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Wednesday, June 4, 2003 Americans rely on 'a hope and a prayer' as they ponder long-term care needs Long-term care is one of those things most people procrastinate about, but no one should. Only those who have had a need for long-term care or know someone who has, truly understand the risks they are taking by not being financially prepared. A recent independent national survey sponsored by Allianz Life Insurance Company of North America revealed that middle-income Americans, the largest population segment, could be hardest hit if they don't plan for the financial impact of long-term care for themselves or family members. The survey, "Allianz Life Report on American Priorities: Long Term Care Snare," found that nearly three-fourths (71 percent) of respondents are very or somewhat concerned about needing long-term care in the future. However, less than one-fourth of the respondents (21 percent) have purchased long-term care insurance. This, despite the fact that 68 percent think long-term care insurance is very or somewhat important to the financial security of their family. It's clear that although people fear the possibility of needing this type of care and the costs associated with it, they are overwhelmed and would prefer to look the other way and ignore the financial strains they or their family could face if care is needed. Those relying on relatives for their care, must take into consideration the added emotional stress and disruption of employment and family life. When survey respondents were asked what they would do to prepare for the possibility that they (or their spouse) would need long-term care, common responses included "nothing," "hope and pray," "wait for the government to do something," "start saving money," and "research information on long-term care needs." This signals a potentially ominous crisis, given that one out of five Americans over the age of 50 may need some level of care in the next 12 months, according to Americans for Long-Term Care Security. The type and length of care needed varies and care options carry different price tags, but, should nursing home care be required, the estimated annual cost of nursing home care is $55,000, according to the AARP. Put the two together, and it could spell serious hardships for many families.
Middle income at risk Despite their failure to prepare for the possibility of needing long-term care, most survey respondents understand that they cannot count on government assistance to pay for it. Sixty percent realize that Medicare is not likely to cover the total costs of their care, even if they can't afford to insure themselves. One-fourth believes Medicare will pay if they can't. According to the National Academy of Elder Law Attorneys, more than half of the entire population will need long-term care at some point in their life, (for some only a short period of time). Government programs provide financial assistance, primarily to people with few assets and income, for long-term care. This means the vast majority of the population the middle income will be responsible for paying for long-term care themselves. They are too well off to qualify for Medicaid assistance, yet paying for it out-of-pocket could mean a severe setback to their families. What options do middle-income Americans have to cover the risks of living longer? They can rely on their family to care for them, they can risk depleting their assets to pay for care, or they can protect themselves with long-term care insurance. However, many believe traditional long-term care insurance is too complicated and/or expensive. Respondents gave the following reasons when asked why they didn't buy the coverage: * Too expensive -- 36 percent * Don't know enough about it -- 21 percent * Didn't know why/refused to answer -- 18 percent * Don't need long term care insurance/waste of money -- 13 percent * Have enough in savings to cover the costs -- 12 percent Clearly, middle-income Americans have the most to lose. It won't take long for many people to see their retirement nest eggs melt away when they're paying $50,000 a year, out-of-pocket, for nursing home care, or more than $20,000 annually for Assisted Living Facility expenses. People should ask themselves, would they rather pay several thousand dollars a month for long-term care services, or a fraction of that to protect their assets with long-term care insurance?
Insurance industry must step up to the plate The survey also found that nearly 60 percent want a long-term care insurance policy with basic benefits (nursing home, in-home care and assisted living facility) rather than one with optional benefits at an additional cost. It's time for the insurance industry to answer consumer needs and demands. The industry needs to help people understand the economic realities of long-term care what it really costs and what is at stake for their families. It's time to offer a simpler, less expensive solution to cover long-term care risks solutions that Middle America can understand and afford. The issue is getting attention at a national level, and Congress is considering proposals to allow tax deductions and/or credits for long-term care expenses and insurance premiums. More than 80 percent of survey respondents would support such tax incentives to buy long-term care coverage.
Family ties Approximately three-fourths (74 percent) of survey respondents said they have had a family member who required someone to care for them. Respondents were split on the question of whether family members should provide long-term care, with about 40 percent expecting family members to care for them, and nearly 60 percent not expecting family members to provide care. In families where a member needed care, 60 percent were cared for by other family members and 40 percent hired a professional care service. Women and older respondents were much more likely to personally provide care for other family members. Women were also 13 percent more likely than men to express concern over needing long-term care. In other demographical differences, Americans in the 50-59 year-old category tend to be more concerned about long-term care than are the younger and older categories. In this case, many of the younger respondents may view the need for long-term care insurance as too far in the future, and those who are older see it as too late. Charles (Chuck) Kavitsky President, Allianz Life Insurance Co. of North America
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