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Baby Boomers Uninformed About Long-Term Care Costs

Expert Tells Senate Panel That Boomers are Headed for Disaster
By: CaregiverZone

A survey conducted by the Washington, D.C.-based research firms Penn, Schoen & Berland, and Fabrizio, McLaughlin & Associates, found that boomers are poorly informed about the limited long-term care protection provided by Medicare and private health insurance. For example, although 27 percent of boomers think they are covered by long-term insurance, in reality, few actually carry insurance for long-term care.

The committee unveiled a "baby boomer scorecard," a checklist of 10 questions on health, retirement savings, insurance, social support systems and community resources available to the elderly that all boomers should ask themselves when planning for retirement.

Supporting the scorecard, Fernando Torres-Gil, a national expert on aging issues, said baby boomers are "woefully uninformed" about long-term care and fail to understand how vulnerable they are when it comes to long-term care costs.

"We need to provide a social safety net that ensures some measure of protection for boomers in their golden years," said Torres-Gil. "As part of ensuring security for seniors, we must also be vigilant about preserving existing, though limited, Medicare benefits for skilled nursing care. Those benefits have been cut dramatically, and the cuts are hurting seniors today."

Torres-Gil pointed to 1997 cuts tied to the Balanced Budget Act, which reduced Medicare spending for skilled nursing services by $9.5 billion over five years. In 1999, those cuts are estimated to be nearly twice as much as Congress expected.

"We're causing immediate problems by eroding the basic benefits of Medicare in the short term. And in the long term, we need to find a better solution to pay for seniors' and aging boomers' long-term care needs," said Torres-Gil.

"Boomers are completely confused about how health care - specifically long-term care - is paid for in retirement," said Tony Fabrizio, partner of Fabrizio, McLaughlin & Associates, one of two firms collaborating on the study commissioned by the American Health Care Association. "At this rate, Americans will be forced into destitution if they need long-term care at some point in their lives."

Four out of five boomers interviewed do not know how long-term care is paid for, and 25 percent say they are unwilling to consider paying for additional insurance to cover these costs. While 41 percent are willing to pay between $1 and $49 per month for long-term care insurance, in most cases this is well below actual costs of long-term care policies. According to the American Council of Life Insurance, long-term care insurance policies range from approximately $30 to $440 a month per individual, depending upon the age of the policyholder and the level of coverage provided.

"These findings make us wonder if boomers are planning for yachts and sunsets at the risk of ignoring their biggest financial burden, long-term care," said Fabrizio. "Two out of three boomers believe that they should not be forced into poverty to get government assistance for long-term care, but that is exactly what Medicaid requires. It's a pay-now-or-pay-a-lot-more-later situation."