Long-Term Care: Protecting Your Assets and Your Well-Being

At EsqWealth, financial planning for our clients includes a comprehensive approach to long-term security. One crucial piece of this puzzle for some clients is Long-Term Care Insurance (LTCI).

Across the United States, an aging population and rising healthcare costs are sparking conversations about LTCI. While Medicare covers some medical expenses, it doesn’t encompass the long-term care needs that many individuals face as they age. This growing gap has fueled a national trend of exploring potential public programs to help people manage these costs.

California is at the forefront of this movement, with a proposed Long-Term Care Benefit Program (LTCBP) currently under consideration. This initiative exemplifies the national search for solutions, and understanding the California example can provide valuable insights for everyone planning for their future long-term care needs. Other states already have legislation on the books that requires people at a certain age to own their own LTCI or be penalized. 

Let’s delve into the world of LTCI, explore the proposed California program, and discover how you can navigate this evolving landscape to protect your assets and well-being.

Why Long-Term Care Insurance Matters

We all know the story: LTCI provides a financial safety net for individuals who require assistance with daily activities (bathing, dressing) or face cognitive decline (Alzheimer’s disease). While Medicare covers some medical costs, it doesn’t encompass all long-term care needs. LTCI bridges this gap, helping you maintain financial security if you need long-term care services.

How Does LTCI Work?

Traditional LTCI policies pay a set daily, weekly, or monthly benefit when you meet eligibility requirements, typically needing assistance with a certain number of Activities of Daily Living (ADLs) or experiencing cognitive impairment. Coverage can extend to various settings, including:

  • Personal aides at home
  • Adult day care programs
  • Assisted living facilities
  • Nursing homes

One of the downfalls of LTCI is the “use it or lose it” aspect. However, with proper planning and guidance by a financial advisor, there are other options you can obtain that allow you to recoup your assets even if you don’t use the money for long term care.

How Much Does LTCI Cost?

LTCI premiums are highly individualized and depend on several factors such as age, health, gender, and inflation protection options, but here’s a general idea of ballpark figures based on age and gender:

  • Age 55: A healthy 55-year-old man might pay around $1,600 annually for a policy that grows at 3% per year, while a woman of the same age could expect to pay roughly $2,200 due to their longer average lifespan.
  • Age 65: At 65, premiums typically increase. A man might pay around $2,400 annually, while a woman could see premiums closer to $3,400.

Remember, these are just estimates. For a more accurate idea of your potential LTCI costs, talking to a qualified financial advisor or insurance agent is recommended. They can help you assess your specific needs and get personalized quotes.

California’s Proposed Game Changer

The proposed LTCBP is a game-changer, but it’s still early innings. Assembly Bill 567 (AB 567) established a Long-Term Care Insurance Task Force that explored the feasibility of a public program. In December 2023, they delivered their final report, outlining various program designs and potential funding mechanisms.

Here’s the exciting part, the proposed program could offer:

  • Broader affordability: A public program, funded potentially through payroll taxes, could offer coverage to more Californians at a potentially lower cost compared to private LTCI.
  • Enhanced security: A government-backed program may offer greater stability and protection compared to private insurance products.

So, When Can I Sign Up?

Hold on to your hats! While the proposal is intriguing, there’s still a long road ahead:

  • Legislative hurdles: The California Legislature needs to draft and pass a bill creating the program. This is not guaranteed and could take significant time.
  • Financial details: The exact cost, funding mechanisms, and tax implications are still being ironed out.
  • Implementation timeline: Even if a bill passes, there will likely be a delay before the program becomes operational.

What You Can Do Now

Don’t hit pause on your long-term care planning just yet:

  • Stay informed. Follow developments related to the LTCBP. The California Department of Aging ( is a good resource for updates.
  • Consider your needs. Evaluate your current health, family history, and long-term care preferences.
  • Talk to a financial advisor or licensed professional.

At EsqWealth we specialize in comprehensive financial planning, which includes considering life insurance, disability insurance, and LTCI as part of a holistic strategy. We can help you navigate the current landscape and explore all your options, including how the proposed legislation might influence your decision in the future.

Conclusion California’s proposed public long-term care program offers a glimpse into a potentially more secure future for long-term care needs. While the program’s specifics and timeline remain uncertain, it’s a positive step towards a more comprehensive solution. By staying informed, assessing your needs, and seeking professional guidance from a financial advisor like those at EsqWealth, you can make well-rounded choices as California navigates the evolving landscape of long-term care. Perhaps the most important thing to consider is that the need and cost for long term care for you or your loved one can impose extreme emotional and financial burdens which can be avoided or limited with proper financial planning.

The information above is not intended to and should not be construed as specific advice or recommendations for any individual. The opinions voiced are for general information only and are not intended to provide, and should not be relied on for tax, legal, or accounting advice. To discuss specific recommendations for any unique situation, please feel free to contact us.


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