California Partnership for Long Term Care Helps Californians Preserve Assets
The cost of living in California is quite high; Californians know this. What many of them don’t know, however, is that there is a big expense that could trip them up during retirement. Long term care poses a financial risk to those people who haven’t set up a plan to cover the costs, which, unfortunately, is most people.
Lack of Long Term Care Awareness
According to a survey conducted in California in 1994, 35% of state residents incorrectly believed their health insurance included long term care coverage. Fast-forward 20 years and not much has changed. A recent survey conducted by AP-NORC found that 33% of Californians believe Medicare pays for nursing home care and 28% are unsure of whether it does or not.
Nearly 4 in 10 Californians also believe that Medicare will pay for home health care services. In reality, Medicare pays for very little, if any, long term care. At the maximum, basic Medicare coverage will cover 30 days in a nursing home. After that, individuals are on their own.
The state of California, like many other states, recognized this huge gap in awareness and attempted to do something about it many years ago. In 1987, a grant was directed towards promoting private Long Term Care Insurance to the public. California joined with private Long Term Care Insurance carriers to provide affordable policies to state residents that both helps the residents achieve financial independence and also reduces the extreme financial burden that long term care costs place on Medi-Cal, the state’s Medicaid program.
California Joint Venture
The California Partnership for Long-Term Care is still in existence today and the policies offered by the partnership can help those who haven’t yet planned for care achieve peace of mind and preserve their assets so they won’t be spending through them all should they end up needing care as they age.
A number of companies have been involved in the California Partnership including Bankers Life and Casualty, CalPERS, Genworth, John Hancock, and New York Life. Currently, only CalPERS, Genworth, and New York Life are still writing policies, though Transamerica is expected to join the program in 2014. The policies are designed to be affordable for those middle income Californians who are at risk of running out of assets while paying for care.
Getting an affordable policy largely depends on when you apply, though, so applying in your 50s when you are still healthy is the best path to take. Long Term Care Insurance policies are meant for individuals with assets to protect, so if you know you will already be enrolling in Medicaid later on, it’s best to just skip a policy. If you have an income of more than $95,000 a year and assets of more than $200,000, though, the California Partnership recommends buying a policy to preserve those assets throughout retirement.
In the California system, each $1 paid out by the insurance policy protects an equal amount of assets should you ever enroll in Medi-Cal. Rather than spend down your assets to basically nothing, which is typically the requirement for Medi-Cal, much of your assets will be protected from that spend down requirement. In order to qualify for the program, the Long Term Care Insurance policies offered must include both care coordination and inflation protection. So before you rush out and buy the first policy you see, be sure you confirm it meets all the requirements necessary to be a part of the Partnership. Working with an independent agent will help you do just that on top of making sure you are getting the best rate possible.