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Long Term Care - Avoiding the Crisis

The crisis in long term care is apeople who lack the ability to take care
disaster 61 years in the making. Itof themselves for an extended period. If
began in 1946, when the first post-warthat percentage holds in the coming
babies were born-in record numbers. Ityears, then 49.6 million of the boomers
continued for 18 more years, as thewill require long term at some point.
"baby boom" continued. Things took aThe cost of that care will be
turn for the worse in 1964, whenstaggering. Right now, the average cost
birthrates began to fall. The impact ofof a private room in a nursing home is
the baby boom has been enormous. It has$74,600 a year and the average stay is
affected everything from school2.4 years. At those rates, the total
enrollment in the '50s and '60s to thecost of long term care for the baby boom
economy of the '80s, '90s, and '00s. Atgeneration would be $8.88 trillion. That
the peak of their earning power, theaverages out to $467 billion a year for
baby boomers have generated record taxeach of the baby boom generation's 19
receipts and created a surplus in Socialyears.
Security. That is about to change.Who is going to pick up the tab? Nearly
With the baby boomers in the workforce,60 percent of baby boomers are under the
there are now 3.3 workers for eachimpression that Medicare pays for long
Social Security beneficiary. As theterm care. They are mistaken. Medicare
boomers move into retirement, however,pays for short rehabilitation periods,
that figure will fall. By 2031, therebut not for long term care. Today 51
will be only 2.1 workers for each Socialpercent of long term care is paid for by
Security beneficiary. The Socialindividuals and long term care
Security trust funds are projected toinsurance; 49 percent is paid by
have surpluses each year until 2016.Medicaid, the federal program covering
Trust fund reserves will grow to aboutlow-income people.
$4,459 billion. In 2017, however, withWithout reforms, the baby boom will put
about half the boomers at retirementa tremendous strain on Medicaid. As a
age, tax revenues flowing into the trustresult, Congress is tightening Medicaid
funds will be less than totaleligibility requirements. It is also
expenditures. Interest on the reservesgiving tax breaks to individuals who buy
and the assets will make up thelong term care insurance. Long term care
shortfall-at least for a while. In 2041,insurance is a special policy funded by
when the first boomers are 95 and themonthly premiums that pays for long term
last are 77, the reserves will becare, if it is ever needed. The AAHSA
depleted. Incoming funds will cover onlyestimates that the average long term
75 percent of the scheduled benefits andcare insurance policy purchased by a
administrative costs.65-year-old and held until death pays
The boomers will have a similar impactout 82 cents for every dollar spent in
on long term care. At least 72 millionpremiums.
baby boomers will live to be 65 andAs with all insurance, long term care
older, according to the U.S. Censuscosts less for younger, healthier
Bureau. According to the Americanpeople. The average annual long term
Association of Homes and Services forcare premium for individuals under 65 is
the Aging (AAHSA), a nonprofit$1,337. The average premium for
organization that specializes in elderindividuals over 65 is $2,862. The
care, 69 percent Americans who live tosooner the boomers sign up for long term
be 65 or older require long termcare insurance, the better off they are
care-the supportive services needed bylikely to be.



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