• Nursing home costs in California can range between $90 to $200 a day. (The statewide average was $120 in 1998);

• Residential care facilities providing assisted living can cost $45 to $70 or more a day, depending on their size, location, amenities and clientele;

• A live-in companion or homemaker can cost $155 or more a day, depending on where you live. The cost is higher if you need someone with medical training;

• A visit in your home by a registered nurse can cost $100 a visit or more;

• A home visit by a medical social worker can cost $110 a visit or more.

The Brookings Institute estimates that the average 65 year old person has a 20 percent chance of having no long-term care expenses in a nursing home or at home during their lifetime. The remaining 80 percent will have some expenses. They have:

• a 58 percent chance of having expenses between $1 and $50,000;

• a 9 percent chance of having expenses between $50,000 and $110,000;

• almost a 13 percent chance of having expenses of $110,000 or more (in 1989 dollars).

However, most nursing home stays are relatively short. Seventy five percent of people who enter a nursing home stay one year or less, and 52 percent stay less than three months.

People with very high incomes who are able to pay $30,000 to $50,000 a year for their own long-term care probably don't have to worry. They will have the financial resources to pay for it. They can also deduct some or all of their costs as an itemized medical expense on their state and federal income tax returns because of changes in the federal tax law.

If you have the time to save and you invest well, you might be able to save enough to pay for your own long-term care expenses. Relying on the income from your investments is another way to pay for long-term care. However, that may not be enough to pay all your costs if you should need care for an extended period of time, or if you need care before you have saved enough money.

Yes, if you meet all of the requirements of a 1996 federal tax law. This law, the Health Insurance Portability and Accountability Act, or HIPAA, amended the federal tax code. Some additional long-term care expenses can now be deducted as medical expenses. California passed similar legislation allowing a medical deduction for the same long-term care expenses on state tax returns.

Some or all of the costs for personal care and homemaker services-in addition to other long-term care expenses might also be deductible as a medical expense if you meet all of the requirements of this new law. If you itemize your federal and state tax returns, you may be able to deduct certain unreimbursed long-term care costs.

All of your medical expenses must first exceed 7.5 percent of your adjusted gross income (AGI). Then you can deduct amounts that exceed that percentage. You should consult your tax advisor for more information on how this could affect you.

Most long-term care is furnished in nursing homes to people with chronic, long-term illnesses or disabilities. The care they receive is personal care, often called custodial care. Medicare does not pay for custodial care. Medicare pays less than 10 percent of all nursing home costs. To qualify for the Medicare nursing home benefit, you must spend three full days in an acute care hospital within 30 days of your admission to a nursing home. You must also need skilled nursing care seven days a week, and/or rehabilitation services at least five days a week. Medicare will not pay for your stay if you need skilled nursing or rehabilitation therapy only once or twice a week.

The longest nursing home stay that Medicare will pay for completely is

20 days. After the first 20 days, if you still require skilled care, Medicare will pay only a part of the nursing home bill. You will have to pay a copayment for each day of the next 80 days if Medicare continues to pay for your stay.

Yes, but only if you meet certain requirements of the Medicare program. These requirements apply whether you are in a Medicare managed care program like an HMO, or receiving traditional Medicare fee-for-service benefits. You must

be homebound and require skilled nursing or rehabilitation services. The services you receive must be from a home health care agency that participates in Medicare. You may also receive some personal care services along with the skilled services.

However, Medicare does not pay for general household services such as laundry, shopping or other home care services that are needed primarily to assist people in meeting their personal care needs. Remember that Medicare also may not pay for all of the services that a home health agency provides.

Some Health Maintenance Organizations (HMOs) have a contract with the federal government to provide Medicare covered services to Medicare beneficiaries. However, members of HMOs generally have no more coverage for long-term care than someone with any other type of health care coverage.

These HMOs usually provide only those home health and skilled nursing facility services that are covered by Medicare. HMO members ordinarily are not required to pay copayments for these services as long as the HMO determines that their care continues to meet all of the requirements for Medicare coverage.

No. Disability Income insurance doesn't pay for medical care, personal care or long-term care. The purpose of this type of insurance is to replace earned income. Disability Income insurance generally pays a percentage of an employed person's earned income if they are disabled while still employed. Once you retire, you may no longer be eligible for disability income benefits. Unfortunately, because it's called "long-term" disability insurance, some people may assume they are also covered for long- term care services.

Long-term care benefits are sometimes sold as part of a life insurance policy, or as a rider to a life insurance policy. This arrangement allows the death benefit, sometimes called an Accelerated Death Benefit, to be used to pay for certain long-term care services. The amount of the policy's death benefit is reduced by any amounts that are paid for long-term care services covered by the policy.

Life insurance policies with this option can be purchased with one large premium payment, or with premiums paid periodically over time. Monthly administrative fees and certain other insurance costs may be deducted from the cash value, or the interest earnings of the policy. Before any long-term care insurance benefits will be paid, the insured person must meet the eligibility rules in the policy. These policies vary widely, and the methods used to calculate benefits are very complex.

The 1996 federal tax law, HIFAA, may allow you to deduct the portion of the premium that pays for the long-term care benefit. Any long-term care benefits you receive under these policies generally won't be taxed as income. You should consult a tax advisor for information on what you can deduct, what benefits are excluded from income, and what amounts could be taxable.

Note: While these policies may provide an attractive combination of benefits for some people, they should not be purchased without consultation with an accountant or tax attorney.

Some life insurance policies can be purchased with an "advanced death benefit" or "living benefit" rider. This option allows your insurance company to pay you a reduced amount of your death benefit as a lump sum, or in periodic payments before you die. These benefits can be paid only when certain conditions are met. For example, benefits could be paid when you are diagnosed with terminal illness, when you have a major organ transplant, or if you are expected to be in a nursing home for the remainder of your life. If you meet the conditions required by the company, you can use the benefits for any purpose, not just long- term care expenses.

If your current life insurance policy does not have a living benefit rider and you want to include one, write to your insurance company and ask if your policy can be modified to include this option.

There are companies that will buy your existing life insurance policy for a percentage of your death benefit. You must meet their eligibility criteria which usually requires that you have a catastrophic or life-threatening illness. They pay you a lump sum percentage of your death benefit (usually 50 to 80 percent) and continue paying your premium because they will collect the full death benefit when you die.

These companies must be licensed by the California Department of Insurance. Medical information that is obtained when soliciting a viatical agreement must be kept confidential. Agents must tell you that there may be tax consequences when you sign one of these contracts. If you are considering a Viatical Settlement, contact your own insurance company first. They may allow you to use some portion of your death benefit to pay for your long-term care expenses.

The 1996 tax law, HIPAA, may allow some or all of the payments from a properly executed Viatical Settlement to be excluded from income. You should consult your tax advisor before making a final decision.

Note: If your own insurance company cannot help you, call the California Department of Insurance to make sure that any company offering a viatical agreement is properly licensed.

Annuities are insurance contracts that pay interest on the premium you pay the insurance company. Although these may resemble a Certificate of Deposit, they are not federally insured. Annuities are offered by most life insurance companies under two types of contracts: immediate and deferred.

Immediate annuities make periodic payments for a certain number of years or until a specific event, such as your death, has occurred. If you purchased an immediate annuity, you could receive periodic payments until you die, or until the end of the contract period. With a deferred annuity, payments do not begin until a specific event occurs, such as retirement or when you reach a certain age.

Deferred or immediate annuities are sometimes purchased to create an income stream to pay the cost of long-term care. You pay one large premium up front, and the annuity begins paying then or later. Generally you will have to pay some penalty if you later decide that you want payments to begin sooner, or you want the whole amount in one lump sum. If you need long-term care before deferred annuity payments begin, some companies will waive the surrender fees if asked.

Note: You should consult a tax advisor before purchasing any kind of annuity.

If you have a large estate, a living trust avoids the lengthy probate period. You can name yourself as the trustee with a successor who will make decisions for you if you become incapacitated. Generally, if your estate is large enough to warrant a living trust, you should have enough assets to pay for your long-term care. Assets held in a living trust will be counted in determining Medi-Cal eligibility. (See next page for information on Medi-Cal.)

The only type of trust that will protect your assets from the cost of long-term care is an irrevocable trust. However, then you would no longer have any access to your assets. For all intents and purposes the assets become the property of the trustee.

Note: Recent changes to state and federal law are placing greater restrictions on trusts when people later apply for Medi-Cal. For more specific information, check with a free legal services program in your community, your financial advisor or an Elder Law attorney.

For many older people, their home is their most valuable asset. "Home equity conversion" or "reverse mortgages" were developed to help older people tap into the equity of their homes. A reverse mortgage may allow you to receive monthly payments based on the equity you own. These payments could then be used to pay for the care you need and allow you to remain in your own home. The amount of monthly payments you can receive from a reverse mortgage depends on your age, the value of your home and the cost of the loan.

There are various types of home equity loans. Some are offered by lenders through the Federal Housing Administration (FHA) or the Federal National Mortgage Association, while others are offered by financial services companies or insurance companies. Some will only continue making payments as long as you continue living in your home; others are fixed term mortgages; while others give you a line of credit.

The FHA requires lenders to provide counseling to help you understand these loans and how they work. As with any complex financial contract, you should discuss these arrangements with your financial advisor and accountant or attorney before you enter into one of these contracts.

This is California's version of Medicaid, a joint federal and state program for people with low incomes and few assets. Medi-Cal provides health care services to people on public assistance and to others who cannot afford to pay for these services themselves.

Medi-Cal pays for physician-approved hospital, medical, prescription drug, and nursing home care. It also covers in-home services through the Personal Care Services Program (PCSP). PCSP uses Medi-Cal benefits to provide choreworker and personal care services at home for those who are eligible. Personal care is assistance with bodily hygiene, personal safety and activities of daily living.

Medi-Cal pays for nursing home care when a stay is medically necessary. Couples anticipating nursing home placement for a spouse need to be aware of special laws intended to prevent impoverishment of the spouse at home. These laws allow the spouse at home to keep a certain amount of their combined income and assets when the other spouse goes to a nursing home. In 1998, the spouse at home may keep all of the couple's income up to $2,019 each month, and up to $80,760 in resources. (The spouse at home can be granted more of their income, if necessary, through a "fair hearing," or by court order.)

Income allocated to the spouse in the nursing facility will go towards his or her share of cost, if any. The spouse can also keep $35 a month for personal needs and up to $2,000 in assets.

Note: The income and asset limits change each year. For more information on Medi-Cal eligibility guidelines and specific income and asset limits, contact your county Department of Social Services.

The Multipurpose Senior Services Program (MSSP) is a care and case management program that helps people live independently. It links older Medi-Cal eligible individuals when they need placement in a nursing home with various health and social services in their community. For more information on the MSSP program, call 1-800-510-2020.

In-Home Supportive Services (IHSS) provides non-medical services to eligible aged, blind and disabled persons who are unable to remain in their homes safely without this assistance. An individual may be eligible for IHHS when they meet specific criteria related to eligibility for the Supplemental Security In- come/State Supplementary Program (SSI/SSP) for the aged, blind and disabled. The types of services available through the IHSS program are domestic and related services, such as heavy cleaning, menu planning, laundry services, meal preparation and cleanup, and reasonable shopping errands. The IHSS program is administered by county departments of social services under guide- lines established by the state. For further information on the IHSS program, contact your county Department of Social Services.

Many families do provide personal care for their older family members. However, it is difficult to predict if potential caregivers will be available to provide care when you need it. Family members frequently live far away from their older relatives, and providing daily care is often impossible. Families that do live nearby often provide informal care in the beginning, but few families can provide full-time care. Most do not have the financial resources to pay for care in an older person's home or in a nursing home.

Alternative housing arrangements are available in many communities and may be an option for some people. These housing options vary depending on where you live, and use many different names. They are often called retirement homes, assisted living facilities, or life care communities. People often move to one of these places before they need care, and usually intend to stay there the rest of their lives.

Some of these alternative housing arrangements require large cash deposits and a monthly fee; others use a month to month rental arrangement. Some allow residents to move from independent living through more intensive levels of care within the same facility as they become increasingly more dependent, Others provide only some of the services a resident may need, and require them to move at later stages of disability.

Some may require you to sign a complicated financial contract and pay a large non-refundable deposit when you first sign up.

Note: You should always have legal contracts reviewed by your financial advisor before you sign one, and particularly if you pay a large deposit.

Some fraternal organizations and church auxiliaries have special funds to assist members of their organizations who need help with long-term care. For example, some religious groups sponsor homes that provide social, personal and medical services for elderly members of their faith. Some offer free services; others charge a fee based on income. If you belong to one of these groups, or a similar group, ask about any type of long-term care that might be available.

The Veterans Administration (VA) provides a wide variety of services for aging veterans through traditional hospital programs, VA nursing homes and the State veterans homes. The VA also offers other programs including home care, adult day care, mental health care, day treatment centers and caregiver-support programs. However, the VA has recently reduced some of its services due to budgetary constraints.

Note: Not all veterans are eligible for these services, so it is important to inquire before you need assistance. For information call 1-800-827-1000.

Some individuals have been selling "home companion care" to senior citizens, primarily targeting the over- 80 population. These "policies" are not long-term care insurance. These contracts require an advance payment of $6,000 to $14,000, plus annual "association" or "member- ship" fees. They promise to provide one year of home companion or homemaker care, full-time or part-time, and a variety of other member services. Copayments are required for each "service" provided by these contracts.

People selling these products do not pay into the state insurance guarantee fund, and these contracts are unregulated. Some of these products may be under-funded and unable to provide the promised benefits. Unlike insurance policies, these contracts have only a three-day (rather than a 30-day) "free look" period for cancellation and return of funds. These companies may charge for the same types of services available free or at low cost from government and community-based organizations.