Long-Term Care Insurance Costs

By CalBroker Mag

Like the rest of the country, California’s aging population is booming. It is estimated that the number of people aged 60 and over will grow three times as fast as the rest of the population through 2060.1

As the aging population increases, you will likely see an uptick in long-term care needs for your clients. People with chronic illnesses and other disabilities also require long-term care, but older adults are more likely to need it. Knowing the average costs of long-term care can help you prepare your clients and choose the right long-term care insurance coverage for them as they enter their golden years.

What Is Long-Term Care Insurance?

Long-term care insurance covers services that help people who have chronic illnesses or disabilities live their lives when they no longer can manage on their own. These services may include in-home health care, in which a caregiver comes and prepares meals, reminds people to take their medications, does chores, and bathes the patient.

Your clients may also have a loved one in need of specialized care for conditions such as Alzheimer’s disease, dementia, Parkinson’s disease, or multiple sclerosis. Long-term care insurance covers treatments for these diseases and resources for helping patients manage their daily lives.

Knowing the average costs of long-term care can help you prepare your clients and choose the right long-term care insurance coverage for them as they enter their golden years

Factors That Impact Long-Term Care Insurance Costs

As with other medical services, a variety of factors influence the average costs of long-term care.

Population Growth and Aging

Population growth is a big factor.2 More people living in an area means that healthcare agencies are treating a higher volume of patients. California’s aging population could put a strain on resources. Older adults use medical services more often than younger people, accounting for over 34% of annual healthcare expenses.3

Lifestyle

Other factors affect how much it costs to cover your clients. Their health and lifestyle choices, their commitment to preventive care, and their chronic health conditions can make treating them more expensive.

In California, heart disease is the leading cause of death, and the average life expectancy is 79.4 Other common causes of death in the state that warrant long-term care include cancer, stroke, and complications from COVID-19.

Duration of Coverage

Gone are the days of long-term insurance for life. In reality, about 14% of people will need long-term care for more than two years at the end of their life.5 When recommending policies to your clients, you can help them save money by reducing the benefit period, but you need to factor in their health and their likelihood of needing long-term care.

Additional Coverage

Some long-term care insurance policies offer added benefits such as inflation protection to help your clients cover their bills even if the cost of care has increased. These benefits add to your clients’ premiums, but they can potentially save on out-of-pocket expenses by adding this option to their policy.6

Average Long-Term Health Insurance Costs in California

Your clients can choose from three types of policies, including home care only, nursing home and residential care facility only, and comprehensive. Before recommending a policy to a client, make sure you understand their condition and their needs, so you know they’re getting the right coverage.

On average, the cost of a nursing home with a private room in California is $131,349 a year.7 An assisted living facility costs $72,570, and home care costs $72,846. These costs differ based on where in the state your client lives. For example, a private room in a nursing home in Modesto averages $140,611, while the same room in Santa Cruz averages $126,812.

Premiums vary widely in the state. Policies are available for as low as $300 a year and up to more than $1,000 a year.8

How California Stacks Up with the Rest of the Country

With California hosting three of the 10 most populous cities in the country, it’s not surprising that long-term healthcare costs are higher in the state.9 Less populous states such as Wyoming and Montana have lower healthcare costs, and the lowest averages are in the Southeastern United States.

Save Your Clients Money

There are steps you can take to save your clients money on their long-term care insurance premiums. Encourage them to keep up with preventative care and adopt healthy habits. You can also nudge your clients to consider getting insurance coverage earlier. Younger clients pay lower premiums.

You can also encourage your clients to get coverage with financially stable companies with a good reputation. Walk them through ratings from independent agencies to help them find the right coverage.

Seek out insurance policies with longer waiting periods. If your client can wait 90 days for coverage to kick in, they will pay lower premiums than they would for a policy they need in a month.

The Future of Long-Term Care

Considering California’s aging population, you will see an influx of clients in the next decade looking for long-term care insurance. Because the state has more people, it costs more to provide long-term care.

Your clients may pay less if they live in smaller parts of the state rather than the dense urban areas. Whatever their needs, you can help your clients save by encouraging them to stay fit and pay attention to their health. The good news is that technology is improving, allowing physicians to catch chronic illnesses earlier, which makes them easier and less costly to treat.

Health insurance is ever-evolving, too, with new regulations and guidelines developing each election cycle. By staying on top of new developments, you can recommend the best policies for your clients.

Medicare does not provide long-term care coverage or custodial care unless medical care is needed. Learn more about what is covered under your plan.