on whether consumers can adequately understand the opportunities and risks that long-term care insurance offers.

One often-cited issue is inflation. Many long-term care insurance policies offer a fixed, daily benefit amount (often between $50 and $300). On average, a day of care in a California nursing home costs $250, according to the Department of Health Care Services. But, as AARP warns, the rising costs of health care may cause daily costs to rise significantly as well.

If that happens, the contractual policy benefits would cover a lower percentage of the cost of care in ten or twenty years, when the policy would be most needed. 

AARP also notes that some insurers offer inflation protection at an extra cost.

Many states, including California, offer a state-sponsored partnership program that, in some situations, allows consumers to pay into a long-term care insurance plan that will provide later benefits without affecting eligibility for Medicaid (in California, Medi-Cal).

California Health Advocates, a non-profit advocacy group, recommends that anyone planning to purchase long-term care insurance consult with an accountant or elder law attorney before doing so.

For information and advice about planning – with long-term care insurance or by other means – contact Gilfix & La Poll Associates, LLP.