Long-Term Care 101

Think you know about Long-Term Care? Click here to take the quiz!

Help SECURE YOUR FUTURE with proactive Long-Term Care planning

Quick Links:

• What is Long-Term Care?
• Fact or Fiction? Common LTC Insurance Misconceptions
• Services & Settings of Long-Term Care
• Medicare vs. Medicaid—What’s the Difference?
• Likelihood of Needing Care
• Understanding the Cost of Care
• The Cost of Waiting
• Paying for Care
• Baby Boomers & LTC
• Women & LTC
• Gay & Lesbian Community & LTC
• Seniors & LTC

What is Long-Term Care?

Many people conjure up an image of a nursing home when they think of long-term care. But long-term care does not always mean institutional care. Instead, it is primarily “custodial” care—personal, hands-on assistance to individuals who need help with the activities of daily living, or ADLs. ADLs are routine things that healthy people don’t give a second thought to: bathing, dressing, eating, using the toilet, getting into and out of bed or a chair. The need for long-term care may be due to physical limitations or disabilities resulting from injury, illness or the normal aging process. It can also be due to a cognitive impairment resulting from a stroke, for example, or Alzheimer’s disease.

And while such care is provided in nursing facilities, assisted-living facilities, and adult day care centers, the majority of long-term care takes place in the recipient’s home. Usually, in fact, it is provided by unpaid family members or friends.

If you think long-term care is primarily needed by the elderly, you’re incorrect. Nearly 41% of long-term care is provided to people under age 65 who need help taking care of themselves after an accident or stroke or as a result of chronic illness or debilitating diseases. (1)

(top)

Fact or Fiction? Common Long-Term Care Insurance Misconceptions

Misconception #1

“Long-Term Care Insurance is too expensive! Besides, I am healthy now so why not wait and save money?”

The facts:

• The average monthly cost for a private room in a nursing home is $6,265. (2)
• The approximate monthly cost for an average LTCI policy is $190. (3)

Comparing the LTCI cost with the costs involved for appropriate care, you should ask, “Can I afford not to have Long-Term Care Insurance?” This is the most common reason given for not owning long-term care insurance. Yet according to LIMRA International, a market research organization, people who have never shopped for policies overestimate the cost by as much as five to 10 times.

Misconception #2

“I don’t need Long-Term Care Insurance because I won’t need long-term care.”

The facts:

• If there was a 69% chance that you would wreck your car in an accident, would you make sure you had auto insurance?
• If there was a 69% chance that your home would burn in a fire, would you buy homeowners insurance?
• According to the Centers for Medicare and Medicaid Services, about 10 million people of all ages already need help with the basic tasks of daily living, and that number is projected to increase sharply as the population continues to age.

Given this information, why wouldn’t you protect yourself against such a great risk?

Misconception #3

“Medicare will cover my long-term care needs.”

The facts:

• Medicare only pays about 12% of short-term skilled nursing-home care costs, and only provides coverage following hospitalization.(4)
• Medicare does not pay for help with Activities of Daily Living.

So if not from Medicare, where will your long-term care funding come from?

Misconception #4

“My long-term care expenses will be taken care of by Medicaid.”

The facts:

• Medicaid is the federal program that provides health care coverage to lower-income Americans. Medicaid pays benefits either immediately, for people meeting federal poverty guidelines, or after nursing home residents exhaust their savings and become eligible. (5)

Would you rather receive care how and where you want with the flexibility of a Long-Term Care Insurance policy?

Misconception #5

“My family will take care of me.”

The facts: In a study of 935 caregivers employed while caregiving, those surveyed said they made at least one formal adjustment to their working schedule as a result of caring for a loved one. (6)

• 57% go in late and leave early
• 17% took a leave of absence
• 10% had to cut back to part-time hours
• 6% had to give up their work entirely

Will your family be able to provide the care needed? Will they have the resources to pay for the assistance that may be required? More importantly, how will you feel about your family being your caregiver?

(top)

Services & Settings of Long-Term Care

Where can long-term care be received?

• Your home
• Adult day care center
• Assisted living facility
• Nursing home
• Hospice facility

Most long-term care (about 80%) is provided at home—either in the home of the person receiving care or at a family member’s home. (7)

Provides choice and control when you need care

The best long-term care insurance policies help give you control over important care decisions. When choosing a long-care care insurance policy, it’s important that you choose a plan that provides:

• Coverage in a variety of care settings, including at a nursing home, assisted living facility, in your local community, or at home
• A wide range of home health care benefits that allow you to stay at home longer
• Inflation protection that helps your benefits keep pace with the rising cost of care
• Flexible benefit options to meet your specific care needs

(top)

Medicare vs. Medicaid—What’s the Difference?

The difference between Medicare and Medicaid can be confusing, and many people assume the government will cover their long-term care needs through one of these programs. In reality, most people do not qualify for either program, which makes Long-Term Care Insurance a must-have!

(top)

Likelihood of Needing Care

The longer you live, the more likely it is that you’ll need help at some point. Overall, at least 70% of people who live to age 65 will require some long-term care services at some point in their lives. That means that only 3 in 10 of us will live out our lives without the need of such assistance.

Will you need care someday? None of us know for sure, but family history could be a good indicator.

One thing is certain: The potential need for long-term care is a risk that all Americans face—and one that can take a heavy toll on your family and your wallet.

The chance of needing:

FACTS ABOUT LONG-TERM CARE

2009 Individual Long-Term Care Insurance Facts

• • 8.25 million Americans protected with long-term care insurance
• • $8.5 billion in Long-Term Care insurance claims paid in 2008
• • 180,000 Americans paid Long-Term Care insurance benefits in 2008
• • $1.2 million: Amount of largest claim still open

Source: American Association for Long-Term Care Insurance, 2009 Sourcebook

Percentage of Claims Paid To:

Men 35%
Women 65%

(top)

Understanding the Cost of Care

The cost of care is an important consideration in long term care planning. Taking into account the current and future cost of care can help you:

• Better understand the risk of needing long term care
• Quantify the potential impact to your financial assets — today and in your later years

Today, the average cost for one year of home-based care can exceed $75,000. (11) Based on historical inflation, the cost of care in 20 or 30 years could easily be $150,000 to $250,000 annually — an expense that could jeopardize a lifetime of planning and savings.

The Rising Cost of Care
Projected increases in annual costs. (12)

By purchasing a long term care (LTC) insurance policy today, you can feel confident that you’ve taken appropriate steps to help protect your retirement assets and maintain control over where you receive care.

Long-term care needs may evolve over time

In many cases, people who initially receive long-term care services in their home may, over time, need to transition to a different care setting, such as an assisted living facility or nursing home. When this occurs, the need to cover costs for long-term care services is extended.

For example, after receiving three years of home-based care, a person moves into a facility and stays for two years. Based on the current average annual cost of facility care, the two-year stay would cost more than $150,000, bringing total long-term care expenses for five years to $311,280 in today’s dollars. Based on inflation, that number could surpass $700,000 to $1.5 million in 20 to 30 years.

Many people mistakenly believe they are already covered.

Long-term care insurance pays for personal assistance with activities such as eating, bathing, using the toilet, and moving around—or for supervision due to cognitive impairment. This assistance is typically not covered by health or long-term disability insurance. As for government programs, Medicare pays only for short periods of care, and Medicaid only covers the very poor—those whose assets are at or below state-required levels.

The impact of long-term care

(top)

The Cost of Waiting

Today, a healthy 50-year-old seeking to buy a 5-year policy with a $200 Daily Benefit would pay an annual premium of $1,624. The chart below shows the annual premium that same person would pay if he/she were to wait to purchase the same 5-year policy with comparable daily benefits (adjusted for inflation) at older ages. (16)

The decision to purchase Long-Term Care insurance today can make your annual premium significantly more affordable than if you delay your decision to buy.

Your age and health matter

The cost of a long-term care insurance policy typically is based on your age and health when you apply, as well as the additional benefits you select on your policy. As a result, the annual premium that you would pay for a policy bought today may be significantly lower than what you would pay for a comparable policy purchased at an older age, or if your health declines. In addition to understanding the rising costs of care, you’ll also want to consider the following when deciding whether to purchase long-term care insurance:

• Premiums based on age—Health issues aside, a Long-Term Care insurance policy for a 50-year-old is less expensive than the same policy for a 60-year-old.
• Changes in health status—Most of the insurance carriers offer significant discounts for good health.

If you are healthy today and delay your purchase, a future change in health status may disqualify you for the health discount—and result in a higher premium.

An accident or illness can strike at any age

The coverage you buy for your future also protects you today. If an accident or illness were to occur when you are relatively young, owning a long-term care insurance policy would ensure you have coverage to help pay for the cost of care.

(top)

Paying for Care

The need for long-term care can be a costly and sometimes unexpected expense. Many people mistakenly believe that long-term care services are already covered. However, this type of assistance is not typically paid for by health or disability insurance. In addition, government programs are not designed to cover cost of long-term care for most people. Others believe they can “self-insure” by covering long-term care expenses themselves, not realizing how much and how fast the cost of care can affect a lifetime of savings.

SAMPLE OF MONTHLY COSTS ASSOCIATED WITH HOME-BASED LTC SERVICES

Below is a hypothetical scenario showing potential costs for an individual receiving long-term care services in their home over a three-year period.

If you or a family member were to need care, how would you pay for it?

• Medicare pays only for short periods of care.
• Medicaid generally covers only people with very little income and assets.
• Personal Income, Savings and Assets are often used to cover long-term care expenses, putting a significant portion of people’s retirement savings at risk.
• Family members sometimes assume the burden of care, which over time can have a significant impact on their lifestyle, personal and work commitments, as well as their physical and emotional well-being.
• Long-Term Care Insurance

Advantages to purchasing Long-Term Care Insurance:

• It provides benefits when they are needed.
• It helps preserve your savings and assets.
• It provides you a greater range of care options.
• It can enhance your quality of life.

Limitations of Other Funding Methods:

• Medicare provides some benefits for long-term care services, but these are very limited. Medicare covers nursing home care, but only for short periods following hospitalization. Benefits for both nursing home care and home care are provided only to those needing skilled care to recover from an acute illness or injury. Medicare does not cover ongoing personal or supervisory care needed to cope with a chronic impairment. And neither Medicare supplement insurance nor Medicare Advantage plans provide any significant additional coverage for long-term care.
• Medicaid only pays for long-term care for the poor. Those who are not indigent must deplete their life savings and assets before they can become eligible for Medicaid, and while receiving Medicaid benefits, they must spend almost all their income on care. Moreover, because most state Medicaid programs focus on nursing home care and because Medicaid does not usually pay providers as much as private patients, care options are often limited for Medicaid beneficiaries.
• Savings and Assets It is not realistic to expect most Americans to be able to save the amount of money needed to pay for long-term care, especially while trying to buy a home, save for their children’s education, and fund their own retirement. Those who do rely on their own funds to pay for care must often deplete most of their assets they have spent a lifetime accumulating, leaving nothing for a comfortable retirement or for a surviving spouse or other heirs.

(top)

Baby Boomers

Be financially secure —
Living life the way you want

That’s what independence is all about. But realizing your goals requires proactive planning; including taking into account how the need for long-term care can impact your financial security, your lifestyle, and your family’s well-being.

• 84% of buyers of traditional Long-Term Care insurance protection in 2008 were younger than age 65.

Source: American Association for Long-Term Care Insurance (AALTCI), www.aaltci.org, 2009.

The time to prepare is now — While you’re young and healthy

When it comes to long-term planning, it’s important to address your future needs sooner rather than later.

• Your age and health are key factors that will determine the cost of your long-term care policy. The younger and healthier you are when you purchase your policy, the more affordable it will be.
• The coverage you buy for your future also protects you today. If an accident or illness were to occur when you are relatively young, owning a long-term care insurance policy would ensure you have coverage to help pay for the cost of care.

Source: National Clearinghouse for Long-Term Care Information, www.longtermcare.gov, Sept. 2008.

Long-term care insurance.
Important at any age.

A serious accident or debilitating illness can strike at any age.

• It can happen when you’re young: 40% of people who need long-term care are working adults between the ages of 18 and 64.
• The probability of losses in physical functioning increases with age — dramatically so for the population aged 65 and older.

You’re probably not already covered.

Many people mistakenly believe their long-term care needs are already covered, but long-term care assistance isn’t typically paid for by health or disability insurance. In addition, government programs such as Medicare and Medicaid aren’t designed to cover these costs.

By planning ahead today — with long-term care insurance — you’ll take an important step toward helping to protect your future.

Quality time.
For you and your family.

By covering personal assistance from licensed health care and home care professionals, long-term care insurance relieves you of having to rely too much on your family and friends for physical help. So the time you spend together can be more rewarding and enjoyable.

(Highlight from Meeting the Long-Term Care Needs of the Baby Boomers: How Changing Families Will Affect Paid Helpers and Institutions, a study by the Urban Institute, May 2007)

Greater Need by Boomers Meets Government Financial Crisis

As Baby Boomers age, their numbers will double Medicare eligibles. At the same time, the number of workers to support beneficiaries will decline. Those who ignore the facts—a surging need for long-term care…fewer dollars to fund government programs—are going to face a world where they have less (if any) choice.

Conclusion of Study:

• The disabled older population will grow faster than the younger population, likely raising the economic burden of long-term care.
• Rapid population growth will substantially boost the number of older people using paid long-term care services.
• Even under the most optimistic scenario long-term care burdens on families and institutions will increase substantially in coming decades.

• The number of frail older adults receiving long-term care will grow over time as a share of the population ages 25 to 64, suggesting that care burdens on prime-workers will rise as the boomers age.

(top)

Women

There’s so much you want to do

Retire comfortably. Maintain your independence and financial security. You are working hard to make that a reality. But it takes planning. And that part of planning means protecting the savings and investments you are accumulating to reach those goals.

Protect your future.
And your family’s well-being.

Over the course of a lifetime, you save and invest to meet your goals. A comfortable retirement. Travel. Time with family and friends. By making long-term care insurance part of your financial plan, you’re taking an important step toward meeting those goals. Don’t let the high cost of long-term care interfere with your plans.

Long-term care planning.
It’s a women’s issue.

No one likes to think about needing long term care. But people of all ages need the protection that long term care insurance buys. Especially women — because women tend to live longer and are more likely to reach an age where they require professional long term care.

Because women generally outlive men by several years, they face a 50% greater likelihood than men of entering a nursing home after age 65. (21)

While family and friends can always be depended upon to help, distance, work, time, and other responsibilities may make it difficult for them to do as much as they might like. That’s why more and more women are incorporating long term care insurance into their financial plans.

Women especially need to think about long-term care because women live longer than men making them more likely to reach an age where long-term care is needed.

Source: National Clearinghouse for Long-Term Care Information, www.longtermcare.gov, Sept. 2008.

Quality time for you and your family

Chances are, you’ve experienced being a caregiver at some point in your life, so you know how demanding a role it can be. By covering personal assistance from licensed health care and home care professionals, long-term care insurance relieves you of having to rely too much on your family and friends for physical help. So the time you spend together can be more rewarding and enjoyable.

Source: AARP Public Policy Institute, “Fact Sheet: Women & Long-Term Care” April 2007.

Women and Long-Term Care

Long-term care planning is especially important to women who are married or may be living alone. Women can be impacted at multiple times in multiple ways; as providers of care and, ultimately, as recipients of long-term care.

Why Long-Term Care Planning is Vital for Women

WOMEN FACE MORE RISK OF NEEDING CARE

• Women represent a greater proportion of older Americans, accounting for almost 58% of the population aged 65 and older.
• Women who reach age 65 have a life expectancy of another 20 years versus men (17 years). For women who reach 85 it is 7.2 years versus 6.1 for men.
• Women have 10 times the chance (as men) of reaching age 85. More than two-thirds (68%) of the population 85 and older are women.
• Women over age 65 are less likely to be married (44%) than men (75%). They are more likely to be divorced (9.6%) than men (7.5%).
• Women over age 75 are far less likely to be married (38%) than men (74%). By age 85, only 15% of women are married; 76% are widowed.
• Women are twice as likely to be living alone. Between 65 and 74, 28% of women live alone compared to 15% of men. After age 75, 49% of women live alone compared to 22% of men.
• Women living in poverty is highest among divorced or separated women (37%) followed by widowed women (28%), never married women (22%) and married women (10%).
• Women who reach age 65 are less likely to be able to perform any one of five physical functions (21.7%) versus men (13.5%). At age 85, 55.9% of women are unable to versus 38.3% of men.
• Women are far more likely to go to a nursing home. After age 65, 40 out of every 1,000 women are in nursing homes, versus 24 men. After age 85, it’s 165.2 for women versus 80.0 for men.
• Women over age 65 include 980,000 nursing home residents versus 337,000 men.
• Women are more likely to suffer from Alzheimer’s disease — by far the leading health condition that requires long-term care. One in six women are at risk for developing Alzheimer’s in their lifetime, while the risk for men is one in ten.
• Women are more likely to suffer a stroke than men — another leading cause of needing long-term care. In 2004, 373,000 females and 327,000 males suffered a new or recurrent stroke.

WOMEN ARE TYPICALLY THE CAREGIVERS

• Women provide between 60% and 75% of family or informal care and although men also provide assistance, female caregivers may spend as much as 50% more time providing care.
• Women don’t abandon their caregiving responsibilities because of employment but the conflicting demands of work and care can result in women taking decreased work hours (33%), passing up a job promotion (29%), taking a leave of absence (22%), switching from full-time to part-time employment (20%) or quitting their job (16%).
• Women who are employed and provide care fare estimated to each lose an average of $25,494 in Social Security benefits, an average of $67,000 in pension benefits and $565,000 in wage wealth.
• Women who provide care for an ill or disabled spouse were almost six times as likely to suffer depressive or anxious symptoms as those who had no caregiving responsibilities.
• Women who spend nine or more hours a week caring for an ill or disabled spouse increases their risk of coronary heart disease twofold.

Facts about Women and Long-Term Care Insurance:

• Women receive $2.50 in benefits from LTC insurance policies for every $1.00 the company pays out to male policyholders. 42% of claims are for single women.
• Women who are single account for 42% of company claims. Some 25% of claims are married women, although married women tend to claim at an earlier age than either single women or single or married men.
• Women placed their first benefit claim for home care (75%), for assisted living (12%) for nursing home (13%).
• Women’s average cost for a dementia claim is $105,000 (single) and $98,000 (married); 2008 study.
• Women who are single are 110% more likely to exhaust policy benefits than are married men.
• Women who are single are 70% more likely to exhaust benefits than married women.
• Women who are single are 22% more likely to exhaust benefits than a single male.

Source: American Association for Long-Term Care Insurance (AALTCI), 2009 Sourcebook.

“Women have greater need for LTC insurance. Women are more likely to receive benefits from their LTC insurance, and because premiums are unisex, women pay the same as men.”
Executive Director Jesse Slome, AALTCI

There are four kinds of people in this world; those who have been caregivers, those who currently are caregivers, those who will be caregivers, and those who will need caregivers.

(top)

Gay and Lesbian Community

Protecting independence and quality of life.
For yourself. For your partner.

Over the course of a lifetime, you save and invest to meet your goals. A comfortable retirement. Travel. Spending time with loved ones and friends. By making long-term care insurance part of your financial plan, you’re taking an important step toward meeting those goals. Don’t let the high cost of long-term care interfere with your plans for your financial security.

On a national average, one year in a nursing home or 24-hour home care can cost more than $75,000.
Source: John Hancock Cost of Care Survey, conducted by CareScout, 2008.

Be financial secure — Living life the way you want

You’re building the life that’s right for you, but protecting it takes planning. Few people have the financial resources to pay for the ongoing care they might need in the event of a serious illness, injury, or disability.

This can be especially true for members of the gay and lesbian community, where planning for long term care can present some unique challenges. Have you taken into account how the need for long term care can affect your financial security?

Long-term care planning — An extra measure of financial security.

No one likes to think about needing long term care, but most everyone needs the protection it buys, especially the gay and lesbian community, where care issues and financial penalties can be different.

While most can often count on Social Security spousal or survivor benefits, regulations currently prohibit same-sex partners from receiving these types of assets. This is also often the case with many traditional employer pension plans. With long term care insurance, you can protect the assets you have worked so hard to accumulate, while reducing financial risks.

Source: National Clearinghouse for Long-Term Care Information, www.longtermcare.gov, Sept. 2008.

The time to prepare is now — While you’re young and healthy

Protect your financial security, while you are healthy enough to qualify for coverage. Your premiums are based on your age and health when you apply. Therefore, the younger and healthier you are, the more affordable your insurance can be.

Protection for your home.

For most couples, if a spouse is in a nursing home and needs to go on Medicaid, the healthy spouse can remain in a home that is jointly owned. However, for domestic partners, generally a healthy partner cannot remain in a jointly owned home and have Medicaid pay the costs of the nursing home, unless the ill partner’s share is bought out by the healthy one. With long term care insurance, you or your partner won’t have to sell the home to pay for care. And, if desired, unlike with Medicaid, the ill partner can even receive care at home.

Quality time — For you and your loved ones.

By covering personal assistance from licensed health care and home care professionals, long-term care insurance relieves you of having to rely too much on your partner, family and friends for physical help. So the time you spend together can be more rewarding and enjoyable.

About 74% of boomers said they are afraid of not being able to take care of themselves, and 56% are concerned about becoming dependent on others.
Source: MetLife, “Out and Aging: The MetLife Study of Lesbian and Gay Baby Boomers,” November 2006.

(top)

Seniors

Retirement. It’s about independence.

You’ve looked forward to a comfortable retirement. And you’ve worked hard to save and invest to meet your goals: to travel, pursue a hobby, maybe provide an estate for your heirs — to stay independent.

But it takes planning. Because few of us have the financial resources to pay for the ongoing care we might need as we grow older.

Protect your independence.
And your family’s well-being.

Your retirement plans center on making the most of your life and staying in your home as long as possible. And while you can always count on your family for help, you want the time you spend together to be quality time. By adding long term care insurance to your financial plan, you’re taking an important step toward making sure the high cost of long term care doesn’t interfere with your goals.

On average, one year in a nursing home or 24-hour home care can cost more than $66,000 today.
Source: Congressional Budget Office, “Financing Long-Term Care for the Elderly,” www.cbo.gov, April 2004

Long term care insurance.
The time to prepare is while you’re healthy and active.

No one likes to think about needing long term care. But the facts may surprise you:

The probability of losses in physical functioning increases with age — dramatically so for the population aged 65 and older.
Source: Congressional Budget Office, “Financing Long-Term Care for the Elderly,” www.cbo.gov, April 2004

The time to protect your financial security is now, while you are healthy enough to qualify for coverage. And because the cost of long term care insurance is based on your age when you apply, the sooner you begin, the lower your premiums, making your coverage more affordable.

Many people mistakenly believe they are already covered.

Long term care insurance pays for personal assistance with activities such as eating, bathing, using the toilet, and moving around — or for supervision due to cognitive impairment. This assistance is typically not covered by health or long term disability insurance. As for government programs, Medicare pays only for short periods of care and Medicaid only covers the very poor — those whose assets are at or below state-required levels.

Quality time.
For you and your family.

By covering personal assistance from licensed health care and home care professionals, long term care insurance relieves you of having to rely too much on your family and friends for physical help. So the time you spend together can be more rewarding and enjoyable.

(Highlight from Meeting the Long-Term Care Needs of the Baby Boomers: How Changing Families Will Affect Paid Helpers and Institutions, a study by the Urban Institute, May 2007)

Because the overall size of the older population will expand rapidly, the number of frail older Americans will soar in the coming decades. Between 2000 and 2040, the number of older adults with disabilities will more than double, increasing from about 10 million to about 21 million. The number of older Americans with severe disabilities will increase by more than 3 million, to about 6 million adults.

Source: The Urban Institute, “Meeting the Long-Term Care Needs of the Baby Boomers,” May 2007.

• Fewer adult offspring will be available to care for their frail parents in coming years.
• The likelihood that frail older people have large families to provide care will also decline over the coming decades.

(top)

Latest News