Jesse Slome, Executive Director
The three most commonly held misperceptions about long-term care are the association with nursing home care, the cost of insurance to pay costs and the age at which planning should begin. According to a report by the American Association for Long-Term Care Insurance, the industry's professional trade organization, typical consumers mistakenly believe costs for long-term care insurance are higher than they really are.
"The perception that long-term care insurance is expensive is the number one reason given by individuals for failing to investigate this important planning option," explains Jesse Slome, Executive Director of the Association. "A significant percentage greatly overestimated what they would actually pay for coverage."
Costs for long-term care insurance are based on the age of the applicant, their health status when they apply and how much coverage they purchase. "By right-sizing a plan of protection to match the level of retirement funds you want to protect and by taking advantage of the many discounts available today, an individual can pay as little as $20-a-week for a solid plan of protection,"
The Association's 2009 industry Sourcebook report examined what individuals in New York State paid for long-term care protection. Those between the ages of 50 and 54 paid as little as $989-per-year;
Over half of those who purchase long-term care insurance do so through an independent insurance agent with the rest now buying coverage through an employer-sponsored plan. The Association, which represents thousands of local professionals, examined what those who purchase coverage at work pay. Those between the ages of 45 and 54 paid as little as $430-per-year;
"It is important for consumers to understand that long-term care is expensive but long-term care insurance isn't," Slome states noting some of the ways people can reduce the cost. Among the savings techniques are, working with an agent who has access to coverage from multiple insurers. "Some agents only represent one company and their rates could be several hundred dollars a year higher for virtually identical coverage." Ask about discounts offered when both spouses purchase coverage, reduced costs for those in good health and consider co-insuring some of the initial cost by including a deductible.
The Association's report also noted that most consumers still mistakenly associate the long-term care need with a nursing home stay. "Most long-term care today is provided in the home," Slome notes. According to the 2009 Association report, 40 percent of long-term care insurance claims paid to individuals last year were paid for home care; some 30.5 percent went for nursing home care and 27.5 percent for assisted living costs. The long-term care insurance industry paid some $8.5 billion in claims in 2008.
While the average age of individuals purchasing long-term care insurance has dropped significantly within the past decade, too many consumers still mistakenly delay beginning the planning process. According to the Association, the average age for those purchasing long-term care insurance is 57; it was 67 in 2000. "While some 8.25 million Americans now have purchased this protection, many are still failing to plan until it is too late to health qualify for coverage," Slome notes.
A study conducted by the organization revealed that 23 percent of those who apply for coverage between ages 60 and 69 are declined because of existing health reasons. Only 14 percent of those between ages 50 to 59 are declined. "More important, 52 percent of those who apply between 50 and 59 qualify for good health discounts that reduce their costs forever," Slome explains. The percentage drops to 42 percent for those between 60 and 69. "The ideal time to start investigating your options is your 50s," Slome advises.
Additional information on long-term care planning can be found on the American Association for Long-Term Care Insurance's website http://www.aaltci.org/
