With nursing homes having the potential to “ruin” a person’s finances, more people are purchasing long term care insurance to pay for home care, a Forbes column writes. Citing an Employee Benefits Research Institute study, the Forbes column details the median household income for a person spending fewer than 30 days in a nursing home versus someone who spends more than six months in one. After six months, many nursing home residents are “effectively broke,” Forbes columnist Howard Gleckman writes.
“Median household wealth for those who spend fewer than 30 days in a nursing home is about $108,000. But after 6 months, many nursing home residents are effectively broke, with median assets of barely $5,000. In other words, after 6 months in a nursing facility, half of all residents lose essentially all their wealth. This includes both their home equity and financial assets.
The study was done by Sudipto Banerjee of the Employee Benefit Research Institute and based on data from the respected Health and Retirement Study, which tracks the health and finances of Americans over 50.
It is important to note that EBRI looked at all nursing home admissions, including short, skilled care stays. Medicare normally pays for the first 20 days and for part of the next 80 days for patients who are undergoing rehabilitation or post-acute care. But it does not pay for long-term care in a nursing facility (or at home). In 2010, about 40 percent of the admissions in this study were for 30 days or less, Banerjee told me.
…The EBRI study also found an increase in long-term care insurance coverage for home care, although the number of insured remains small. In 2010, about 14 percent of those getting paid assistance at home reported having long-term care insurance, up from about 9 percent in 2000.
View the original article on Forbes.com.
Written by Elizabeth Ecker