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Long-Term Care: Are You Prepared?

If you're a woman, probably not — even though you're more likely to need it than your husband

Two women

Ferdinando Scianna/Magnum

The majority of boomer women are unaware of what their long-term care needs will be, how much they will cost or how they will pay for them, according to a new AARP poll.

Consider, too, that women generally outlive their husbands by five years and often deplete their assets caring for their own parents or spouses. This information gap raises the odds that women won't be financially prepared to live out their final years as they'd wish.

The results of the AARP study "Planning for Long-Term Care: A Survey of Midlife and Older Women" indicate that women are in dire need of education on long-term care planning, says Alyson Burns, director of AARP's Long-Term Care Awareness Campaign.

"We want women to realize that they will likely rely on friends, family and personal savings to pay the national average of $74,000 a year for private nursing home care," says Burns. "An alarmingly high number of women do not know that a significant chunk of their retirement savings we'll be put toward paying for long-term care."

An all-too-common misperception

Six in 10 women have no plan in place for how they will pay for long-term care, and one in three erroneously believes that Medicare will cover the cost, according to the poll, which this summer surveyed 500 women ages 45 to 64. A big part of the problem is that long-term care is still widely misunderstood, Burns says.

Only 40 percent of women surveyed know that long-term care involves more than just assisted living or nursing home facility fees or the cost of a home health aide. In reality, long-term care also applies to adapting your home to meet your needs as you age, learning your health history and adopting healthy habits to preserve your health and informing loved ones about your end-of-life wishes.

"This is an important issue for women because women are the biggest users of long-term care," says Burns. "But there is a disconnect between what women want and what they are planning for."

Family stress often motivates planning

Like many women who have a long-term care plan, Eileen Brock, 56, of Palm Bay, Fla., devised hers after her mother died suddenly, leaving her and her siblings to care for her father with Parkinson's disease. He wanted to live independently, but to do so the family had to hire round-the-clock home health aides at an average of $19 an hour. Her father also needed an elevator chair, which had to be installed in order for him to get up and down the stairs. All of this had to be done while Brock's father waited, very impatiently, in a nursing home. He had no long-term care insurance, so by the time he passed away, five years after his wife died, all of his retirement savings had been depleted.

"It was not a pleasant pow-wow that my brother, sister and I had when we had to decide on care for my father," says Brock. "If these decisions had been made ahead of time, and thought out by our parents, there would have been less strife and fewer bad feelings between the siblings. I never want my daughters to go through that."

Brock purchased long-term care insurance, which would help pay for institutional or in-home care for herself and her husband. They then drafted a will, spelling out exactly what medical treatments they want or would refuse and establishing power of attorney. During a recent home remodel, the Brocks moved the master bedroom to the first floor and installed wide doorways that could accommodate a wheelchair if necessary. She told her daughters that if she ever can't live on her own anymore, she wants to go into assisted living and not move in with them.

"I know a lot of people say, 'Well the state will take care of me.' But no, I don't want to go to a snake pit, or some of the less-pleasant [nursing homes]," Brock says. "I want to be the one who chooses and I want to be able to afford it."

Lack of long-term planning

Most Americans want to live long lives — an average of 92 years, according to a separate study by Genworth Financial Companies and Age Wave. But the Genworth survey showed that people are five times more frightened of becoming a burden on a loved one than of dying itself. And on average, women need long-term care for 3.7 years, compared with only 2.2 years for men, according to a study in the journal Inquiry.

People want to live long lives, they know that they might require care, but they aren't planning for it. Why?

Fear, mistrust, confusion and denial, says Ken Dychtwald, chief executive of Age Wave, a consulting firm that studies the aging population. To most people, long-term care solely means a nursing home — and people fear nursing homes. When it comes to planning financially, they don't know whom to trust. They are confused by what Medicare, Medicaid and long-term care insurance will and won't cover, often thinking they have coverage when they don't. And lastly, they are in denial that they'll ever need that level of care.

"Long-term care is something far better dealt with years, even decades, before you need it," Dychtwald says. "Denial is unfortunately not a useful reaction."

Long-term care insurance enrollment rates highlight this disconnect. The sooner you purchase, the sooner you'll be able to lock in the lowest possible rate. After all, annual increases are expected to be anywhere from 10 to 40 percent in 2011, according to the Wall Street Journal. However, only 7 percent of Americans have long-term care coverage.

Consider, too, recent news from MetLife Inc. that it will stop selling coverage as of Dec. 30. The company is one of "a parade" of insurers to leave the market recently, says the Wall Street Journal. Those who secure policies before then will be covered, but no long-term care applications will be accepted in 2011. Fewer insurers could cause rates to rise, so the sooner you buy, the more insurers you'll have to choose from.

A government-run long-term care insurance program, to be rolled out in 2012 as part of health care reform, will be paid for through payroll deductions. The program might help you if you plan on remaining in the workforce through at least 2017, as you must be paying premiums for five years to qualify for coverage.

The roots of denial

For women, Dychtwald surmises that their denial is rooted in their roles as caregivers. They are so used to taking care of everyone else that they don't think about the day when they will need help themselves. In addition, the marital division of labor still has husbands more likely to be responsible for financial matters. "So women may not necessarily feel as confident or certain about making major financial decisions than they'd like to be or need to be," Dychtwald says.

The lack of planning, as shown in the AARP study, could also simply be a reflection of the age of those polled (45 to 64), says Kathy Black, assistant professor with the Manatee School of Social Work at the University of South Florida, whose research focuses on health and aging.

"At that age, people are just caught up in their day-to-day lives and not really thinking about tomorrow or 'Who will take care of me?' " says Black. "People have this sense of themselves where they're independent and it's hard to imagine what life is going to be like without that."

There are also cultural issues to consider. "There are some cultures where you just don't talk about this kind of stuff," Black says. "People have this inner belief that bringing it up is a bad omen."

But if you can get past all these reasons why people don't plan for their futures, you can start ensuring that you maintain control over your elder years.

Creating your long-term care plan

Any long-term care plan should include four components, says Burns:

  • A plan to make your home safe and comfortable once mobility becomes impaired;

  • A financial plan for paying for long-term care;

  • Learning your family medical history so you can take charge of your health;

  • Taking care of the legal work: wills, powers of attorney and communicating your final wishes to your loved ones.

"We know that the two biggest triggers for creating a long-term plan are becoming a caregiver and dealing with a chronic illness," says Burns. "But don't wait for an emergency to happen. Try to start planning now and you'll have great peace of mind when the time comes that you have to deal with a life challenge."

And if you can't do it for yourself, do it for your family. "Plan now because you care about your children and grandchildren," says Dychtwald. "Because if you don't have a plan, if you don't have a financing program in place, it's going to fall on them, and it will be your family that gets damaged by your absence of a plan."

Where do you start?

First, come up with a vision of how you want to be cared for once you need assistance, says Black. This includes home renovations to enable you to remain there as long as possible, or determining whom you want to help you with your day-to-day needs, be it an adult child or paid caregiver. Then, sit down with your family members and talk about it.

"We have many people who do want to bring it up with their children and the children will change the topic," says Black. "People don't want to talk about these last chapters in life. But, death is just a natural part of life, and we need to be comfortable talking about this."

The holidays are a good time to broach the topic, says Black, but so is tax-planning season or any other time when you can get everyone together in one place. When it comes to the legal paperwork, an elder law attorney can help not only ensure you have all the right documents but can be a valuable third party as you broach discussions about your estate and inheritance with your heirs.

A financial adviser can help you determine how long-term care will be paid for, either from your own assets or long-term care insurance. The younger you are when you first purchase insurance, the lower your rates will be. AARP also has a workbook that will help you navigate the planning process.

But most importantly, experts advise that you start planning long before you need help. "Otherwise what happens is somebody ends up in the hospital and they can't go home because of a health event," Black says. "Now, you've got to take the first bed available at a facility, and you've lost the luxury of time of choosing where you wanted to go. Planning in advance really keeps people in control."

Cynthia Ramnarace writes about health and families. She lives in Rockaway Beach, N.Y.