Keenan Blog

Mitigating the Financial Risks of Long-term Care

May 08, 2019

By the close of 2019, the Baby Boomers – about 76 million of them – will be at least 55 years old. The generation of Millennials – 83 million strong – have further to go before hitting that milestone. Yet, as more Americans enter their senior years, the prospects that our families will encounter the burdens and financial risks of long-term care (LTC) become more likely. No matter where you are in your life, you may face the need to provide a grandparent, parent or other relative with additional assistance with their everyday activities. By the time we reach age 65, we all have about a 50-50 chance that we will need some form of LTC during our lifetime.

LTC differs from medical care because it involves basic, personal assistance with activities of daily living (e.g. eating, bathing, getting dressed, transferring, etc.) as opposed to treatment for health conditions. It is also different in that medical insurance, including Medicare, does not cover those personal care needs over a long period of time. Medicaid (known as Medi-Cal in California) does pay for substantial LTC expenses, but to qualify, your income must be below a certain level and you must meet minimum state eligibility requirements.

About 80 percent of custodial care is given at home by an unpaid caregiver, usually a family member, partner, friend or neighbor. An AARP survey showed that more than 43 million people in the U.S. had provided unpaid caregiving in the prior year. But at some point, many people will require help beyond the capacity of unpaid caregivers. Sometimes, the help required relates to both physical and mental decline, such as with dementia and other cognitive impairments.

Long-term care insurance (LTCI) is one way families can prepare for the financial realities of aging, chronic health conditions and disability. It provides long-term assistance for those who need a nursing home, home care, or adult daycare. The premiums for LTCI are significant, but the younger and healthier you are when you purchase coverage, the lower the costs. LTCI offers various options for the benefit amount and length of time care is paid. There are also hybrid policies that combine life insurance protection along with LTC benefits. Everyone’s situation is unique and it’s prudent to seek professional guidance to consider the range of options, your future income and personal resources in shopping for LTCI.

Depending on their health history, many individuals may not qualify to purchase LTCI on their own. Coverage offered on a group basis through an employer can overcome this barrier to some extent. Some insurers providing LTCI can provide a basic level of voluntary, employee-paid coverage, or simplified underwriting. It may be an opportunity for employees to access valuable financial protection against a very real risk.


About Liesel Collins
Liesel Collins, CEBS, is Assistant Vice President in our Rancho Cordova office.  Liesel graduated from Whittier College with a B.A. in Economics and has worked in the employee benefits field for over 25 years.  She works in the Central and Northern California regions with schools, municipalities, and health care agencies.