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The Facts about Long-Term Care

4/19/2016

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According to a recent study (Genworth, 2015), seventy percent of all people over the age of 65 will end up spending time in a skilled nursing home.  Currently, the median cost of skilled nursing home care in the Inland Empire is $285 per day, with the average stay being between 2 and 3 years, unless the reason is cognitive dysfunction (e.g. Alzheimer’s disease). Many Alzheimer’s patients spend as many as 8 to 10 years in a skilled nursing facility.  An average stay today would eat up a patient’s estate in the neighborhood of $100,000 to $300,000. And this cost has been going up at the rate of about 4% per year.

Many people think that Medicare will pay for long term care, and they will to a very limited extent under certain circumstances, currently for up to 100 days (with a copay after 20 days in most plans). After Medicare is exhausted, Medical may pick up the cost, but in most cases requires the patient to “spend down’ his or her estate (assets) to less than $2,000.

There are several solutions to funding the long term care problem. First, a person can self-fund the cost, in many cases wiping out a patient’s (couple’s) nest egg that would go to a person’s children if it were not for the high cost of a nursing home.
Second, there is a traditional Long Term Care Insurance policy. These policies are medically underwritten, and many times cost in excess of $300/month for a healthy 50 year old. The premiums may also increase over time as the costs of claims against the company increase. Quite often, people wait until they have medical issues making them uninsurable for long term care. Also, if a person passes away without needing nursing home services, the premiums paid for the policy are lost.

Finally, in the State of California, with our primary Life Insurance provider, we are able to offer a Life Insurance policy that contains a “Chronic Health Care” rider at no additional cost of premium. This rider becomes effective with the same criteria as traditional Long Term Care Policies. If a policy holder requires a skilled nursing home care, a portion of the life insurance policy’s death benefit may be used for payment of Long Term Care costs. If a policy holder never needs to use the rider, it hasn’t cost him/her anything more than the premiums paid for the death benefit which are then paid to the insured’s beneficiaries at death.

If you would like to learn more about this topic, contact Russ Morris so that we can discuss your specific situation and the solution(s) most appropriate for you and your family.
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    Russ Morris, LUTCF

    In 1995, I became a licensed financial advisor and Life Underwriter Training Council Fellow (LUTCF) because I believe that next to our physical health, our financial health is the most important factor in our lives. For over twenty years, my goal has been to be a "financial doctor" that my clients can trust.  

    As a financial doctor, I take the time to listen, assess and understand each of my clients’ unique situations, goals, and concerns. I help grow assets for retirement and protect families from the financial loss that can occur after a premature death.  I truly enjoy helping my clients develop financially healthy lives.


    ​Along with my passion for helping all clients achieve strong financial health, I enjoy tennis, hanging out at Rancho Cucamonga's Bad Ass Coffee and meeting new people.

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