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EnCompass®
The AAA Companion |
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July | August 2004
Volume 78 Issue 4
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Insurance & Financial Services
Long-term care:
4 out of 10 will need it
Long-term care is on the minds of state and federal government officials and with good reason. Current long-term care financing policies are unsustainable and a threat to the level of care that the nation's 77 million baby boomers will expect, the Senate's Special Committee on Aging recently concluded.
By 2040, the number of Americans 65 and older will more than double. And, absent reform, these changing demographics will drive spending for Social Security, Medicare and Medicaid to consume nearly 75 percent of all federal revenue by 2030.
Because public programs are the primary source for financing long-term care, Heathcare Review magazine recently called for federal and state governments to help make private insurance more affordable through tax deductions, tax credits or even direct subsidies.
U.S. Senator Larry Craig (R-Idaho), chairman of the committee, announced in late February that he and Sens. Evan Bayh (D-Indiana) and George Allen (R-Virginia) are introducing new legislation designed to help those purchasing long-term care insurance.
"Experts estimate that four out of 10 people who reach the age of 65 will need long-term care at some point," said Sen. Craig, "and many people mistakenly believe that the federal Medicare program will cover the cost of long-term care. But the reality is that Medicare only covers nursing home costs for a short period following a hospital stay."
Under Craig's bi-partisan bill, an individual would purchase a long-term care insurance policy approved by a state government, and in return, the state would guarantee that should the policy benefits be exhausted, the government would cover the costs of continuing care through Medicaid without requiring the senior to spend down. For the individual, such "partnership policies" allow them to protect their assets, and for state governments, such efforts should help reign in skyrocketing Medicaid costs.
According to the National Governors Association, state Medicaid programs currently pay the largest percentage (44%) of all long-term care costs in the United States. Out-of-pocket expenses by individuals and families are next (23%), and federal Medicare (16%) is the third largest payer. The national average cost for a semi-private nursing home room is now around $57,000 per year and the average stay is 2.3 years.
"As we in Congress work on things the government needs to do to address long-term care financing problems," said Sen. Craig, "I encourage the public to examine their own long-term care needs and consider purchasing their own, private, long-term care insurance."
What is
long-term care?
Long-term care (LTC) is assistance provided to people who have a chronic illness or a disability that requires outside assistance to take care of them. Care usually occurs in a nursing home or in a person's own home. Although age is a contributing factor to the need for long-term care, young or middle-aged people who have been in accidents or have suffered a debilitating illness also may need long-term care.
AAA Insurance & Financial Services
AAA Insurance is an independent insurance agency that offers products from several highly rated national insurers, including Safeco, Travelers, Progressive, Hartford, Allied, AAA Life, John Hancock and others. Products available through AAA Insurance include auto, home, life, umbrella, and long-term care.
For information about AAA insurance products, call AAA Colorado toll-free at 866-399-9836, or click on "Insurance" at www.aaa.com.
AAA Colorado also offers various financial products that include the "AAA Visa" card, certificates of deposit (CDs) and money market deposit.
For information about AAA deposit products, call 1-800-526-7120. For information about the "AAA Visa" card , call
303-753-8800, click on "Financial" at www.aaa.com or obtain an application at any AAA Colorado office.
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