By Lisa McAree, CLU
The subject of long term care insurance has been receiving a lot of press lately, and financial and insurance advisors are increasingly recommending it to their clients as a crucial part of retirement planning. But a recent survey by the American Association of Retired Persons (AARP) revealed just how misinformed many consumers are about this timely subject.
While the study showed that 31 percent of those surveyed believed they had purchased long term care insurance, only about six percent of Americans have actually purchased such coverage, according to estimates from the Health Insurance Association of America (HIAA). That means many people are apparently confusing long term care insurance with other plans, such as disability coverage or Medicare.
Here are some questions and answers about long term care insurance that might help to dispel any confusion or uncertainty
Q. What is long term care?
A. It's the type of assistance provided to individuals who cannot take care of their own personal needs. The need for long term care may result from an accident, a disability, the natural aging process or a cognitive impairment such as Alzheimer's disease.
Q. What are the odds that I will need long term care?
A. Much greater that you might think. Statistics show that 50 percent of us will need long term care at some point in our lives. Nearly one out of three people over age 65 will spend some time in a nursing home or assisted living facility. And, according to AARP, approximately seven million Americans age 65 or older will need long term care this year alone, with that number nearly doubling to 12 million by 2020. Compared with the risk of losing everything in a house fire (one out of 1200) or the chance of a major auto accident (one out of 240), it's clear that needing long term care will be a reality for many of us.
Q. How much does LTC cost?
A. Many people don't know how much nursing home care costs, and, in fact, more than half of those surveyed by AARP estimated the cost too low. Today, the national average cost of nursing home care is close to $55,000 a year, and in some parts of the country, including Massachusetts, it is even higher. The median cost of care in an assisted living facility is between $24,000 and $30,000 a year. The cosst of home health care varies greatly, depending on the length and frequency of services, but the average annual cost is about $30,000. Some people may spend as little as $200 a week on home health services, while others with a catastrophic home health care need could spend as much as $150,000 a year.
|
