Consumers' greatest fear about aging is not having enough money to pay for long-term care
Longevity Alert: As America Ages, Long-Term Care Costs Could Overwhelm Most Families
Not having enough money to pay for care is the greatest fear adults have about aging and their long term care needs, according to a recent consumer survey by Genworth, but only one in five have taken any action toward financing their long-term care expenses.
Furthermore, only half of the respondents said they plan to take personal financial responsibility for their own care as they age. The others said they would leave that worry to the government, their children or family, community or faith based organizations, or had no idea who would provide their care.
"As these findings suggest, many people will not be prepared financially to handle the impact of growing older, which means the burden of caring for them will fall on their families, friends and communities," said David O'Leary, president and CEO of Genworth's U.S. Life Insurance division. "That's why it's so important for people to talk to their families about who will care for them, educate themselves about the cost of care and develop a plan for how they will pay for it."
Genworth conducted the survey to gauge consumers' knowledge about long-term care costs and financing options. The consumer sentiment study, along with Genworth's annual Cost of Care Survey, is part of Genworth's commitment to help people who need care age on their own terms and live their lives the way they want for as long as they live.
Misperceptions about who pays for long-term care costs:
Consumers' inaction may be partially explained by additional survey findings that showed glaring misunderstanding about what care costs and what costs are covered by various funding sources, including government programs, O'Leary said.
Two out of three adults expect government programs to partially or fully cover the costs of their long-term care services, despite the fact that Medicare pays for only limited care and Medicaid has strict financial eligibility requirements. In addition, both programs have come under increasing funding pressure.
Confusion exists about government programs and what they cover: 45 percent of respondents either confused Medicare for Medicaid or admitted they didn't know the difference between the two programs.
About 40 percent underestimated the hourly cost of professional care in the home, which is where most people prefer to receive care, and 52 percent of respondents did not know that this service can be covered by a long-term care insurance policy.
62 percent of respondents incorrectly defined what long-term care insurance covers.
61 percent of respondents did not know that long-term care insurance usually provides care coordination services such as personalized care plans and help finding quality care providers as part of the policy benefits.
Findings point to overwhelming confusion about who pays for care
Baby Boomers, who are closest to the age at which people typically begin needing long-term care services, are the least likely to think they will be among the 70 percent of people who turn 65 today that will require long-term care services at some point (52 percent compared to 64 percent for Millennials and 65 percent for Generation X).
Gen X is the most fearful about lacking the money to pay for long-term care, but is the mostly likely not to have taken any action towards paying for future long-term care expenses.
Millennials are most likely to have taken action towards paying for future long-term care expenses, which may be tied to another finding revealed in the study that they are the most likely not to expect the government to cover any part of their long-term care services.
"People are never too young to begin preparing for how to pay for long-term care costs, which are often overlooked as a major retirement expense and can quickly wipe out a person's savings," O'Leary said. "Understanding the costs is a good first step, followed by a conversation with a financial professional about potential funding options that will protect assets against long-term care costs – and provide the peace of mind that comes with knowing you'll be able to receive the care you need how and where you wish to receive it."
So, Where Do I Start? Resources for Determining Who Will Pay for My Care
Understanding who pays (or doesn't pay) for care and how to bridge any gaps in financing can help ensure that consumers will have the financial resources to receive the quality care they deserve. Here are resources to get started:
Genworth provides tools for people to develop a plan at: Let's Talk: "Conversations that Matter."
To compare long-term care costs in different care settings across various cities and states, download Genworth's Cost of Care App on the App Store for iOS devices.
To find out what long term care services are covered by Medicare and Medicaid: longtermcare.gov.
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