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April 04, 2003
Most Americans Unprepared for Long-Term Care Costs
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The results are especially troubling because the need for these services is expected to increase in the future, according to the AARP.
The advocacy group for the elderly cites U.S. Census Bureau projections that the size of today's 65-or-older population will double to about 70 million in 2030. The 85-and-older population is expected to do the same, totaling 8.5 million people.
"With the onset of the aging demographic revolution, it is essential that the general public not only learn about the long-term care options but understand their costs, and begin planning for their future care requirements," said AARP CEO Bill Novelli. "Unfortunately most of us pay little attention to the cost of such care until we or our loved ones need it."
The AARP survey asked Americans age 45 and older a range of questions designed to measure their level of understanding of the costs and funding sources associated with three types of long-term care: nursing homes, assisted living
facilities, and in-home care.
The results show that Americans age 45-plus generally do not know how much long-term care services cost. Only 15 percent could identify the cost of nursing home care within 20 percent of the national average cost. Another quarter (24 percent) said they did not know the cost. And more than half (51 percent) estimated the cost too low.
The national average monthly cost of nursing home care is $4,654.
Only one in four (27 percent) could come within 20 percent of the estimated median cost of care in an assisted living facility, and 38 percent said they did not know.
The national estimated median cost for assisted living per month is between $2,000 and $2,500.
Americans age 45 and older also are generally unaware of how much an in-home visit from a skilled nurse or aide costs. Americans age 45 plus gave a wide range of answers, with no real consensus. One in three (33 percent) "didn't know" the cost. (The average Medicare reimbursement is $109 for a skilled nurse visit and $64 for a home visit by an aide.)
About three in ten (31 percent) Americans age 45 and older say they have insurance that covers the costs of long-term care, when they probably do not. Although it is difficult to know exactly how many Americans currently have long-term care insurance policies, the Health Insurance Association of America estimates that only about 6 percent of Americans purchased such insurance.
People who say they have insurance that covers the cost of long-term care are more likely to say they feel prepared to meet the financial challenges of long-term care than those who say they do not have such coverage (70 percent versus 39 percent). This suggests that people who say they have long-term care coverage when they do not may have a false sense of financial preparedness.
Overall, Americans age 45 and older are split as to whether they feel prepared to meet the financial challenges associated with long-term care. About half (49 percent) feel "very" or "fairly" prepared; 46 percent said they are "not very" or "not at all" prepared.
According to the new study, there is also a discrepancy between what people think Medicare and Medigap cover and what they actually cover. More than half (55 percent), including those who say they are "very familiar" with long-term care (58 percent), believe Medicare covers long-term nursing home stays. And nearly a quarter says they would rely on Medicare to pay for such stays. The reality is that Medicare does not cover long-term nursing home stays.
Four in ten (41 percent) thought Medicare covers assisted living care and more than one in three (34 percent) didn't know whether it does or does not. Medicare does not pay for assisted living.
Over half (57 percent) correctly said that Medicare covers the cost of in-home visits from a skilled nurse. However, many Americans do not understand the difference between a home visit from a skilled nurse and a home visit by a home health aide. More than half (52 percent) thought Medicare covers aide visits. In fact, Medicare covers only home health aide services for care that is medically necessary. It does not cover costs of custodial care.
The survey, entitled "The Costs of Long-Term Care: Public Perceptions Versus Reality", was conducted by RoperASW on behalf of AARP. The results are based on telephone interviews with a random sample of 1,800 Americans age 45 and older.
With a sample this size, the maximum margin of error at a 95 percent confidence level is within 3 percentage points. In addition to the national survey, five state-specific surveys were conducted with a random sample of 400 people age 45 and over in California, Florida, New Mexico, Washington, and Wisconsin.
To visit the AARP site, click here.
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