Guest Columns

Many Americans don't understand long-term care

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Roger Roemmich
Roger Roemmich

Many Americans are ostriches when it comes to long-term care. With heads buried in the sand, they pretend it won't ever come up in their lives. But healthcare providers know the truth: The U.S. Department of Health and Human Services estimates that between 60% and 70% of Americans over the age of 65 will require some form of long-term care. Yet the vast majority of Americans still won't buy coverage through a traditional long-term care insurance policy, or through annuities or universal life insurance polices that provide long-term care benefits. According to a MetLife Mature Market Institute study, only about 9% of Americans own a long-term care insurance policy. 

Why? The answer comes back to the ostrich factor. Many Americans remain in denial and are therefore disinclined to pluck the truth from the myths about long-term care, much to the detriment of their own finances as they turn to homecare providers for custodial services on a self-insured basis, if they can afford it. Those who need full-time skilled nursing care end up paying a median of $81,030 per year, according to the Genworth 2012 Cost of Care Survey. At that point, the individual's assets are pretty much toast, with the average stay at a skilled nursing care facility at 1,040 days, or 2.8 years, according to the American Association for Long-Term Care Insurance.

Myth 1: The biggest myth that's up to providers to dispell is that Medicare will pay for long-term care. It won't for more than a maximum of 100 days with the mandatory three-day qualifying hospital stay being met first. If the patient shows no progress, Medicare benefits stop.  

Myth 2: In the past, long-term care insurance policies and some annuities with long-term care benefits would not pay for custodial services at home, correctly giving the public the impression that it was a nursing home or nothing. While some still do, and for better or worse, the trend is toward home care. Most long-term care benefits are spent for in-home services.

Myth 3: The most common reason given for not buying long-term care insurance is the price of annual premiums, and the fact that insurance companies keep raising them. The Long-Term Care Price Index in 2013 put the cost per year for a couple age 55 for $162,000 each with a three-percent inflation option at $3,725. Pricey? Yes. But what's little known is that long-term care insurance rates are primarily calculated based on age, and the younger the purchaser the lower the cost of coverage over the lifetime of the policy. The average buyer is 57.

Myth 4: Americans don't buy coverage because they think family will step in. They're right. More than 10 million over 50 are taking care of elderly parents, resulting in lost wages for these caregivers of $324,000 for women and $283,000 for men. Lack of coverage costs more than just seniors.

Myth 5: According to the U.S. Government Accountability Office, about 40% of all recipients of long-term care are between 18 and 64. So, it's not just seniors who need it.

It's up to providers and those in the industry to continue to educate the public about long-term care, and how to be able to afford it.

Roger Roemmich is a certified accountant, financial planner and long-term care professional, and is the chief investment officer for ROKA Wealth Strategies. He is the author of "Don't Eat Dog Food When You're Old."

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