Misconceptions Dampen Sales Of LTC

By Allison Bell

Most Americans have avoided buying long-term care insurance, partly because they think it costs five times as much as it does, said authors of a new study.

Survey participants estimated they would have to pay $177 a month for coverage, compared with an actual premium cost of about $35 for a healthy 50-year-old, they said.

Despite price fears, 16 percent of the respondents without policies told researchers they might buy coverage in the next five years. Only 11 percent now own an LTC policy.

John Hancock Mutual Life and the National Council on the Aging commissioned the survey, in which researchers interviewed 1,000 U.S. adults in March over the telephone.

James Firman, National Council president, issued a statement calling for improvements in consumer education. "Americans can't plan for or make the right choices if they don't know or understand their risks of needing long-term care and their options for paying for it," he said.

Gail Schaeffer, retail long-term care vice president with John Hancock, said she expected the survey to reveal widespread misconceptions about premiums. "People do grossly overestimate the cost," she said.

Ms. Schaeffer also remarked on the many respondents who have helped to care for older relatives. "Even among people in their 20s, close to one out of five had provided hands-on assistance," she said.

Experts on aging say 80 percent of the older adults receiving long-term care are getting help in their own homes or in a community day care setting.

The majority of survey participants were unaware of the statistics on home care. Participants viewed long-term care insurance mainly as a vehicle for paying the $40,000-a-year or more tab for staying in a rest home or nursing home.

The likelihood that a 65-year-old eventually will spend a year or more in a nursing home is 31 percent for a woman and 14 percent for a man, experts on aging say.

Despite widespread concern about institutional care costs, only 44 percent of respondents said they had planned much for the possibility that they might need institutional care themselves.

Fewer than half of the survey respondents said they had enough savings, insurance and other resources to pay for a full year of institutional care.

Availability of LTC coverage could be a popular fringe benefit: 70 percent of respondents whose employers do not provide policies wish they did. Six out of 10 respondents who already own policies bought them through employers or unions.

The authors of the study drew no conclusions about the role of the government and private insurers in providing coverage.

The American Association of Retired Persons has lobbied for federal programs to help consumers obtain LTC insurance and give tax breaks to consumers who buy it.

The AARP has doubts about the current limited role of Medicare and Medicaid in paying for long-term care. "Long-term care is expensive and long-term care insurance is expensive," said Barbara Stucki, an AARP research analyst. Premiums can exceed $1,000 a year for a healthy 65-year-old. Ms. Stucki cited studies from insurance industry groups suggesting that only half of older Americans can afford coverage. AARP itself estimates only 20 percent of older consumers can afford coverage.

"Relying on insurance is going to leave a lot of people out in the cold," Ms. Stucki said. "They're going to turn to the government anyway."

AARP worries almost as much about the older consumers who can afford long-term care coverage. Policies are still evolving, and many fail to cover home care or impose barriers that make life difficult for owners seeking to collect on their policies, Ms. Stucki said.

AARP also questions whether insurance agents selling long-term coverage have the training they need to understand and explain it. "It's a new product and a complex product," Ms. Stucki said.

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