According to researchers at Georgetown University and Pennsylvania State University, about 70% of individuals 65 and older will need some kind of long-term care—whether at home or in an assisted-living facility or nursing home.
But how many of them should purchase a long-term-care insurance policy? That number, it turns out, is far lower—at 19% of men and 31% of women, according to a new study by researchers at Boston College’s Center for Retirement Research. (Women live longer on average, and so they’re statistically more likely to incur long-term-care costs.)
The reasons stem from a range of factors, including the fact that relatively few people have enough wealth to make it worthwhile to purchase protection against the potentially catastrophic costs of long-term care. Moreover, the authors found, due to the way Medicare and Medicaid work, many people can count on government-provided coverage for the vast majority of their needs.
To assess the odds of needing long-term care, the researchers used government data to “calculate monthly probabilities of transitioning among various health states” from age 65 on. The data show that 44% of men and 58% of women will spend at least some time receiving nursing-home care.
Because “many short-duration stays in nursing homes are covered by Medicare”—which covers stays of 100 days or less following a hospital stay of more than three consecutive days—half of all men and 40% of women who use nursing-home care fall within this coverage window. Hence, Medicare picks up their tabs.
So who should consider buying coverage? According to Anthony Webb, a senior research economist at the Center for Retirement Research and a co-author of the paper, those with significant assets—of a couple hundred thousand dollars or more—should look into a policy. The target market, he adds, is “people who have a sizable amount of household financial assets and would be unlikely to qualify for Medicaid.”
The numbers in the paper pertain only to single individuals, who comprise over three-quarters of nursing-home residents. While 19% of men and 31% of women can benefit from purchasing coverage, only 13% of single individuals age 65 and over have actually bought a policy.
For more information about Long Term Care Insurance contact Bob Garrison at firstname.lastname@example.org.