77,000,000 Baby Boomers are approaching 65, and the government is hoping that we are prepared to pay for our own care when we become disabled by illness and aging. In 1999, 43 per cent of those over 65 historically spent time in a nursing home before dying. About 95% of nursing home residents only require “custodial” care, not 24 hour “medically necessary” care which is a limited benefit payable by Medicare. Us Boomers typically have had fewer children than our parents, we live longer today, and many of us are single. Care can cost $70,000 or more a year now and will probably continue to increase at least 5% per year. Medicare was designed for acute health problems and Medicaid for the indigent. Because we Boomers are an independent lot, we are spending more time recovering at home and moving to fancy residential assisted living if we have the cash needed.
A health insurance product has existed now for over 41 years to help pay for long term care. Originally, LTC insurance only paid for nursing homes, as families were the main source of help when a parent out-lived their health. Baby Boomers have had fewer children and may have difficulty living with a son or daughter who has a job and kids in the home, too. Long term care insurance has evolved to include the help and equipment necessary to cover the needs of a disabled person, and to help the family caregivers with the support needed to maintain their own health and sanity. The Journal of the American Medical Association, 12/15/99, found that older care-giving spouses face a 63% higher risk of mortality than a non-care-giving control group. We all think we could care for each other because it is difficult to imagine being ill, but more than half of us will need home health care after age 65--that means the other half will be care-giving.
Rep. Nancy Johnson, a Republican from Connecticut, as chairman of the Ways and Means Health Subcommittee, introduced the Long Term Care and Retirement Security Act in 2001, which offered an improved tax deduction for purchase of long-term care insurance policies. Some form of this legislation has been offered annually since then, but with current fiscal concerns, so far, not approved.. Currently, LTC insurance is 100% tax deductible as health insurance for C-corporations to buy for selected members, deductible within limits for the self employed, and for the rest of us if we exceed 7.5% of our income on health. The bipartisan bill proposed is to give equal tax benefits to all of us to buy LTC insurance on a tax deductible basis. (2009-still not passed for 100% for all.)
According to Johnson, "Long-term care coverage will give people comfort that their needs will be met if they need this care, and will lift some of the financial burden from future generations. Private insurance also allows people the freedom to choose the setting for their own care--whether this is a nursing home, rest home, at-home or an assisted living facility--without threatening their family's financial security. Moreover, this would also make it more likely that the Medicaid safety net will be there for those truly in financial need." (7/16/01 Hill.)
People who purchase LTC insurance at the earliest age possible will enjoy better benefits at lower premiums, and pay the least in the long run. Waiting can mean a health change that makes a person ineligible for the better companies that underwrite tightly and have maintained premium stability. Good policies will include immediate care coordination so a person has help finding the care they prefer in the setting of their choice. A long term care insurance specialist can help you determine if this protection is appropriate and affordable without changing your lifestyle now or in retirement. Www.LTCFP.com and www.AALTCI.com have been recommended by Kiplinger's Retirement and the Wall St. Journal (2007) for unbiased information and competent LTCi agents.
This insurance will become common due to the aging of America and the necessity for personal planning, saving and insuring for quality care as we all age. Government custodial care funding will most likely be impossible in the face of the sheer magnitude of 1 in 4 Americans being over 65 and 1 in 2 of those 85+ with dementia.
With an unfunded liability of trillions of dollars in Medicare and Medicaid, we Boomers need to hope for the best and prepare for the worst. I for one, am prepared to remain "independent to the end!"