As folks live longer, they may require more assistance during the later years. FMCA hopes to help members prepare for this possibility with a new benefit that provides group rate discounts for long-term care insurance. FMCA has teamed with Craig Schubert and Long Term Care Insurance Planners to offer members a group rate on long-term care insurance. For more information on the FMCA member benefit long-term care discount program, please contact Insurance Planners (800) 926-1282 24 hours a day or visit the company’s Web site at www.long-term-care-insurance-planners.com. Please click on the FMCA logo to receive your discount. Information about the need for long-term care insurance appears in the article below.
Long-Term Care 101
By Craig Schubert
It’s harder and harder to avoid the topic of long-term care these days. Almost everyone has a parent or relative who is receiving, or has received, long-term care. Almost everyone has a story to recite about the unexpected high cost of long-term care. And, although people are reluctant to broach this topic, many are concerned about their own long-term care. Will I need it? Will I be able to afford it? Will the cost of care wipe out my savings? Who will take care of me or my spouse?
We’re getting older
There’s good reason to be asking these questions.
First, we’re getting older. Individuals aged 65 and older currently make up about 12.4 percent of the population, but based on projections this figure is expected to increase to about 30 percent by 2025.1 Furthermore, while only 1.5 percent of the total population is over age 85 today, this percentage is expected to more than double by 2025.2
The increase in the percentage of seniors is due, in part, to the aging of the baby boom generation. It is also attributable to increases in life expectancy. In 1950 life expectancy was only 68 years.By 1975 it had increased to 72.6 years and by 1997 life expectancy for all individuals had risen to 76.5. For those aged 65, life expectancy was 17.7 years in 1997 as compared to just 10 years in 1950.3
The longer we live, the greater the risk of requiring some form of long-term care in our lifetime. According to the United States Department of Labor, the elderly population requiring long-term care services will more than double in the next 30 years to more than 70 million.4
Usage of long-term care services is increasing
Second, while improvements in healthcare have made sudden death from acute diseases less likely, the chances of incurring a debilitating disease that may require long-term care has increased.
Changing cause-of-death trends are reflected in changes in nursing home usage. In 1995 there was an estimated 1.5 million individuals in nursing home care. At current rates there will be approximately 3 million nursing home residents in the year 2030. Even with the use of alternatives such as home health care, assisted living, more and more of us will require at least some nursing home care before we die.5
We are entering nursing homes at later ages. In 1997, the average age was 82.6 as compared to an average 81.1 in 1985. Three-quarters of today’s nursing home residents require more assistance with activities such as bathing, dressing, and eating than a decade ago.6
No doubt, as the baby boom generation continues to age and as aging boomers live longer, the system may strain to deliver the needed services. As demand outstrips supply, costs can only be expected to rise.
What is long-term care?
Although the term “long-term care” encompasses a broad spectrum of services provided to individuals suffering from chronic illness or other disabling conditions over a prolonged period of time, it usually includes assistance with:
- basic functions, such as bathing, getting dressed, getting out of bed, going to the toilet, continence and eating;
- household chores, such as cleaning and preparing meals;
- life management, such as shopping, money management, and taking medications; and
The need for assistance in one of these areas is often diagnosed by assessing one’s ability to perform Activities of Daily Living (ADL). Researchers agree that the inability to perform some or all of the following six core ADLs best describes either physical or cognitive impairment.
- Bathing “” turning on water faucets, setting temperature and water level, transferring into tub or shower, washing the whole body, transferring out of the tub or shower, drying off completely, and emptying the tub;
- Dressing “” getting clothes from the closet and drawers, dressing self, including fasteners, braces, and prostheses;
- Transferring “” changing the body from one surface or plane to another, such as from bed to chair to chair, chair to standing;
- Toileting “” moving self to bathroom when the urge to void occurs, arranging clothes, transferring to toilet, cleansing self, transferring off toilet, rearranging clothing, washing hands, and moving out of bathroom; and
- Eating “” getting food and drink from a container into the body for nourishment, including cutting meat, buttering bread, and using fingers and utensils.
- Continence “” the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag).
It is estimated that approximately 7.5 million of 33.6 million persons aged 65 or older in 1995 had an ADL impairment. Among those with impairments, 81 percent live in the community while 19 percent resided in nursing homes.7
How much will it cost?
Some of the concern we share about long-term care centers around how much it will cost. The cost depends on the level of care received. Nursing home facilities, licensed by the state and certified by the federal government for Medicare and Medicaid payments, provide the broadest range of services.
Residential community care facilities, also known as assisted living facilities, adult family/foster homes, congregate homes, continuing care retirement communities, and board and care homes, are a growing segment of the long-term care delivery system. Although typically licensed by the state, regulation of such facilities is less stringent than for nursing homes because fewer medical services are provided.
Home-and-community based services are designed to provide the minimal level of care to enable individuals to remain in their own homes. Examples include senior centers, adult day care, and “meals on wheels,” transportation, therapy services, and homemaker/chore services.
Nursing home care is by far the most expensive with annual nursing home costs around the country averaging $55,000.8 The costs of types of care vary significantly depending on the level and duration of care.9
Paying for long-term care
Many of us mistakenly believe that Medicare or Medicaid will pay for our long-term care needs. There are some important things you should know about these programs. Medicare mainly covers skilled care after you have been in the hospital for at least three days and generally does not cover personal or home care services. Medicare was not designed to pay for extended long-term care and it should not be counted on as a resource to meet this need.
Medicaid is the federal state health insurance program designed to pay for nursing home care for those who are very poor. Medicaid dictates the type, amount and location of care. If you have assets to protect, Medicaid is generally not for you.
Some people believe they can rely on their own personal resources to pay for their long-term care needs. This is called self insurance. Unfortunately, many people underestimate the cost of long-term care and end up using savings that they have built up over a lifetime. Others may have to sell assets, such as their home.
- U.S. Dept. of Commerce, Bureau of the Census, Profiles of General Demographic Characteristics 2000, May 2001
- U.S. Department of Census, Population Projection of the United States by Age, Sex, Race, and Hispanic Origin, 1999-2100, http://www.census.gov/population/projections/nation/detail/d2021_30.pdf
- National Vital Statistics Reports, Vol. 47, No. 28; December 13, 1999, http://www.cdc.gov/nchs/fastats/pdf/47_28t12.pdf
- Report, Findings, and Recommendations of the Working Group Studying Long-Term Care, United States Department of Labor, November 14, 2000, p. 5
- The Changing Profile of Nursing Home Residents: 1985 to 1997, Nadine Sayoun, Ph.D., RD, Laura Pratt, Ph.D., Harold, Lentzner, Ph.D., Achtinya Dey, Ph.D., Kristen N. Robinson, Ph.D., Centers for Disease Control and Prevention, National Center for Health Statistics, page 2-4, March, 2001,http://www.cdc.gov/nchs/data/agingtrends/04nursin.pdf
- The Changing Profile of Nursing Home Residents: 1985 to 1997, Nadine Sayoun, Ph.D., RD, Laura Pratt, Ph.D., Harold, Lentzner, Ph.D., Achtinya Dey, Ph.D., Kristen N. Robinson, Ph.D., Centers for Disease Control and Prevention, National Center for Health Statistics, page 2-4, March, 2001, http://www.cdc.gov/nchs/data/agingtrends/04nursin.pdf
- Long Term Care: Knowing the Risk, Paying the Price, page 9 (Health Insurance Association of America, 1997)
- Baby Boom Generation Increases Challenge of Financing Needed Services, United States General Accounting Office, March 2001, p. 1
- AARP Public Policy Institute Fact Sheet, Sheel M. Pandya and the Independent Living and Long-Term Care Team, page 1, February 2001 http://research.aarp.org/health/fs10r_nursing.html
Availability of long-term care insurance varies by carrier and state. Craig Schubert (CA Insurance License #0D90910) is a Financial Planner with the Prudential Financial Planning Services, a division of Pruco Securities Corporation, a Prudential Financial Company. In WA and NY add: Corporate headquarters located at 751 Broad Street, Newark, N.J. 07102-3777.