[Please note that the following is intended only to provide general background information about long-term care options. While the information is believed to be reasonably accurate, you are cautioned and encouraged to discuss the purchase of any long-term care insurance policy or other type of long-term care program with a qualified, licensed financial advisor who is aware of your individual situation. CSU-ERFSA is not responsible for the content of linked web pages, and cannot guarantee the accuracy of those pages.]
The need for long-term care insurance depends greatly on individual circumstances. For that reason, CSU-ERFSA can't make specific individual recommendations regarding LTC insurance, but we can provide some general information.
There are several risk factors that need to be taken into account when considering the purchase of LTC insurance. Life expectancy is a major consideration. The longer that you live, the greater the likelihood that you will need long-term care. Unfortunately, the premiums for LTC insurance also depend on your age when you purchase the insurance. Gender is a major factor in the need for long-term care. Women, in general, live longer than men and thus are more likely to need long-term care. Marital status also is an important factor. A married person with adult children is less likely to need formal long-term care than a single person.
The federal government estimates that there is about a 70% chance that someone who is 65 years old today will need some form of long-term care. On average women will need long-term care for about 3.7 years, while on average men will need long-term care for 2.2 years. The current estimate is that about 20% of people who are 65 years old today will need long-term care for longer than five years.
The costs of long-term care are high. Recent data (2017), indicate that nursing home care in California averages about $300 per day, but varies widely in different parts of the state. Some people would prefer to remain in their own residence rather than to move into a nursing home. The CalPERS long-term care program and some private LTC insurance policies provide options for in-home care as well as nursing home care. However, the benefits offered for in-home care may differ from those offered for care in a licensed facility. You should read and understand fully the provisions of any LTC policy that you are considering. In particular, most LTC policies have a "deductible period" during which you must cover the expenses of long-term care from your own resources. The most common deductable period is 90 days. The reason for this is that about 30% of patients who enter a nursing home will either recover sufficiently within 90 days to no longer need LTC, or will die within the 90 day period.
Many CSU-ERFSA members are enrolled in the CalPERS Long-Term Care Program. However the program has suffered from significant shortfalls in funding in recent years and was closed to new enrollment on June 1, 2020. In addition, policyholders in the program have experienced steep premium increases in recent years.
A number of policyholders joined a class-action suit against the program in response to the premium increases. Recently, a tentative settlement was reached between CalPERS and the plaintiffs in the case, which would permit certain policyholders to leave the program with a full or partial refund of their premiums. A final resolution of the case is expected some time in mid-2022.
In recent years new options for long-term care have been developed. In addition to traditional, stand-alone long-term care insurance policies, many insurers now offer whole-life policies with long-term riders. Generally, these policies allow the policyholder to use up to 80% of the face value of the policy to meet long-term care options. Another option is the purchase of an annuity, the proceeds from which can be used to cover long-term care needs.
CSU-ERFSA has partnered with AMBA to offer a variety of benefits to our members. These include several different supplemental insurance offerings, including several different long-term care options frome highly-rated companies licensed in California.
Whether you are a newly retired California State University system employee just beginning to think about long-term care coverage, or someone who is considering leaving the CalPERS LTC Program under the proposed settlement, and you are a current or prospective member of CSU-ERFSA, we invite you to talk with a licensed [Lic. CA#0196562] AMBA agent about your long-term care needs. The AMBA agents can discuss with you your individual financial and personal situation, and recommend to you the best way forward for long-term care coverage.
To set up an appointment to speak with a licensed AMBA agent, call 1-866-684-5266 M-F between 8 am and 5 pm California time.