It Could Happen to You
By Amir Zaman
WEA Insurance
employee benefits specialist
June 1999
As life expectancies increase so do chances of needing LTC
Thirty years ago, the lack of long-term disability (LTD)
insurance among public school employees was glaringly obvious. Then, as
now, there were limited dollars for benefits and the question was how
to use those dollars most effectively. LTD insurance, despite its importance,
wasn’t a high priority. But as the Trust educated members about LTD
insurance, it became more and more common in benefit packages. Today,
virtually all WEAC members have high-quality LTD protection.
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The status of long-term care (LTC) today is similar to LTD’s status
30 years ago. In the past, individuals didn’t, and many still don’t,
know that their chances of suffering a disability are greater than they
think. Without LTD insurance, an individual who is disabled and unable
to work is likely to face financial difficulties. LTC poses a similar
risk. For those who will need LTC services, the cost may be staggering
and could have a significant impact on their financial well-being.
Who needs LTC?
Not everyone, of course, is going to need LTC. However, as the accompanying
table shows, a person’s likelihood of needing LTC services increases
dramatically with age. As life expectancy in this country has increased,
so have the chances that people will require LTC at some point in their
lifetime.
It is important to remember that while the majority of LTC is used by
the elderly, a person can require LTC services at any age. As the chart
shows, a significant portion of people needing LTC are working-age adults.
Who pays for LTC?
LTC insurance is designed to help individuals pay for services they may
require as a result of a chronic physical or mental incapacity which leaves
them unable to do everyday activities. For example, a stroke, auto accident,
or dementia may leave a person unable to feed or dress himself or herself.
If this person requires medical care, these costs would be reimbursed
by a health insurance plan. However, if the person has to hire someone
for assistance with eating or getting dressed, these costs would not be
reimbursed by any health insurance plan.
Most LTC costs are still being paid by individuals out of their own pockets.
Medicaid, which is a government welfare program for the poor, pays LTC
costs for those who have very little money of their own. Individuals who
depend on Medicaid to pay their LTC costs don’t have a say in where
they receive their care — they are usually forced to go wherever
Medicaid can find a facility for them. Medicare, which is a government
health insurance program for those age 65 and over, pays for some limited
skilled nursing care costs, usually following hospitalization, but doesn’t
pay for any custodial care costs.
It’s likely that the government’s contribution toward the cost
of LTC will decrease in the future rather than increase. That’s because
the percentage of elderly in the U.S. population is slated to increase
substantially, especially as the baby boomers reach retirement age. That,
in turn, is expected to lead to an increase in the use of LTC services,
and it’s very doubtful that the government can allocate sufficient
funds to pay for everyone.
In fact, when President Clinton unveiled an initiative last January to
address the growing need for LTC, it was clear that the federal government
wasn’t planning to pay any more toward the cost of LTC services.
While the initiative had some positive aspects – such as creating
a support program for those who provide LTC for family members –
a substantial portion of the initiative’s budget is geared toward
educating and encouraging individuals to think about their need for LTC
and to plan for dealing with the cost of LTC on their own.
Posted June 9, 1999