Statistics Lure Elderly to Nursing Home Insurance / Sort Myths from Reality; Anticipate Expense of a Lengthy Nursing Home Stay

Article excerpt

If you are a typical older American, you face severe economic hardship when confronted with a long stay in a nursing home. Estimates reveal that by the year 2003 - only 16 years from now - there will be over 2 million nursing home residents, an upsurge of 57 percent over 1978.

Today, the average rate nursing homes charge is $67 per day or $24,455 a year, while some exceed $35,000 annually. The average stay: about two and a half years.

These alarming statistics are persuading more and more older adults to investigate nursing home insurance.

And yet only about 200,000 individuals have purchased this type of long-term-care private insurance, reports Dick Packard of AMEX Life Assurance Co., one of the first companies to offer nursing home insurance.

Big News: Half of these policies were purchased in 1986!

Much confusion surrounds nursing home insurance, so your first step involves sorting out myth from reality:

Myth: My Medicare benefits and/or my private health insurance will cover the costs of a nursing home stay.

Reality: Private health insurance covers hospitalization costs, not nursing homes. Medicare will pick up the entire tab for only the first 20 days of a stay, and then only if the patient requires strictly defined ``skilled'' care.

From the 21st to the 100th day, Medicare pays only those charges in excess of $65 per day, which amounts to a $5,200 deductible if the patient stays the full 100 days. After the 100th day, or if at any point the level of care is reduced to ``basic'' or ``custodial'' care, Medicare pays nothing. ZERO.

Myth: If over my lifetime, I have built up assets to ensure a comfortable retirement, including paying off my home and receiving pension and Social Security income, I need not worry.

Reality: A recent Harvard University study indicates that over two-thirds of men and women who had to pay for their own nursing home care used all their personal assets, including the value of their homes, within one year.

According to Dale Larson, author of ``A Comprehensive Guide to Medicare and Health Insurance for Older People,'' half of America's nursing home patients currently on Medicaid were not poor when they entered the nurisng home. Rather, they were forced to ``spend down'' their assets until Medicaid kicked in. …