California is an attractive state to live – and retire – in. It has much to offer its residents, including options for long-term care when you need it.
How much you’ll pay for care depends on a variety of factors, including where you live, the type of care, services needed, and so on. Long-term care insurance is a great way to make future care more affordable, closing the financial gap to help you take control of your long-term care needs.
Below, we’ll explore the cost of care in California, focusing on the Bay Area and SoCal. We’ll discuss their cost differences, what’s included in the cost of care, and how you can use this information to plan for your future care needs.
Why Regional Long-Term Care Costs Vary Across California
The high cost of living, especially housing costs (rent and mortgages), can influence care pricing. SoCal and the Bay Area have very competitive housing markets because they are desirable places to live. You pay for that same convenience and more when you’re seeking long-term care.
Wage competition can raise rates in certain metropolitan areas in California. Many employers are offering more attractive hourly rates and salaries to attract employees to avoid workforce shortages and maintain compliance.
Additionally, demand, availability, and operating requirements affect what families have to pay. Facilities within the city limits are often more expensive than those in suburban or rural areas, while the local staffing requirements may also impact the overall cost.
Not all long-term care is created equal, so it’s important to understand the regional costs, what is included, and what you need to pay extra for to plan for your long-term care needs.
California Long-Term Care Cost Basics by Care Type
Let’s take a closer look at long-term care costs in California by care type.
A breakdown of the monthly median costs according to CareScout is below.
- In-home care
- Homemaker services: $7,245
- Home health aide: $7,436
- Community and assisted living
- Adult day health care: $1,950
- Assisted living community: $7,350
- Nursing home care
- Semi-private room: $11,695
- Private room: $15,178
Now, many variables can affect the cost of care, even within these categories.
For example, in-home care services may be covered by insurance. These are typically only required on a short-term basis after an injury. However, home health care is not. These professionals often assist with activities of daily living and are typically covered only under long-term care insurance policies.
Assisted living prices can depend on the type of room, level of care, specialized services, and more. The less attention you need, the more affordable the care.
Memory care services are often more expensive because they require constant supervision and specialized care. As a result, these costs have continued to rise faster than in other settings.
Similar to in-home care, there are some scenarios where traditional insurance could cover nursing home care. For example, skilled care can offer its residents therapy to help them recover after an illness or injury. This is often short-term, and the residents are expected to recover and return to normal life.
Custodial care is the opposite. It’s often not medical assistance, but rather help with activities of daily living to help individuals function. This care is where long-term care insurance comes in to help offset the costs, since it is very expensive.
Bay Area Costs: What Tends to Run Higher and Why
The Bay Area is known as a tech hub for start-ups and established companies. There is a lot of money flowing into this area, which can significantly drive up costs across all industries.
As a result, the cost to operate long-term care in the Bay Area is high. Real estate, facility overhead, labor market pressure, and more contribute to these higher costs. Additionally, there is a caregiver competition across industries to attract and retain talent.
As the population continues to age, there is a higher demand for services and longer waitlists. Many long-term care providers will increase their prices, causing individuals to pay more for their care.
Southern California Costs: Why It Can Look Different City to City
For many people, when they think about California, they think about SoCal – Los Angeles, San Diego, and more. It’s an entertainment and cultural hot spot.
Pricing across Southern California can vary by major markets and surrounding communities. You can expect to pay more for care within the city limits than in the suburbs. According to CareScout, a private room in a nursing home is $13,688 a month in Los Angeles.
The number of facilities in an area can also impact how much you pay. If there are many, long-term care facilities may need to be more competitive on price to attract more residents.
Additionally, wage and staffing dynamics can push costs higher, especially in higher-demand areas like memory care. The more specialized the care and supervision you need, the higher your costs will be.
What’s Driving the Gap Between the Bay Area and SoCal
On average, care costs more in the Bay Area than in SoCal. Why is that?
- Facility costs: Housing and commercial lease costs are baked into the overall facility pricing, which drives up the overall cost.
- Competition: Wage expectations, staffing ratios, and caregiver shortage put pressure on nursing homes, causing them to increase wages to attract more employees. When they do that, they pass the cost increase on to residents.
- Regulations: Licensing, compliance, insurance, and operating costs vary by region. It often costs more to remain compliant.
- Demand: There is a higher demand from the aging population. As we live longer, the likelihood that we will need care increases. That is at odds with the limited supply of facilities, driving up costs for those who can afford it.
These pressures are being felt across the long-term care industry nationwide. However, they are experienced at a greater scale in California, specifically in the Bay Area and Southern California.
What’s Typically Included and What Commonly Costs Extra
The type of care isn’t the only factor that can impact how much you will pay for your long-term care needs. Across all care types, the base premium includes elements and extras you can add for a fee.
- In-home care typically covers the basic or minimum hours. However, you may pay more for night or weekend care, higher-acuity help, and more.
- Assisted living costs will depend on your service level. The more personal care and attention you require, the more expensive your monthly costs will be. This can include medication management, food service, and more.
- Memory care costs are often high to begin with because they require constant supervision. However, you will pay more for specialized programming, therapy, etc.
- Nursing homes charge by the room type, but you will also pay for therapy, skilled care, outings, and more.
Each long-term care facility is different, so make sure you understand what’s included in the terms before you sign any contract.
Aging in Place vs Facility Care: How the Budget Changes
Many families struggle with the decision on how best to care for their loved ones. It may seem more cost-effective to age in place; however, there are scenarios where it is better to place your loved one in a facility.
Below are factors to consider.
- The cost of in-home care: Sometimes the hours make it more comparable to facilities.
- Family support: The more support you have at home, the more likely it is that your caregivers will not face burnout. Caring for your aging family members can cause a significant emotional and financial burden.
- Changing needs: As your needs change, you may need more specialized care. It can be harder for your loved ones to keep up with your care, leading to a decline in quality of life.
Long-term care is not covered under most traditional health care coverage, so it’s critical that you plan for your future. Long-term care insurance in California can help.
How to Build a Personal Long-Term Care Budget With Inflation
Long-term care can feel complex and expensive, especially if you don’t have a plan. You can help demystify the process by creating a budget.
To do so, please follow the steps below.
- Estimate your care needs. Think about the care setting you want, the hours you may need, and how long you may need care. Be realistic in your planning for the best results.
- Account for inflation. Use today’s costs to get a sense of the initial cost, but also plan for inflation. Typically, you can expect about a 3 percent year-over-year increase, which can add up over time.
Build in a buffer. You never know what the future will hold, so be sure to plan for the unexpected. Stress test for longer claims or if you need more expensive support like memory care.
Having a plan can help you understand what you need to save and which other options to explore to pay for your long-term care needs.
Structuring LTC Insurance Benefits to Match Where You Expect to Live
Long-term care insurance is a great option to help pay for your care. Here’s how you can structure your benefits to align with your expected care needs.
- Choose a daily or monthly benefit that aligns with your target region. You can estimate the cost per day of care based on where you want to receive care.
- Select an elimination period strategy and develop a plan to cover the gap. Even with a long-term care insurance policy, there will be some out-of-pocket costs. The longer the elimination period, the lower the long-term care insurance costs.
- Plan for the unexpected. You may need to relocate within California or even move out of state. Make sure your benefits can move with you.
Financial advisors and long-term care insurance professionals can help you create a long-term care financial plan that works within your budget.
Practical Planning Tips to Avoid Surprise Costs
As you explore care options, there are steps you can take to avoid surprise costs.
- Ask questions. Understand what’s included in the cost, what is extra, how they handle changes, and more. Even if the quotes look like they are apples to apples, there may be things hidden in the terms, so you’ll end up paying more.
- Buy LTC insurance early. The average American purchases long-term care insurance between the ages of 55 and 66. However, the longer you wait, the higher your premiums or the more likely you will develop health conditions that will disqualify you from coverage.
- Be agile. The needs you had 10 years ago may not be the same as the needs you have now. Make sure to revisit coverage needs after moves, major life events, and more. Adjust your plans as needed to account for gaps.
Long-term care insurance can help you take control of your care needs without becoming a financial or emotional burden on your loved ones.
Key Takeaways and Next Steps
California’s high cost of living and cost differences should shape both your budgeting needs and your benefit designs. What you can afford in SoCal may not get you as far in the Bay Area.
Research the cost of care in your desired care region and leverage it into a clear, realistic plan, accounting for inflation to reflect increases in care costs. A long-term care insurance professional, such as those at Lavine LTC Benefits, can help you strategize and build a plan that works for both your budget and your care goals.
Contact us today for a free consultation to get started.