Long Term Care and its Policies
article written by: Samuel X. Kaplan
The graying of America, coupled with longer life expectancy, presents families with significant challenges in caring for the elderly and disabled. Today, one in nine Americans is age 65 or older, by 2030, the ratio will be one in five. The U.S. Department of Health and Human Services reports that a 65-year-old person in 1997 could expect to live to be 83 years olf and an 85-year-old person could expect to live to be over 90. The U.S. Census Bureau projects that the population of centenarians in 2050 will range from a low of 265,000 to an estimated high of 4.2 million people.

Over the last 35 years, the changing face of America has had a dramatic impact on the meaning of Long-Term Care (LTC). When insurance companies began offering LTC policies as add-ons to life insurance several decades ago, long-term care was defined as nursing home care only. It was considered the last stopping place before the grave and not much thought was put into the design of the benefits or the needs of the person requiring assistance. In most cases, families cared for their loved ones in their own homes, using nursing homes as a last resort when home care became impossible. Few people invested in LTC policies and fewer used them.

Longer life spans, higher costs, two-income households and extended families spread all over the United States have rendered most families unable to serve as sole caregivers for their loved ones. But the need for long-term care remains - and the demand for LTC policies to protect families from financial ruin is growing. Today, six out of 10 Americans will need some type of LTC and four out of 10 will stay in a nursing home at least once. One in four people will spend a year in a nursing home; 21% will stay five years or more.

It is estimated that average nursing home care costs run between $40,000 - $100,000 per year (more is some urban areas); care is assisted living facilities ranges between $12,000 and $40,500 per years and home health care costs run between $15,000 - $90,000 annually, depending on time spent caring for the elderly. These costs have a devastating effect on families who must turn to personal resources to pay for care. A recent Harvard University Study indicated that 16% of those placed in nursing homes were impoverished within three months; 72% were penniless within the first year. People are being released quicker and sicker from hospitals, requiring costly care. Health plans won' pay for these services; Medicare coverage runs out after a limited period of time and Medicaid will only help families when they are penniless.

These staggering studies were a wake-up call to aging Americans, who began buying LTC policies in ever-growing numbers about a decade ago. The expanded demand has also increased the number of choices available to families when deciding what type of LTC is best for them.

Today's LTC policies are about life. Living longer, being independent, having financial security, dignity and peace of mind are all benefits that can be achieved through long-term care coverage. LTC is also about choices. A well designed plan offers a wide range of caregivers, care settings and options that empower the individual to live life to the fullest. LTC policies are all about flexibility and giving consumers what they want.



What Do Consumers Want?

The expectations of 40-years-old consumers are vastly different from those who are 70-years-old. The benefits the LTC consumers would design if they could look into the future would be:

    • Independence
    • Financial Security
    • Peace of mind/Protections for their families
    • Choices
    • Dignity
    • Benefits they can afford
    • Benefits they can understand
    • Benefits that will be there when needed

Consumers Clearly want Flexibility. They don't want to be locked into a static policy that won't enable them to benefit from advances made in LTC benefits over the years. In making a selection, LTC buyers should look for one policy with a variety of options that can be selected, altered when needed and subsequently discontinued as one's  lifestyle changes. People want solid benefits that put them in control of their lives while protecting their assets.

Long-Term Care is the truest form of a family benefit you can find. It impacts not only the covered individual, but everyone in the family as well. Consumers tell us that they want to stay in their own homes amid comfortable surroundings as long as possible. Their families - who are also consumers - tell us that they need help in order to keep their loved ones at home. They want to do it, they have the will to do it, but sometimes, they just don't have the resources, the skills or the energy. This is where flexible, innovative LTC policies are changing the future of LTC in America.


Future Trends

In 1995, the U.S. Census Bureau reported that 54 million Americans (one in five) reported some level of disability and one in 10 described their disability as severe. Despite these numbers, Americans  needing assistance have chosen to live at home. It is estimated that only 24 million live in health care setting, such as nursing homes and assisted living facilities.

Assisted living facilities are the fastest growing type of senior housing in the U.S. The American Health Care Association projects that assisted living will sustain a compound annual growth rate of 17% from 1996 through 2001, when it is estimated that $33 billion will be spent on assisted living.

The American Seniors Housing Association has reported that one-fourth of the 2.2. million Americans who live in housing for seniors have chosen assisted living complexes.

Assisted living facilities off residents the security of 24-hour protective oversight in a home-like atmosphere, meals, housing and a range of services, including social activities that promote independence and enhance the quality of life for the individual. Assisted living benefits promote dignity, independence, personal privacy and autonomy. They usually offer assistance with medications and arrange for health care and skilled nursing care, as needed, on an intermittent basis. They are ideal settings for seniors and disabled persons who require some assistance, but do not require 24-hour nursing care or medical monitoring. This type of housing is becoming increasingly popular.

Home care is also extremely popular. In 1998, the national Association for Home Care released statistics indicating that home care expenditures had reached a level of $42 billion, with more than 20,000 home care organizations serving eight million people. In 1999 it was reported that there were an estimated 397 million home care visits.

While the demand for home care visits is increasing, the cost is also rising. According to Consumer Reports on Health, the average cost of a full day (eight hours) of care from a home health care aide is approximately $200 per day.

The message is clear; Americans want to stay in their homes and home-like settings such as assisted living Facilities, and they are seeking Long-Term Care benefits that will enable them to do so.


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