Long Term Care Insurance


Half of all Americans who turn 65 this year are expected to spend some time in a nursing home. One percent of all Americans aged 65 to 74 reside in nursing facilities, and the proportion increases to seven percent of those 75 to 84, and twenty percent of those over 85.

Payment for Nursing Home

Almost half of those nursing home residents are paying for their long-term care from some combination of savings, family contributions and private insurance; most of the balance are paid for or subsidized by Medicaid, Medicare or other federal and state programs.

There is a tremendous market for insurance which could provide for the long-term care needs of such a large (and growing) population. The long-term care insurance industry has grown dramatically in recent years as a direct result.

What to Look For

When purchasing long-term care insurance, it is important to look for a number of benefit options:

Daily benefit rates. An inadequate rate will not provide sufficient coverage, and may make the patient ineligible for government assistance.

Home care. Policies with some home care provisions may permit the patient to remain at home longer.

“ADLs”. A policy should provide coverage when you are unable to perform a certain number of the “activities of daily living.”

Rating. Be sure the insurance company is likely to be around longer than you are.

The American Association of Retired Persons (AARP) offers a free brochure for prospective long-term care insurance buyers. “Before you buy: A guide to long-term care insurance” is available by writing to AARP Fulfillment, 601 E Street NW, Washington, D.C. 20049.

Elders Prefer Home

According to an article in the Wall Street Journal of November 16, 1993, the 1980s boom in construction of seniors housing developments may have misjudged the market. The article cites the results of a poll conducted by the American Seniors Housing Association as showing that elderly homeowners prefer to remain in their homes until death of a spouse, serious illness or frailty requires a move.

As a result, seniors housing tends to have older and frailer residents than expected, and many facilities have added emergency-response services (96%), housekeeping (85%) and nursing care (63%). The average senior housing resident is 82 years old, and three-quarters of residents are women.

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