Some Brief Facts
"Almost half of everyone over age 65 spends some time in a nursing home. "
"A stay costs about $2,000 to $5,000 a month, and that is expected to rise to an estimated $7,000 to $18,000 by 2023."
"No matter what age you are now, if you were to buy a mid-priced long-term care policy you'd probably pay out less for your lifetime of premiums than you would for one year in a nursing home."
Conde Nast Currency, April 1998
The greatest threat to life savings is not acute illness but long term care.
- In reality, today about 1 in 10 Americans older than 65 and almost half of Americans age 85 and older who live in the community require assistance with their every day activities. The risks of needing nursing home care are also substantial. Nearly half of women and one-third of men age 65 and older will need a nursing home stay sometime during their lifetime. (Testimony before the U.S. Senate Special Committee on Aging, March 9, 1998)
- Overall, 1.8 million Americans are in nursing homes; the cost last year was $87 billion. About half of that, or $44.9 billion, was paid by Medicaid, the federal-state program intended to provide health care to the poor. That tax bill is equivalent to $173 each from all 260 million men, women and children in America. As the aging population swells, the burdens will only get worse. (Philadelphia Online, 3/30/98)
The need for long term care is growing.
- By the year 2030, when the last of the baby boomers reach retirement, it is estimated that the number of elderly individuals will double from 35 million to nearly 70 million. Over 20 percent of the population will be over 65 in 2030, compared with 13 percent in 1990. This means that in about thirty years, 32 states will resemble Florida’s population today. (Testimony before the U.S. Senate Special Committee on Aging, March 9, 1998)
- Today, the average life expectancy at birth is 79 years for women and 72 years for men. Life expectancy is projected to increase into the next century, increasing at a slightly greater rate for women. Since women have a longer average life expectancy than men and also tend to marry men older than themselves, 7 out of 10 "baby boom" women will outlive their husbands -- many can expect to be widows for 15 to 20 years. (Administration On Aging, 3/30/98)
- By the year 2020, older women will account for 85 percent of persons aged 65 and over who live alone. Given these factors, home and community-based services, which include personal care services, assistance with household tasks, transportation, and attention to health needs, are critical to the well-being of older women today and will play an increasingly important role in meeting their diverse needs well into the next century. (Administration On Aging, 3/30/98)
- Since 1990, the costs per stay have increased at an annual average rate of 3 percent above the rate of inflation. Assuming this trend continues, the annual cost of a nursing home stay is expected to increase from $40,000 today to $97,000 (in 1996 dollars) by 2030. (Testimony before the U.S. Senate Special Committee on Aging, March 9, 1998)
- Though government pays for a large portion of long term care costs, if baby boomers fail to plan ahead and purchase private insurance, much of the burden of rising nursing home costs will continue to fall on individuals and their families. Currently about 48 % of nursing home costs are paid for by individuals in the form of out-of-pocket costs. (Testimony before the U.S. Senate Special Committee on Aging, March 9, 1998)
Long term care, whether at home or in a nursing home, often can wipe out the life savings of a chronically ill patient in one year or less. (Washington Times,2/16/98)
- Medicare covers only skilled daily care up to 100 days, which is less than 9% of nursing home costs.
- Long term care is not covered by health insurance or Medigap supplements.
- Medicaid patients depend on the government to determine the type of care received.
Due to growing publicity, Americans are waking up to this serious financial risk.
Glossary of Terms
Activities of Daily Living (ADLs)
These are functions or activities which are performed by individuals without assistance, thus allowing personal independence in everyday living. These functions are used as measurement standards to determine the level of personal functioning capacity. Examples of ADLs would include:
Transferring: the ability to move from a bed to a chair
Dressing: being able to adequately clothe one’s self
Personal Hygiene: being able to go to and from the toilet and bathing
Eating: being able to take in food
Adult Day Care
Adult Day Care is a group program designed to meet the needs of functionally impaired adults. This is a structured program away from one’s own home which provides a variety of health, social and related support services.
Daily Benefit
This is the amount of benefit in dollars that you choose to offset nursing home or home care expenses. (You may want to check what the average daily cost of nursing homes is in your area.)
Guaranteed Renewable
Regardless of your age or changes in your health, your coverage can never be canceled as long as your premiums are paid on time.
Home Health Care
Home Health Care allows a person to remain at home, or to receive services at a community-based center, when assistance is needed but a nursing home confinement is not required. Many plans require a separate rider for this care. Other plans offer both Nursing Home and Home Health Care under one basic plan, providing a pool of benefits to cover expenses wherever care is provided.
Long Term Care
Long Term Care is care provided for persons with chronic disease or disabilities. The term includes adult day care, custodial care, home health care, hospice care, intermediate care, respite care and skilled nursing care. Long term care does not include hospital care.
Maximum Benefit or Benefit Period
This is the limit on benefits you can receive from the policy. It may be expressed as a lifetime dollar amount (Benefit) or a length of time (Benefit Period). Some plans offer unlimited benefits. (The higher the maximum, the higher the premium.)
No Premium Increase for Age and Health
The premium you pay when you first qualify for coverage will never increase due to changes in your age or health. Premium adjustments may be made only to an entire group of people, in the same rate class, and in a given state, and only upon 31-days prior written notice.
Skilled Care
Skilled Care is daily nursing and rehabilitative care performed or supervised by skilled medical personnel. Care must be based on doctor’s orders.
30-Day Free Look
Reputable insurance carriers give you 30 days to review your policy coverage. If you are not completely satisfied, you may return your insurance documents with no further obligation.
