2. Why should you consider long term care insurance?
If you've thought about your future most likely you've set aside money for unforseen events. But you probably haven't protected your savings against the expense
of an extended illness or disability. You should take action now,
because the likelihood of needing such long term care is significant
and the cost is high.
A study reported by the New England Journal of Medicine in 1992 anticipates that 43% of people over age 65 will enter nursing facilities during their lifetime. More than half of
the people in a nursing facility stay more than one year. Currently,
the cost of a year in a nursing home averages about $38,000.¹ In
addition to nursing facilities, many people will need long term
care services in their home, or community services in adult day
care centers. It has estimated that 80% of all people age 65 will
need either nursing facility services or home or community services
during their lifetime.
Long term care insurance is the most efficient means of protecting your
assets from this threat. When you purchase a long term care insurance
policy, you not only help safeguard your assets from the cost of
long term care, but you increase your independence and control over
future needs.
3.Who pays for long term care?
Nationally, one third of all nursing home expenses are paid out-of-pocket by
individuals and their families, and about half are paid by state
Medicaid programs.¹ Medicare, Medicare Supplement Plans, Medicare
HMO's and traditional health insurance plans are designed to pay
for hospital and doctor costs, not to pay for long term care services.
In fact, Medicare pays only about 10% of all long term care costs
(including only 5% of all nursing facility expenses). A study performed
by the Health Care Financing Administration, which administers Medicare,
showed that the majority of nursing facility costs were paid with
the personal assets of the individual receiving the care, or by
Medicaid if the individual had no personal assets. To receive Medicaid
assistance, you must meet federal poverty guidelines for income
and assets on health care. When you have spent down your assets,
you then will be eligible for Medicaid. Thus, many people begin
paying for nursing home care out of their own pockets and are forced
to spend down their financial resources until they become eligible
for Medicaid.
4. How much does long term care cost?
If you don't have insurance, long term care can be expensive, depending
upon the amount and type of care needed and the setting in which
it is provided. Currently, the cost of a year in a nursing home
averages about $38,000.¹ This cost is only an average and varies
widely across the country. If you receive skilled nursing care in
your home and are visited by a nurse three times a week for two
hours per visit for the entire year, the bill would come to about
$12,300.¹ If you receive personal care in your home from a home
health aide three times a week for a year, with each visit lasting
two hours, the bill would amount to about $8,400.¹
¹American
Health Care Association study, 1993
