As the Baby Boomer generation retires and the proportion of the workforce declines, many families are facing financial difficulties due to the high cost of long-term care. The recent passing of Qiong Yao has sparked discussions on advance planning within the Chinese community, prompting a societal reflection on the issue of “long-term care.” Kai Chen, the financial director of Golden Butler, and senior accountant Wendy Liu, shared with readers of The Epoch Times at the end of the year the importance of long-term care in family and personal planning, as well as proposed solutions.
California’s aging population issue is becoming increasingly severe. According to the latest statistics and projections, as of 2024, people aged 65 and above account for approximately 16% of California’s total population, with the figure expected to rise to over 20% by 2030. This also means that 1 in every 5 California residents will be a senior citizen.
Kai Chen introduced that the current long-term care options in the United States can be categorized into four main types: adult day care, in-home care, assisted living facilities, and professional nursing facilities.
Adult day care provides basic care for elderly individuals with reasonable mobility, including breakfast, lunch, transportation services, and medical care. Those with Medicaid can avail of related services, while for those without assistance, the cost is around $30 per visit.
Elderly individuals with partial self-care abilities can apply for in-home care, which costs approximately $50 per hour without Medicaid coverage. Assisted living facilities provide accommodation and care for seniors who do not require around-the-clock medical attention, with monthly fees ranging from $5,000 to $8,000. Some costs can be covered through Medicaid waiver programs, but food and lodging expenses are self-supported. Professional nursing facilities that offer round-the-clock medical services can cost between $100,000 and $200,000 per year, with this type of facility typically not covered by federal Medicare.
Kai Chen noted that some Chinese individuals transfer assets to their children in advance to qualify for Medicaid, but this could lead to irreversible family problems, such as asset disputes, deterioration of parent-child relationships, and even asset loss. He believes that Long-term Care Insurance (LTCI) is a safer option, providing protection for assets and offering a wider range of care choices.
Wendy Liu added that LTCI can complement Medicaid, with the waiting period of the policy designed to seamlessly align with the Medicaid application schedule, making care planning smoother. The average life expectancy of California residents is around 80 years, higher than the national average, with Asian and Hispanic populations having even longer lifespans. The number of centenarians in California is steadily increasing, and opting for long-term care insurance can also be coupled with tax relief policies to obtain benefits.
Based on the tiered discounts provided by the 2024 tax relief policy for long-term care insurance, individuals under 40 can annually receive a $470 discount, while those aged 41 to 50 can get an $880 reduction. The discount amount increases with age, with individuals aged 70 and above eligible for an annual $5,880 reduction.
Wendy Liu explained that premiums paid by C-corporations are fully deductible, while S-corporations, sole proprietors, and individuals need to calculate based on age ranges.
Since the initiation of long-term care taxes in Washington state in 2022, the demand for LTCI has significantly increased nationwide. Experts suggest securing insurance at a young age for lower premiums and guaranteed future protection, avoiding burdening families in old age due to lack of planning.
Kai Chen believes that long-term care insurance is a peace of mind and dignity purchased in advance for oneself and one’s family. As the aging population trend intensifies, insurance products on the market are becoming more flexible, offering coverage multiples of 6 to 10 times, clauses adjusting for inflation, and even cross-border services to assure individuals planning to retire abroad. He stated, “Long-term care is not a sudden decision but a marathon that requires early planning.” Faced with life’s uncertainties, planning care options is not only a form of self-respect but also an expression of love and responsibility towards family. ◇