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Large Number Of Boomers Are Filing LTC Claims, Study Finds

By Trevor Thomas

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Several studies investigating long term care were released in time for National Long Term Care Awareness Week, Nov. 5-11–including one suggesting that individuals in the boomer generation are far likelier to file LTC claims than might be expected.

UnumProvident Corp. found that almost 58% of LTC claims the company handled as of 2006 were for people under age 65.

That’s true for both group and individual LTC policies, according to a profile of claims submitted to UnumProvident, Chattanooga, Tenn.

In 2005, the company handled more than 3,000 group and individual LTC claims and expects to process 4,000 in 2006.

UnumProvident’s analysis of its own data also showed the following:

o The average age of under-65 claimants is 53, and more than 15% were younger than 45.

o For group policies, the average age was 62, while for individuals, it was 77.

o More than 66% of under-65 claimants received care at home, while 17% received nursing home care.

o A typical claim for policyholders in the age group lasted a year or longer.

Its analysis of group LTC showed the top claim triggers for under-65s were cancer (30%) and stroke (more than 10%). Additional leading causes of claims were neurological disease, dementia and multiple sclerosis, each accounting for less than 5% of claims.

A company spokeswoman says comparisons with claims submitted to UnumProvident 5 years ago showed some striking differences.

Cancer and neurological disease were the top 2 triggers of claims by those under age 65 in 2001, followed by dementia, stroke and injuries, in that order, says the spokeswoman, Jessica L. Stone.

In view of the serious impact LTC needs could have on retirement nest eggs, boomers and their financial advisors might also be concerned about data released by 2 other big carriers showing sharp cost increases for LTC services.

A study by New York Life Insurance Company showed the cost of a private room in an LTC facility rose 6% this year, to $204 per day, or $74,445 per year. Nonprivate rooms, based on double occupancy, also rose about 6%, to an average of $180 dollars a day, or $65,700 a year.

Nationwide, the average private room rate increased by $11 per day, or $4,015 per year. The average semiprivate room rate rose by $10 per day, or $3,650 per year, New York Life found.

The MetLife Mature Market Institute, Westport, Conn., found the cost of assisted-living facilities moderated this year after surging in 2005.

The private pay rate for an individual at an assisted-living facility rose just 2.2% in 2006 over the year before, averaging $2,968 per month, or $35,616 yearly, according to the institute’s 2006 MetLife Market Survey of Assisted Living Costs. MetLife notes, however, that cost is up almost 18% from 2004.

North Dakota showed the lowest assisted-living cost at $1,742 monthly, while Bridgewater, N.J., had the highest, at $5,197 monthly.

The institute found 43% of facilities provide dementia care for residents, with 23% reporting they charged an additional fee for this care, ranging from $750 to $2,200 monthly.

Another study suggested Americans may not be as prepared as they might be, should they one day need LTC services.

The survey of 1,000 Americans by the LIFE Foundation, Washington, found 39% would turn to family or friends if they ever needed LTC services, while 18% entertained the dubious notion that they could use health insurance to pay for the costs.

Only 15% said they would use LTC insurance, while 12% thought they would be able to get by on accumulated savings for LTC needs. Another 12% cited government assistance programs as their fallback in case the need arrived.

“The chance of needing LTC at some point in your life is greater than 50%, and yet very few people are prepared financially so that they won’t have to fall back on their family,” noted Deb Newman, president of Newman Long Term Care Agency, Bloomington, Minn., and a board member of LIFE.