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The vast majority of people over the age of 45 critically underestimate the cost of long-term health care, according to a study commissioned by AARP.

Almost 2 in 5 Americans age 45 and older (38 percent) admit that they are “not very� or “not at all familiar� with the long-term services currently available, according to AARP's findings. Its report, “The Costs of Long-Term Care: Public Perceptions Versus Reality,� gauges respondents' understanding of the costs and funding sources of three types of long-term care: nursing homes, assisted-living facilities and in-home care. The study, released in December 2001, was conducted by RoperASW from July 20 to August 14 via telephone interviews with a random sample of 1,800 Americans age 45 and older. State-level data was also collected for California, Florida, New Mexico, Washington and Wisconsin from July 27 to August 21, from 400 residents in each state.

By 2030, 70 million people in America will be over the age 65, representing 20 percent of the total population, according to U.S. Census Bureau projections. Says Bill Novelli, AARP CEO: “It is essential that the general public not only learn about the long-term care options but understand the costs and begin planning for their future care requirements. Most of us pay little attention to the cost of such care until we or our loved ones need it.�

AARP's report finds that although more than half (60 percent) of the over- 45-year-old respondents claim that they are very or somewhat familiar with long-term care services, they seem to lack knowledge of the actual related expenses. For instance, when asked about the costs of nursing home care, fully half of respondents (51 percent) gave an estimate far below the national average of $4,654. Another quarter (24 percent) didn't even venture to guess. Only 15 percent were able to provide an estimate within 20 percent of the actual cost. Similarly, for the cost of assisted-living facilities and in-home care, most respondents either underestimated or had no idea about the expenses involved.

The report also revealed an unfounded belief among older Americans that their future needs will be covered or that they own long-term care insurance. More than half (55 percent) of Americans over the age of 45 mistakenly believe that Medicare will cover long-term nursing home stays of three months or more for age-related or other chronic conditions. An even greater share of Boomer respondents age 45 to 54 (61 percent) believe this to be true. In fact, Medicare covers only nursing home care for a short-term stay following hospitalization, and even then, will only cover expenses in full for the first 20 days. After that, the patient must pay about $100 a day, and coverage can end at any time if the patient doesn't meet strict medical criteria. And while 57 percent of older Americans correctly believe that Medicare covers the cost of in-home visits from a skilled nurse, 52 percent also think it covers home health-aide visits — which it does, but only if “medically necessary.�

In addition, almost a third of older Americans (31 percent) think they have insurance through work or a private policy that covers long-term care costs, and of those who believe they have such coverage, 70 percent say they feel prepared to meet future financial demands. However, the authors of the report state that many who think they have proper insurance may not, citing the Health Insurance Association of America estimate that only about 6 percent of Americans actually own a long-term care policy.

“We suspect that people are confusing long-term insurance with other types of coverage, for example, disability insurance provided by employers or Medicare,� write the authors. “If they eventually need long-term care services and discover that they are not covered, the financial burden may be overwhelming.�

For more information, contact AARP's Linda Barrett at (202) 434-6197.


Fully one-third (36 percent) of Americans over the age of 65 — those with the most immediate need for long-term care — admit that they are “not very� or “not at all� familiar with such services.


TOTAL 60% 38%
45-54 59% 42%
55-64 58% 39%
65+ 63% 36%
Under $10K 42% 55%
$10K-<$30K 54% 45%
$30K-<$50K 60% 40%
$50K-<$75K 66% 34%
$75K-<$100K 74% 26%
$100K+ 61% 38%
Less than high school 44% 54%
High school grad 55% 43%
Some college 66% 33%
College grad 71% 28%
Post graduate 74% 26%
Note: Rows may not equal 100% because “no answer/don't know� not shown or due to rounding.
Source: AARP/RoperASW
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