Should I Spend Money on Long Term Care Insurance that I May Never Use?

Long Term Care Insurance (hereafter referred to as LTC) is a risk protection tool. Many people don’t consider the risk to be worth spending the money, while others believe that everyone must have LTC. In this section we will discuss the “true” statistics regarding nursing home care and other related services, and hopefully arm you to make a wise decision.

We could die suddenly in our sleep, in a car wreck, watching TV, or we could have a stroke and spend years in a nursing home. We don’t really know how or when we will have a health issue. LTC provides a back-up plan to cover our needs and protect the assets we have spent a lifetime accumulating.

With the aging of America, LTC has taken on a whole new meaning. We remember that just a few years ago, nursing homes were few and far between and many were only in small towns. Today, we see independent living, assisted living and nursing home facilities in almost every neighborhood. Long term care has grown to a complex formal network that includes medical, nursing, social and other related services. The average monthly institutional cost in our country is $6,250. With that in mind, think about this:

• There are more than 1.9 million nursing home residents in the U.S.
• There are approximately one million individuals living in assisted living facilities.
• Almost 200,000 individuals are receiving care at adult day care centers.
• Nearly 1.5 million people receive home health care services.
• 745,000 people (average age of 78) live in continuing care retirement communities.

(From www.aahsa.org/aging_services/default.asp AAHSA: Aging Services: The Facts 3/14/07)

The number of Americans turning age 65 will jump from 6,000 per day in 2007 to 10,000 per day in 2011. Exponential numbers are just around the corner. According to Partners for Livable Communities, one in five Americans, or 80 million people, will be termed elderly in the year 2030. This is simply staggering! Satchel Page, the great baseball player of yesteryear once said: “Age is a question of mind over matter; if you don’t mind, it doesn’t matter.” However, with the increasing number of seniors today that are diagnosed with some type of dementia and in need of care, it does matter.

Now, having said all that, I want to clarify some of the myths and facts concerning Long Term Care Insurance. Remember LTC is a risk protection tool.

1. Myth - You need to buy long term care when you are young because more than 40% of people who need LTC are under age 65.
Fact – 238 million people between the ages of 18-64 receive health care assistance. Only 159,000, or less than 1%, receive nursing home care.

2. Myth - Medicare will pay for your LTC expenses if you are over age 65.
Fact - Medicare only pays for short-term skilled care in nursing facilities and limited skilled care at home. It is not a long term care policy.

3. Myth - There is nearly a 50% chance that a person will require 24-hour care in a nursing home facility.
Fact - Only 1% of those aged 65-74 live in a nursing home. Only 4% of those ages 75-84 and 19% of those 85 years and older are currently living in a nursing home.

4. Myth - If you purchase LTC at age 65 you probably don’t need inflation protection.
Fact - The average age of admission into a nursing home is 83. If you are age 65 today, you have 18 more years of inflation and need to consider that the average stay in a nursing home for a senior adult is between 2.8 & 3.2 years.

More facts to consider:
• Women face a greater possibility of needing long term care.
-They tend to outlive their spouse and in many cases their caregivers.

• Most long term care costs are paid for by the income and assets of individuals and their families.
-Most people still have family members who provide in home care and act as unpaid caregivers. They help with the basic activities for daily living such as bathing, dressing eating, toileting, medications and grooming.

• If a person needs LTC and has few assets and income, Medicaid can be one option.
-Medicaid is a federal and state government program that acts like a safety net when individuals qualify because of minimal assets (usually $2000) and income (check with your state Medicaid offices). President Bush signed the Deficit Reduction Act (DRA) on February 8th of 2006 which changed the Medicaid asset transfer rules and penalty period.

If you have a spouse, friend or relative who is in need of nursing home care, you can visit the Consumers Union Center for Consumer Health Choices web site at: www.comsumersunion.org/health/nursing-rpt603.htm.

Insurance Poor!

I am sure you are familiar with the term “insurance poor”. You cannot purchase a kitchen appliance, office furniture, or a car without being offered an extended warranty (insurance)! We even keep home owners insurance after our homes are paid for. The reason we do this is because we are afraid our home might burn down. Now what is the likelihood of our house burning down? Not that great, but we still carry the insurance, just in case!

Everyone needs to evaluate their own personal situation in order to decide:
• What genetic factors will contribute to long term care need.
• If the premiums are affordable.
• What value you place on independence.
• If there are other housing/care options available to you(family/friends).
Do not be manipulated by agents who use misleading statistics to create fear in an effort to sell you a LTC policy.

Next - What Are My Other Health Care Options?

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