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LTC

The LTC Market

Your clients will probably be buying this insurance! Will it be from you or someone else? The long-term care market is HOT! Since it is relatively new and taps into a growing marketplace, it offers a tremendous opportunity and unlimited financial gain.

  • 32 million people are aged 65 and over, with this number projected to double in the next 50 years.
  • Two thirds of people over age 65 will long term care services in their lifetimes. While most people think long term care impacts only senior citizens, 40% of current LTC services recipients are between the ages of 18 and 64.
  • At an average cost of $188 per day for a nursing home, this can translate into having to pay over $205,860 for long-term care expenses. For most people, paying these expenses out-of-pocket for an extended period can mean a financial disaster. It can wipe out the dollars that have been saved for their retirement years.
  • Home Health Care is a very important part of long-term care protection - and it can be expensive. For every person receiving care in a nursing home, there are 4 people receiving care outside a facility.
  • With people living longer than ever before, the demand for health care including long-term care will significantly increase.
  • The number of persons in nursing homes is expected to increase by over 60% in the next 30 years.
  • The over 50 market controls 75% of the nation's wealth and half the discretionary income. These people have assets to protect - the main purpose of LTC insurance.

Long-Term Care Crisis Looms in U.S.

The nation is on the brink of substantial growth of its elderly population as baby boomers are approaching their retirement years. Not only will the population of U.S. residents over age 65 increase significantly during the next 30 years, but they will live longer then any generation before them, bringing the country's 85 and older population to a record high. While living longer is good news, elderly face increasing odds of needing long-term care---the physical, mental and social care given to those who have severe, chronic impairment.

The average life expectancy at the turn of this century will be 76 years -- an increase of almost 30 years since the beginning of the 20th century, according to the 1996 U.S. National Center for Health Statistics. And, with growing longevity come increasing odds of needing long-term care. Nearly 50 percent of all Americans who reach age 65 are projected to spend time in a skilled nursing facility, a 1996 American Association of Retired Persons National Nursing Home Study found.

Long-term care, however, is much more than nursing home care. It also includes home health, assisted living facilities and adult day care centers. It can come in the form of skilled care, which is the most intensive; intermediate care, similar to skilled care except that it is provided on a periodic basis; and custodial care, which involves assistance with normal activities of daily living such as bathing, dressing and eating.

Most people are surprised to learn that long-term care services are not covered -- or covered only on a limited basis -- by Medicare or Medicaid. Medicare handles only short-term stays after hospitalization and does not cover nursing home stays beyond 100 days. That's not much help for chronic situations, considering the average stay in a nursing home is Most people are surprised to learn that long-term care services are not covered -- or covered only on a limited basis -- by Medicare or Medicaid. Medicare handles only short-term stays after hospitalization and does not cover nursing home stays beyond 100 days. That's not much help for chronic situations, considering the average stay in a nursing home is 2.3 years, according to the 2004 National Nursing Home Survey.

Medicaid pays only after the person has "spent down" his or her assets. In other words, recipients must demonstrate poverty to qualify. Poverty levels vary by state, but can be as low as $2,000 in net assets, excluding your home, if married. Furthermore, Medicaid only pays for care in assigned participating nursing homes.

Long-term care insurance is a financial tool your clients should consider. Many of us spend nearly 30 years of our lives saving for retirement, yet we fail to insure against the possibility of long-term care depleting or exhausting that nest egg.

According to the American Council of Life Insurance (ACLI), one out of every 7 New York residents will be over age 85 by the year 2030. As a result, the number of these people needing nursing home care could increase from today's 125,300 to 285,600 in 2030, placing an extraordinary burden on the already strained Medicaid and Medicare programs.

In 1995, total spending on nursing home care for older New York residents reached $8.7 billion. By 2030, total nursing home expenditures are expected to rise to $39.4 billion (adjusted for inflation), notes ACLI. Medicaid pays for half the state's nursing home costs, while Medicare pays for 2 percent of short-term nursing home stays. Individuals pay out of pocket for the remainder. Furthermore, Medicaid nursing home spending in New York is expected to rise form $3.9 billion today to &17.7 billion by 2030, an increase of 353 percent!

Approximately 70 percent for the working population in New York can afford to purchase long-term care insurance, similar to national trends. If New York residents who could afford long-term care insurance purchased a policy, state Medicaid expenditures could be reduced significantly. National estimates show that Medicaid could save more than 20 percent of its expenditures.