Cecily O'Connor
RedwoodAge.com

Boomers are mindful they'll need some type of long-term care going forward, but remain confused about who'll foot the bill.

Nine out of 10 adults lack a plan to pay for a home health aide, private nursing home care and other LTC expenses, according to the LIFE Foundation, a nonprofit group representing insurance providers. Most are expecting to count on "unrealistic" sources of LTC payment and care should they need help with basic tasks of daily living, such as bathing, eating and dressing, the foundation said. 

Nearly one in four said they will rely on family and friends, while others believe their health insurance coverage will suffice. Government programs such as Medicare also are seen as a safety net, but have many limitations when it comes to long-term care services.

"Most people are confused about how they will pay for long-term care services, which is a scary thought considering 70 percent of Americans who reach age 65 will need such care at some point in their life," said Deb Newman, president of Newman Long Term Care and a LIFE Foundation board member.

The survey comes at a time when many insurance providers are touting the benefits of LTC care policies during Long-Term Care Insurance Awareness Month in November. Since many boomers are expected to need some form of care, they are being urged to plan for their needs well before retirement when they are still in good health. 

Who Pays for LTC?
Part of the awareness campaign centers on clearing up common misconceptions people have about LTC funding sources. For example, health insurance only provides coverage for medical care and does not pay for custodial services for people who can no longer take basic care of themselves.

Meanwhile, as a government-sponsored health insurance program, Medicare does not pay for most forms of long-term care. Rather, it covers short-term rehabilitation after you have been hospitalized for at least three days, are homebound under a physician's care or are eligible for Hospice services. And while Medicaid pays for LTC services, it only does so for those who fall within their state's determined poverty level.

Even for those folks with more means, most Social Security checks won't even begin to cover LTC expenses. The monthly benefit for the average retiree is $1,153 - a fraction of what most LTC services cost. The average annual cost of a home health aide tops more than $40,000 and private nursing home care is approaching an average cost of $75,000 a year, according to a Genworth Financial survey.

Lastly, most adults' savings accounts also are seen an unreliable source. Though the savings rate has begun to improve, the majority of Americans likely do not have an adequate amount of savings to cover the high LTC costs. The median 401(k) is only about $40,000 to $60,000, according to most estimates.

To that end, the foundation laid out five questions to help people start thinking about LTC coverage. When it doubt, it's wise to speak with a financial planner. 

• How much coverage do you need and for how long?
• What types of services are important to you? 
• How important is it to have a policy that keeps up with inflation? 
• Does your policy qualify for a new state-run Long-term Care Partnership Program?