Volume 4 Number 52
December 28, 2007

DO YOU NEED LONG-TERM CARE INSURANCE?

With healthcare costs rising and longer life expectancies, funding long-term care needs is an increasing concern for millions of people. According to the U.S. Department of Health and Human Services (HHS), about 9 million Americans, now 65 or older, will require long-term care. HHS expects that number to rise by 25 percent – to 12 million – by 2020. The average annual cost of nursing home care is $74,806, according to Genworth Financial’s 2007 Cost of Care Survey, but that figure can fluctuate depending on the level of care required, and the state in which the care is provided.

To help consumers make more informed decisions about long-term care insurance coverage, the National Association of Insurance Commissioners (NAIC) offers tips and considerations through its public education program, Insure U – Get Smart About Insurance, at www.insureUonline.org. Additionally, answers to many common questions about long-term care insurance can be found in the NAIC’s free “Shopper’s Guide to Long-Term Care Insurance,” which can be ordered at https://externalapps.naic.org/insprod/Consumer_info.jsp. The Florida Department of Financial Services offers a guide entitled Long-Term Care and Other Options for Seniors.

Consumers who would like to protect their assets, minimize dependence on family members and control how they receive nursing or home care, should carefully consider long-term care insurance. It’s a highly individualized decision that requires people to look closely at multiple factors including their family health history, dependent relationships and personal financial situation.

Understanding the Basics of Long-Term Care Insurance

When people are unable to perform activities of daily living – such as eating, dressing and bathing – long-term care insurance can pay for the services of nursing homes, assisted-living facilities and in-home caregivers. Importantly, long-term care insurance covers expenses for those diagnosed with a chronic illness such as Alzheimer's disease, Parkinson's disease, multiple sclerosis and diabetes. Standard health insurance policies and Medicare usually do not pay for long-term care expenses associated with these illnesses. Medicaid provides limited long-term care benefits – and only after a person’s assets have been depleted.

People are living longer, but they often don’t have the ability to take care of themselves as they reach the older ages. Because these costs can become prohibitively high, interest in long-term care insurance is increasing. We encourage consumers to visit our Web site and take the long-term care quiz to find out more about their options. The quiz is located on the right-hand side of the home page of www.insureUonline.org.

A major consideration for purchasing long-term care insurance, according to the NAIC, is whether individuals have assets they want to protect, as the substantial annual cost of long-term care can quickly deplete even a sizeable nest egg. On the other hand, if one’s retirement savings are minimal or non-existent, he or she would likely qualify for Medicaid in a very short period of time, significantly diminishing the need for long-term care insurance coverage. According to the NAIC, consumers should not purchase long-term care insurance if they are currently on Medicaid or their only source of income is Social Security.