Long Term Care and LTC insurance is an important issue for baby boomers, their parents and me. The reality of long term care is at the forefront of our minds because of the news, TV or personal experience. We must ask ourselves what impact an unexpected illness or accident would have on our finances. What is long-term care who needs it and how much will it cost. Before we look at these questions let me share some fun facts about getting "older".



1. Over 40% of all Americans over the age of 65 will spend some time in a nursing home due to a prolonged illness or disability.

2. One year in a nursing home can cost $36,000 to $60,000. Currently, the average cost in a long term care facility in America is $41,000 per year. The average cost of a visit by a home health aide is $52. Daily visits would cost you almost $19,000 per year. Skilled nursing at home, to administer medication or oxygen, for example, five days per week for a year would cost you an average of $94 per visit, or $24,440 per year.

3. Health care plans and Medicare combined pay only about 3% of the costs of long term care. State Medicaid programs rescue only those families who descend to the poverty level. The rest comes out of pocket - nest eggs, funds earmarked for retirement, life savings - or from a long term care insurance policy.

4. In 1983, Medicare began a new program called the Prospective Payment System. Instead of reimbursing hospitals for the actual cost of treating patients, this program now pays a set fee according to 467 Diagnostic Related Groups, or DRGs. Once a patient reaches the arbitrary number of days in the hospital, Medicare payments stop regardless of the individual patient's actual condition or the need for continuing care.

5. 70% of people who are older than 65 will need long term care services.

6. 77 million Americans will turn 50 over the next 18 years. That's 1 person every 7.5 seconds.

7. 43% of individuals age 65 will enter a nursing home sometime in their lifetime, with 50% staying an average of 2.5 years.

8. The national average cost for 1 year in a nursing home is approximately $41,000; in larger cities from $50 to $60,000 annually.

9. 50 percent of all couples and 70 percent of single persons are impoverished within one year of entering a nursing home.

10. For every person receiving care in a nursing home, there are 4 people receiving care outside a facility.

11. The annual cost to companies for lost productivity from elder care responsibilities is $17 billion a year or $3,142 per employee.

12. By 2020, 1 in 3 workers will be a care giver for a family member.

Most of us would never dream of not having home owners insurance, health insurance (that's another issue) or auto insurance. After looking at some of the facts and family medical history, the conclusion seems clear that as baby boomers, we must give this a serious look. The challenge for us is too learn as much as we can about long term care so that we can have options and not be caught off guard by an unexpected illness that could wipe out our retirement or add an undue burden on our families.

Sources:

Life Insurance Selling, December 1992 CBS News - Census Bureau New England Journal of Medicine, February 1991 American Association of Homes for the Aging, 1989, Leimberg, 1992 HIAA, "Long Term Care -- Needs, Costs and Financing (1992) Leimberg's "Think About It" Stephan R. Leimberg, JD, CLU (November 1992) U.S. Administration on Aging, July 1991 USA Today, July 19, 1994 Wall Street Journal, July 19, 1995 USA Today, July 19, 1994 Long Term Care Conclusion