Fewer Americans Planning For Long-Term Care

Americans are less concerned about the financial impact of long-term care (LTC) costs than they were roughly a decade ago, and they are less likely to plan for the possibility that they may require care, according to a survey of 1,000 people between the ages of 21 and 75 conducted by Greenwald & Associates for John Hancock Life Insurance Company.

While 57% of respondents in the 2006 survey said they are concerned about paying for LTC, this figure was down from 69% in a comparable 1997 survey. Results also showed that only 51% of respondents in 2006 expressed worry about ever needing LTC, down from 59% in 1997.

"Our survey suggests that Americans hold a number of alarming misconceptions about their potential need for long-term care," said Laura Moore, senior vice president, John Hancock Long-Term Care Insurance. "Their lack of worry and subsequent failure to plan for long-term care, despite understanding the financial impact it can have on people's lives, can lead to serious consequences in the future."

At the same time, however, the 2006 survey found that 64% of respondents believe they will live to age 85, compared with 61% in a 1998 survey; while 85% believe the cost of LTC could significantly reduce their retirement income and assets, compared with 76% in 1998.

When asked whether they have made arrangements for paying for LTC, 69% of 2006 respondents said they have done little or no planning, up from 58% in 1996 and 49% in 1997. In addition, 43% of those surveyed in 2006 admitted they have not planned at all, up from 34% in 1996 and 24% in 1997.

When asked how they would cover the cost of LTC without insurance, 43% of 2006 respondents said they would pay for it out of pocket, compared with 40% in 1997. Yet 46% of those surveyed in 2006 admitted they would not be able to afford even one year of LTC, up from 43% in 1997.

The 2006 survey also revealed declining confidence in Social Security, Medicare, and Medicaid as sources of LTC funding. Some 61% of 2006 respondents said they are not confident Social Security will be available when they retire, up from 53% in 1998; 62% expressed doubt that Medicaid will be available, compared with 55% in 1998; and 67% said they are not confident Medicare will be adequate to meet their needs, versus 61% in 1998. Even so, 47% of 2006 respondents said they believe they will be able to qualify for Medicaid coverage of LTC needs by transferring assets to family members, up from 45% in 1997.

"Clearly, long-term care is difficult for Americans to think about—in fact, our survey suggests that they are in denial, taking a chance they won't need care or just ignoring the fact that they might," said Moore. "In the case of long-term care, ignorance is not bliss. We've found that planning for long-term care expenses can dramatically change the quality of care for those needing care and the quality of life for their families when a care situation arises. Once people take the first step in long-term care planning, they often find that it is not as overwhelming and cost-prohibitive as they had thought."