Study: Americans nearing retirement ignorant about cost of care
WASHINGTON (CNN) -- Americans age 45 and older are largely ignorant about the costs of long-term care for the elderly and what services are covered by private insurance and Medicare, according to a survey released Tuesday by AARP.
The survey showed that nearly a quarter of Americans approaching retirement age said they did not know the cost of nursing home care and only 15 percent could identify the price within 20 percent of the national average monthly cost, $4,654. Asked to estimate the cost, more than half estimated too low.
Likewise, only 27 percent could come within 20 percent of the median estimated cost of care in an assisted living facility -- $2,000 to $2,500 a month -- and another 38 percent did not know.
However, when asked if they felt prepared to meet the financial challenges of long-term care, 49 percent of the people in the survey said they felt "very" or "fairly" prepared; 46 percent felt "not very" or "not at all" prepared.
And while 31 percent of those surveyed said their insurance would cover the costs of long-term care, the Health Insurance Association of America estimates that only about 6 percent of Americans actually have such insurance. The AARP concluded that this could indicate that many people facing retirement are operating under a false sense of security.
"With the onset of the aging demographic revolution, it is essential that the general public begin planning for their future care requirements," said Bill Novelli, chief executive officer of AARP, an advocacy group for older Americans. "Unfortunately, most of us pay little attention to the cost of such care until we or our loved ones need it."
The study also found discrepancies between what people think Medicare covers and what it actually does. Of the 58 percent of the people in the survey who described themselves as "very familiar" with long-term care, about 55 percent believed Medicare covers long-term nursing home stays, when it does not. About 40 percent thought Medicare would pay for assisted living care, which is also not covered.
According to AARP, U.S. Census Bureau projections show that the number of people aged 65 or older in the American population is expected to double in the next three decades, to about 70 million. The population aged 85 and older is also projected to double, to about 8.5 million.
The survey was based on telephone interviews with 1,800 Americans aged 45 and older, with a margin of error of plus or minus three percentage points.
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