Planning for the Future
By: Source: AARP.org Date Posted: 2006-12-22 13:53:25.657182-05:00
Most Americans are unaware of the cost of long-term care and overestimate the amount that government programs such as Medicare will pay, according to a recently released AARP report.
"With an estimated nine million people over the age of 65 requiring long-term care services this year, there is a need for better public awareness, planning and coordination of government and private sector initiatives," said AARP National Board Member Jennie Chin Hansen.
Roger Corkill of Sioux Falls learned first hand how costly long-term care can be when his mother entered a nursing home seven years ago. That knowledge prompted Corkill and his wife Dianne to purchase long-term care insurance.
"We didn't want to see our children burdened with the financial responsibility of paying for our care should we need it," Corkill said.
In fiscal year 2006, South Dakota's Medicaid expenditures for nursing home care totaled $131.4 million. In an effort to reduce the burden on the state's Medicaid program, the 2006 legislature passed a measure establishing the Long-Term Care Partnership Program, which AARP South Dakota supported, to provide incentives for buying long-term care insurance.
By purchasing a long-term care policy, people who exhaust their benefits from the policy can shield an equal value of assets from being "spent down" before Medicaid begins to cover their long-term care needs. In 2007, South Dakota will be one of six states participating in an aggressive education campaign called "Own Your Future", which encourages residents to plan early for long-term care.
The Corkills were in their mid-50s when they purchased their insurance policy. Even if they pay premiums for two decades or more, Corkill figures they would break even on their investment after just nine months in a long-term care facility. But not everyone has done the research and planning the Corkills have done.
AARP's report, titled "The Costs of Long-Term Care: Public Perceptions Versus Reality in 2006", surveyed 1,456 Americans age 45 and older to assess their knowledge of the costs and funding sources for nursing homes, assisted living residences and in-home care.
The report found while many people say they are "familiar" with long-term care, most actually have little idea about the costs.
- More than half (60 percent) say they are at least " somewhat familiar " with long-term care services currently available
- Less than one in ten (8 percent) could reasonably estimate the cost of nursing home care
- Less than a quarter (23 percent) could reasonably estimate the cost of assisted living, and 23 percent say they don ' t know what an in-home visit by a skilled nurse would cost
- Only one in 10 (9 percent) could reasonably estimate the cost of an in-home visit by an aide
Americans age 45-plus often think government programs provide coverage when they probably won't.
- More than half (52 percent) incorrectly believe Medicare covers assisted living
- Six in 10 (59 percent) believe Medicare covers nursing home stays beyond three months for age-related or other chronic conditions, which is not true
"We are encouraging people to talk with their families, in advance of a crisis, about the kinds of care they would like to receive," said Hansen. "If people know what they want, and have an opportunity to realistically plan for their future, they have a much greater chance of living the lifestyle they want in their later years."
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