Sorting Long Term Care Myth from Fact

Few people understand the risks, costs, and options associated with long–term care. And why would they? It's not pleasant to consider the possibility that you could spend the end of life unable to care for yourself.

In fact, what you think you know about long–term care might actually be based on myths and half-truths that could lead you to make poor decisions about the type of care that you may need.

Myth: I won't need long–term care.
Fact: Roughly 40% of deaths in the United States are now preceded by a period of enfeeblement, debility, or dementia that can last for years.¹ Studies put the chances of a 65–year–old eventually needing long-term care from 20% to 49%, depending on the study and methodology used.²

Two–person households bear a higher risk. If one spouse needs long–term care, it could consume income and assets the other needs for living expenses.

Myth: Medicare will cover my long–term care costs.
Fact: Medicare covers only the first 20 days of skilled nursing care when physician–ordered treatment occurs within 30 days of a three–day hospital stay. For days 21 to 100, the patient is responsible for the first $124 per day (in 2007; $128 per day in 2008), and all costs beginning on day 101.³

Note the emphasis on skilled nursing care. It is one of three levels of long–term care.

Custodial care is primarily for those who need help with the six basic activities of daily living — eating, dressing, walking, getting in and out of bed, taking medicine, and bathing. Medicare does not cover this type of care.

Intermediate care is for those who require occasional nursing care or rehabilitative care by trained medical professionals. Some people can receive this care at home, whereas others may need to be in a nursing home. Medicare may cover some types of intermediate care, subject to the limits mentioned above.

Skilled nursing care is for people who no longer need to stay in the hospital but who require the direct daily care of doctors, nurses, and other health–care professionals. This type of care exceeds the “helping hands” assistance that family members are capable of giving.

Myth: Medicaid will pay for my long–term care.
Fact: To qualify for Medicaid, you basically need to be impoverished or willing to “spend down” your assets to the state–required level before you can begin collecting benefits. When you apply, Medicaid has the right to look back at all your financial transactions over the preceding 60 months to discover whether you gave away your assets or sold them for less than fair market value in order to qualify for benefits. If so, you could be ineligible for full Medicaid benefits for up to 100 months.

Myth: I can't afford long–term care insurance.
Fact: You may believe that long–term care insurance is too expensive, but not having it can be much more expensive if you eventually need care. The national average cost for nursing–home care is $70,912 per year, although the cost can vary greatly among geographical regions.⁴ By comparison, the national average long–term–care insurance premium for a 55–year–old is about $665 per year for a married individual and $1,075 for a single individual. Waiting until age 65 to purchase a policy would increase these average amounts to $1,292 and $1,923 per year, respectively. These premiums amounts would translate to an average benefit of about $100 per day for three years for the married payer, and about $150 per day for three years for the single payer.⁵ (Again, these are national averages. Actual rates will vary widely.)

Ultimately, your decision boils down to paying long–term–care costs yourself or transferring some of the financial risk to an insurance company through a long–term–care policy. Choosing the long–term–care insurance policy that’s appropriate for you involves a number of variables, including your age, health, and financial status. By understanding all your options, you’ll be better equipped to make an informed decision regarding your long–term–care needs.

1) National Review Online, October 18, 2007
2-4) 2007 Field Guide, National Underwriter
5) American Association for Long–Term Care Insurance, 2007

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