Survey: Most Don't Plan for Long-Term Care

About 2 out of 3 Americans over age 40 have done little or no planning for long-term care, a new survey finds. Only one-quarter even believe they'll need help, although about half have cared for an older friend or relative themselves. The AP-NORC Center for Public Affairs Research did the survey. Most people polled said family or friends would help them if needed. But 6 out of 10 have not talked with them about it. About 7 out of 10 U.S. adults need some sort of long-term care after age 65. This may be given by a relative or in assisted living or a nursing home. On average, the care lasts about 3 years. More than one-third of those surveyed said, mistakenly, that Medicare pays for nursing home care. Medicare pays only for a short time, after a hospital stay. Medicaid, the government health insurance for the poor, pays for most long-term care in the United States. But people must "spend down" most of their assets before they qualify. Nursing homes cost an average of $6,700 a month. Most of those surveyed gave much lower estimates. The Associated Press wrote about the survey April 24.

By Mary Pickett, M.D.
Harvard Medical School

What Is the Doctor's Reaction?

When I am an old woman, I shall wear purple.

I have always loved the poem by Jenny Joseph that starts with those words. I love that the woman in this poem is unafraid to grow old, and I love her plans:

I shall … go out in my slippers in the rain,
And pick the flowers in other people’s gardens,
And learn to spit.

Despite being so full of plans, nowhere does she anticipate how she might pay for long-term care.

A survey released this week found that two-thirds of Americans over age 40 have done "little or no planning" for how they might pay for long-term care as an older adult.

As a primary care doctor, I see my patients struggle with the major impact of age-related care needs on their lives and their financial realities. Long-term care costs are huge. Really, we can't afford not to think about it.

The U.S. Census Bureau estimates that $217 billion will be spent in 2015 on nursing home and residential care. This includes assisted living facilities and board and care homes. Currently, about 25% of these costs are paid out-of-pocket by older adults and their families. Almost two-thirds of the cost is paid by Medicaid and Medicare combined.

Medicare pays for only a short term when illness causes disability -- 20 days in a nursing home. After that, patients must meet these costs out-of-pocket. Most older adults with chronic needs then "spend down" their funds to pay for long-term care until the money runs out. At that point, at poverty level, Medicaid support may be available.

The vast majority of older adults live in their own home or apartment, or with family. This includes more than 3 out of 4 people ages 85 and older. But most people will need help, at least for a short time, as they age. They may need help with personal care, such as bathing and dressing, or more intense support in a nursing home.

What Changes Can I Make Now?

There is no perfect way to plan for long-term care, in the event you will need it. But you can begin to make a plan, even if it's not perfect.

1. Talk with your family. Nearly 60% of elderly people who need help with personal care rely fully on unpaid caregivers, usually their children or spouses. Sometimes this is an obvious arrangement. But your family must be flexible and committed. If a caregiver must stay at home, some family income will be lost. This is rarely a comfortable situation if everyone did not agree ahead of time.

2. Consider long-term-care insurance. Fewer than 3% of American adults have purchased a long-term care insurance policy. The average cost is high. A typical plan might cost $3,300 a year for a healthy 60-year-old husband and wife. And it might pay only a $150 a day for up to 3 years. For a person who buys this insurance at age 65, there is a 45% chance of making a claim. If you never need long-term care, the payments you made to the plan are lost.

3. An "age in place" retirement arrangement might be right for you. Some campus-like retirement communities are designed to permit an older adult to "age in place." This means you can go from a relatively independent life to a more dependent life while staying in the same community. Services often include recreation for the active elderly and 24-hour skilled nursing or rehabilitation services for the frail elderly. These organizations are called continuing care retirement communities. They are always expensive. Usually, they charge an up-front fee of $25,000 to $500,000. Then you pay a membership fee or rent each month.

4. Build up your savings. Making ends meet is a challenge. But in your working years, don't underestimate how much you need to save. "After we no longer have our mortgage, we should be able to live on that," we all think. But plan for some money to stay in your savings. If disability strikes, you will need it.

5. Write an advance directive ("living will"). Some people receive intensive medical care after they become profoundly disabled. By then, they are no longer able to let their family and doctor know what care they want. If you know that you would not want life-sustaining treatments in this condition, it is wise to record your wishes in a legal "advance directive."

What Can I Expect Looking to the Future?

By 2030, 20% of the U.S. population is predicted to be over the age of 65. It is not clear that Medicare and Medicaid will be able to sustain the contributions that they make now toward long-term care. This is a good reason for Americans to plan ahead.