On June 30, 2011, the California state assembly voted to approve A.B. 999. The bill was approved 42-33 and would place limits on companies issuing long term care insurance in California, and their ability to increase premiums.

The bill in its current form would require long term care insurance companies to wait a period of 5 or 10-years prior to being able to submitting a rate change application to the state. The bill would also place limits on insurance companies from being able to adjust rates due to their underlying investment performance.

Supporters of A.B. 999 suggest that it is necessary due to the fact the long term care insurance companies continue to underestimate the cost of providing care whenever they introduce a new policy. Opponents of the proposed bill argue that there are already laws and rules in place to address the issue of unpredictable long term care insurance premiums. They have also argued that increase at the end of the 5 or 10 year period would be much higher.

You might be wondering whether or not we have an opinion on this matter. Currently the answer is we’re not sure. Initially, our feeling is there already exists law to govern much of what this bill is about, and at this point it is more about enforcing existing law than continuing to regulate it.

We couldn’t tell you off the top of our heads whether or not any single long term care insurance company has increased rates in back-to-back years, but we feel the concern over significant increases once every five or ten years is going to possibly be more penalizing than a gradual increase over a five year period. It could effectively end up like a balloon payment on a mortgage every five or ten years.

Personally, I feel the states should hold the companies issuing insurance for long term care accountable for their own pricing. The reason consumers purchase long term care insurance is to reduce or eliminate risk.

Last week we spent time discussing the states where long term care costs are the highest. This week we’ll take a look at the state where long term care costs the least. We will again utilize the 2011 Genworth Cost of Care Survey for purposes of deciding which states are the least expensive. Some of the finding have truly been extraordinary. As you will hopefully see in the following information. Again, we will have two Top 10 Lists. The first is for Home Healthcare, while the second list is for nursing home care.

Top 10 Least Expensive States to Receive Home Health Care

1. West Virginia

2. Louisiana

3. Alabama

4. Arkansas

5. Mississippi

6. South Carolina

7. Tennessee

8. Georgia

9. Kentucky

10. Kansas

Top 10 Least Expensive States to Receive Nursing Home Care

1. Alaska

2. Texas

3. Oklahoma

4. Missouri

5. Louisiana

6. Arkansas

7. Kansas

8. Iowa

9. Illinois

10. Utah

Assumes semi-private nursing home room

There is some very unique information available regarding these lists. For instance, Alaska is the least expensive state to receive nursing home care. The average cost of nursing home care in Alaska is $23,377 per year. The next closest state is Texas, which have an average cost of nursing home care of $46,355 – that’s an over $20,000 per year difference. What makes all of this really interesting is that Alaska is the most expensive state when it comes to receiving Home Health Care services. This is a major discrepancy, but just goes to show how much long term care costs can vary based on where you live and the type of care you receive.

In our Top 10 Most Expensive States to Receive Long Term Care post we took the information provided and came up with a list of three states that would arguably be the most expensive states to receive care in across the board. We will do the same today for the overall least expensive states to receive long term care. Not that you asked for it, but here it is anyways:

1. Louisiana

2. Arkansas

3. Kansas

As always, if you enjoyed this post let us know by leaving us a comment. We look forward to hearing from you. Learn more about insurance for long term care.

Well, did I peak your interest. What type of Top 10 list are we talking about? We’re talking about a Top 10 list for the most expensive states in America to receive long term care services. As discussed in earlier posts, Genworth Financial recently published there 2011 Cost of Care Survey. If you haven’t already checked it out I would encourage you to do so by clicking here. Do you have any guesses for who will be this years winner? For our purposes we have two categories this year. The first is the Top 10 Most Expensive States to Receive Home Health Care, and the second is the Top 10 Most Expensive States to Receive Nursing Home Care.

Top 10 Most Expensive States to Receive Home Health Care

1. Alaska

2. Minnesota

3. Hawaii

4. Massachusetts

5. New Hampshire

6. Rhode Island

7. North Dakota

8. Washington

9. Oregon

10. Connecticut

Top 10 Most Expensive States to Receive Nursing Home Care

1. Connecticut

2. Massachusetts

3. New York

4. Hawaii

5. New Jersey

6. District of Columbia

7. New Hampshire

8. Maine

9. Rhode Island

10. Vermont

Assumes Semi-Private Room

If you forced us to pick an overall winner for most expensive state the order would be as follows:

1. Massachusetts

2. Hawaii

3. Connecticut

As always, if you enjoyed this post, drop us a comment to say hello! Also, stay tuned for next weeks post, when we review the least expensive states to receive long term care insurance.

Every year around this time several carriers who offer long term care insurance policies come out with their annual cost of care survey for the nation. These surveys can provide great insight and valuable information for those who have purchased long term care insurance and those who are considering it. It can also be very valuable for those individuals who have decided to self-insure their long term care risk. We utilize this surveys to assist families, couples, and individuals on how much benefit they should obtain based on where they live or where they plan on living when the receive care. The survey we prefer to use is made available through Genworth Financial. There are a few reasons why we prefer Genworth’s survey versus some of the other carriers. The first is because Genworth has been issuing long term care coverage longer than most carriers in the marketplace. The second reason is due to the fact that this is the 8th year the survey has been completed. My understanding is that the survey was initially done by a company called CareScout, who continues to provide the information for the survey. However, it is my understanding that Genworth acquired them in the last few years.

My understanding, as far as how the data is obtained, involves a thorough survey of long term care providers across the country. From that they develop regions, and based on the findings they establish averages for the nation, state, and region.

Interestingly, I was in a meeting last week with an individual, who unbeknownst to me, had made phone calls to two different nursing home facilities in his area (prior to our meeting we had not discussed any policy particulars or benefit amounts). I had designed a proposal for him based on where he lived using information from the Genworht 2010 Cost of Care Survey. In his particular case the average daily cost of care was $200 or $6,000 over a 30-day period. It turns out one the nursing homes he had called told him the monthly cost was $7,000, while other facility quoted him $5,000 per month. It was either my lucky day or CareScout and Genworth really know what their doing, because if you take the average of the two nursing home quotes he received ($7,000 and $5,000) you get an average cost of $6,000 over a 30-day period, which is exactly what I was proposing (at this point in my life I know I’m not quite that lucky so all of the credit should go to the survey).

With that said, let’s take a look at a few of the results:

Nationwide

• The average cost of Nursing Home (semi-private) care rose from $185 per day to $193 per day.
• Over a six-year period the annual growth of nursing home (semi-private) care has increased by 4.52%.
• Home Health Aide and Homemaker Services remained unchanged at a $19 and $18 national median hourly rate, respectively.
• The national median hourly rate remained unchanged for Adult Day Health Care at $60 per hour.

State of California:

• The average cost of Nursing Home (semi-private) care rose from $200 per day to $213 per day.
• Over a six-year period the annual growth of nursing home (semi-private) care has increased by 5%.
• Home Health Aide and Homemaker Services remained unchanged at a $21 and $20 national median hourly rate, respectively.
• The national median hourly rate remained unchanged for Adult Day Health Care at $77 per hour.

As you can see, it does cost more to receive long term care in California than in some other states. These numbers are based on statewide averages. I would encourage you to look at the cost of care in your particular city or county, or do what my client did and call a couple around town to get more information. Also, I would encourage you to learn more about the the cost in your area by visiting the Genworth 2011 Cost of Care Survey website. All of the data in this post was obtained from this report, so I would like to thank Genworth and CareScout for putting this survey together. If used properly it can be one of the most valuable tools available for properly evaluating and advising on individuals long term care needs.

Long term care insurance is a unique product that can offer a tremendous amount of security for individuals and their families, but it can often be misunderstood. I compare it to purchasing a car (since I’m not much of a car guy this comparison works for me). When purchasing a car we make different buying decisions. What type of car do I want (e.g. sedan, SUV, hybrid, truck, etc.)? Once I’ve decided on the type of car, I begin researching what cars are available from different car manufacturers. In today’s economy, I may even consider how many miles per gallon the car can get, and what options may be available (e.g. GPS, MP3 player, sunroof, blah, blah, blah). Once I’ve identified a group of cars I think I might be interested in purchasing I begin looking at what the car costs. If a particular car is out of my price range I’ve narrowed down my list of options. Ultimately, I end up choosing a car based on my personal preferences and needs. But, since I’m not a car guy, I’m relying on the manufacturer to make sure the engine works. At the end of the day it doesn’t really matter what kind of car I drive, as long as it gets me from Point A to Point B without problems.

Long term care insurance isn’t any different, you have a policy (the car), you have policy options (the GPS & sunroof), and you have the carrier (the engine). But, just because I might not be able to afford the luxury version of the car doesn’t mean that my need for transportation has changed. Certainly a less expensive model could get me where I need to go. Just like cars, the need for long term care isn’t likely to go away for a majority of individuals. Don’t be put off by expensive (luxury) long term care insurance policies, maybe if you consider changing some of the options you’ll be able to find a policy that will get you from Point A to Point B.

A recent New York Times poll suggests that consumer confidence regarding the U.S. economy has becoming increasingly pessimistic. With increasing gas prices, unstable employment rates, and the question of whether or not the federal government will continue to have the ability to meet future obligations has raised many questions. It is likely Congress will continue to review federally funded programs like Social Security and Medicare. Self-reliance may begin to become the theme versus governmental assistance. This will prove especially challenging to the baby boomer population as they begin to utilize governmental services that they have been contributing to for most of their adult lives. With health care costs already out of control there doesn’t seem to be end in sight as to when these costs will hit their peak.

As these economic indicators continue to create questions of instability, the long term care insurance industry appears to be positioned to provide benefits for a long term care event that is not covered by other privately owned insurance policies or federal assistance. A recent study published by LIMRA indicates that many individuals are taking advantage of obtaining private long term care insurance. In report suggest that in 2010 there was a thirteen percent increase from the prior year of people acquiring LTCi (Source: U.S. Worksite Sales Survey, LIMRA, Fourth Quarter 2010). Long term care insurance experience the highest percentage growth of other individual insurance product lines which include life insurance, annuities, and disability insurance.

Another story published by the Journal of Financial Services Professionals looked at retirees age 55 to 74 with at least $100,000 in savings (not including their homes) to determine what methods this group intends on using to pay for long term care. Forty-two percent responded by stating they intend to use personal savings to pay for long term care costs. Thirty-two percent responded by saying they have or intend to have a long term care insurance policy to assist in covering some or all of the costs. The balance of the group indicated they would either spend down their assets, sell their home, rely on Medicare, access a HELOC, utilize family, or haven’t even considered it.

Welcome to the inaugural California Long Term Care Insurance blog post. The purpose of our blog is to assist in educating consumers regarding long term care and long term care insurance. Fortunately and unfortunately long term care has become a reality that many us will have to deal with at some point in our lives. I say fortunately because of you are like a majority of Americans who receive care you are doing so because you have lived a long and productive life. Because many people are living much longer than prior generations the need for long term care and long term care insurance has become a much greater reality.

In California the average cost of a semi-private nursing home room is $73,000 per year according to the 2010 Genworth Cost of Care Survey. For those who prefer to receive long term care at home they can expect to pay approximately $45,000 per year. In addition, many people are under the false pretense that some type of federal or state fund program is going to cover these costs, but the reality is most people do not qualify financially because there net worth or income is to great.

Hopefully, you will find this blog informative, educational, and fun. If you do, please drop us a line or even suggest a topic you may be interested in learning more about.