Illustration: Carey Sookocheff
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Exploring the Great Unknown
By Margaret Pouncey, March-April 2002
Are you prepared to pay for long-term care? Many Americans think they are…but a recent AARP study shows they aren't.
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Did you know that buying long-term-care insurance at 65 can cost
you twice as much in yearly premiums as it would if you bought
the same policy at 55?
(Source: The National Center for Assisted Living)
By 2020, approximately 12 million Americans 65 and older will
need some type of long-term care. Most health insurance does not
cover the medical and nursing expenses a chronic illness or
disability can require. AARP's 2001 study "The Costs of
Long-Term Care: Public Perceptions Versus Reality" reveals
that Americans age 45 to 54 have not faced up to
or prepared themselves for these potential expenses.
Only about one-third (35 percent) of the respondents say they
have purchased insurance to cover the cost of long-term-care
services, though more than half (57 percent) say they know one or
more persons (whether themselves, a parent or grandparent, friend
or spouse) who have needed some kind of long-term care.
Here's a closer look at what boomers think they know, and
what they really need to know.
NURSING HOME COSTS
Fact: The national average for the cost of one month in a nursing
home is $4,654, or $55,848 annually (costs vary widely depending
on geographic location).
The study shows:
- Only 15 percent accurately estimated the cost of a nursing
home in their part of the country.
- 51 percent estimated below the national average cost.
- 27 percent say their estimate is "just a hunch."
WHO COVERS WHAT
Fact: Medicare does not cover extended nursing-home stays, and
you must meet strict medical criteria to qualify for any
coverage. Medigap—a private insurance supplement to
Medicare—covers more costs, but its nursing-home benefit
ends after 100 days in a benefit period, as does Medicare's
short-term-stay coverage. Medicaid will help with the cost of
nursing-home care in some cases, but only people who meet
specific financial and medical criteria qualify for those
benefits.
The study shows:
- 61 percent believe Medicare covers nursing-home costs.
- 58 percent believe Medicaid covers nursing-home costs.
- 46 percent believe Medigap will cover nursing-home costs.
ASSISTED-LIVING COSTS
Fact: The national median cost for assisted living is between
$2,000 and $2,500 a month. Medicare does not cover assisted
living, nor does Medigap.
The study shows:
- Only 27 percent accurately estimated the cost of
assisted-living care.
- 41 percent say their estimate is "just a hunch."
- 29 percent say they don't know at all how much assisted
living costs.
IN-HOME-CARE COVERAGE
Fact: Medicare will cover in-home visits from a skilled nurse
only if the patient is housebound, the doctor has determined a
plan for his or her home care, and the patient requires a certain
level of care. Medigap policies do not cover in-home visits by a
skilled nurse.
The study shows:
- 63 percent believe Medicare will cover home visits by a
skilled nurse.
- 58 percent say Medigap will cover such expenses.
FIND OUT MORE
So, boomers may be willing to guess how much future care could
cost them, but they know all too little about the actual price.
For more information about long-term care, visit The National Center
for Assisted Living or Health Insurance
Association of America or go to AARP.org. Or click for a
free summary of the
AARP research report.
To find out how much you know about long-term care insurance,
take our
quiz. Need to do some research? Check out our Sites to See and
AARP
Resources.
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