LONG TERM CARE 11
California Department of Insurance
Protecting California Consumers
Toll Free 800-927-HELP (RCFE)
and 50 percent for home care. Policies sold after October
1, 2001 must pay a minimum of 70% of the daily nursing home
benefit for RCFE care, except for Home Care Only policies
that don’t cover this kind of care. Selecting the Daily Maximum
Because you will be responsible for all expenses not paid
by your insurance policy, you need to decide how much of the
daily cost of care you can pay yourself. Estimate the daily
cost of long-term care in your community and subtract the
amount you can afford to pay for each day of your care.
For instance if the cost in your community is $150 a day and
you can afford to pay a co-payment of $50 a day, you will
need the insurance company to pay $100 a day, or $3,000 each
month. To help the benefits of your policy keep up with the
annual increase in the cost of care due to inflation, every
insurer is required to offer you Inflation Protection.
Although Inflation Protection will increase your premium costs,
without it you may not be able to afford to pay the difference
between the cost of care when you need the long-term care
services in the future and the amount of benefits your policy
will pay. Remember that long-term care costs are likely to
increase in the future.
Unless you choose to add inflation protection, your benefits
will remain static and you will have to pay out-of-pocket
for the future increases in the cost of care. Example: The
average statewide cost of nursing home care in California
in 2002 is $141 a day or $51,465 a year.
A policy
that pays $141 a day would pay 100% of the daily charges for
care in an average cost nursing home today. However, in approximately
fourteen years, the average cost of care is estimated to double
– a day of care will cost $282 and a year of care $102,930.
Without inflation protection, the difference between the cost
of care and the benefit will grow each year. In less than
14 years a $141 daily benefit may cover as little as 50 percent
of the cost of care.
The Maximum Lifetime Benefit When you buy a long-term care
policy, you choose the maximum dollar amount the policy will
pay benefits over your lifetime. The approximate number of
years you want the policy to pay benefits will determine the
Maximum Lifetime Benefit. Policies are available with Maximum
Lifetime Benefit amounts that pay benefits for approximately,
one, two, three, four or five years or for your lifetime.
The longer the period of coverage, the higher the premium.
Your Lifetime
Maximum Benefit is computed by multiplying the Daily Maximum
benefit you select by the approximate number of days you want
benefits to be paid. For example, the Lifetime Maximum Benefit
will be $36,500 if you select a Daily Maximum benefit of $100
and want the policy to pay benefits for one year (365 days).
While everyone would like to buy Lifetime coverage or Unlimited
benefits, not everyone can afford to do so. A policy that
pays for a few years can provide valuable coverage, and for
some people that will be all they will need.
Don’t pass up long-term care insurance just because you can’t
afford lifetime coverage. Selecting the Maximum Lifetime Benefit
No one can predict how many days or years of long-term care
a person will need, or the reason they will require care.
Some people can afford lifetime coverage, others have so little
money they would quickly qualify for Medi-Cal. Choosing the
right amount of benefit depends on the premium you can afford,
and the assets you would otherwise have to spend. Since the
premium for Lifetime coverage is not.
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