Few people, men or women, like to think about getting old. But the impact of aging holds special meaning for women, especially when it comes to the need for long-term care. Since women live six years longer than men on average, they're more likely to reach the point where they require health care services at home or in a nursing facility. Married women have an additional worry. They often use up their financial resources taking care of an infirm spouse, leaving them little to fall back on should they need help later. "Women are particularly at risk financially when it comes to long-term care," says Christopher Hayes, director of the Center for Aging Research & Education based in Southampton, N.Y.
With women making up 75% of all nursing-home residents, 67% of elderly home health-care recipients, and 73% of family caregivers, the sensible approach would be for them to buy long-term-care insurance when they're young and healthy. Such coverage picks up the tab for custodial care at home or in a skilled nursing facility. It's not cheap, though. Depending on your age, the cost of care in your region, and the features you select, such as a daily benefit that adjusts for inflation, premiums may run from $500 a year if you're in your 40s to $3,000 if you're above 70.
HEAD START. But there may soon be some good news from Washington. Congress is addressing long-term-care financing in a bill that was introduced for the third time, in March, by Senators Charles Grassley (R-Iowa) and Bob Graham (D-Fla.), and Representatives Nancy Johnson (R-Conn.) and Karen Thurman (D-Fla.). The bill is widely supported yet has failed to pass because it was connected to unrelated legislation that had problems. The sponsors are hoping to find a way to get it passed later this year.
The bipartisan bill offers an income-tax deduction for long-term-care insurance premiums. The deduction ranges from $200 for those aged 40 or less to $2,500 for those over 70. It phases in over three or four years, depending on your age. The bill also provides a $3,000 tax credit for families in which someone is getting long-term care. Finally, it allows people to pay for long-term-care policies in pretax dollars through employee-sponsored flexible spending accounts and cafeteria-style benefit plans.
The bill is a much-needed effort to encourage individuals to use their own means to pay their way. Currently, only 6 million Americans are covered by long-term-care insurance, and policies are purchased at an average age of 67, according to a Congressional research report issued in February. "People, especially baby boomers, don't think they'll need it because they [erroneously] believe they're protected by government programs and health insurance," says Janemarie Mulvey, an economist and senior retirement analyst with Watson Wyatt Worldwide, a Washington (D.C.)-based benefits consulting firm.
NO SAFETY NET. But neither Medicare, the government health program for the elderly, nor supplemental Medigap insurance, which you buy separately to pay the difference between Medicare reimbursements and actual costs, covers long-term care. A nursing-home stay costs $50,000 a year on average, but can go to more than $100,000 a year in expensive areas. Medicaid, the low-income assistance plan run by the states, pays nursing-home bills, but only after an individual has depleted most of his or her assets. It doesn't cover home health care or assisted living.
Incentives to get people to buy long-term-care insurance have widespread support. More than 20 states offer tax deductions. As of October, 2002, the federal government will make long-term-care insurance available as a benefit to its employees. And President George W. Bush included a provision for deducting premiums in his budget plan, though backers of the Congressional bill want him to pass their more comprehensive proposal. Congresswoman Johnson says: "There's a lot of momentum for this bill, we just have to push it through." The sooner, the better.
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By Toddi Gutner