I had a similar hit on a V70. The bumper brackets were damaged, but they took the impact, and there was no damage to the body other than that. However, since the brackets were bent down, the bumper was down, and after a few days, the heat from the exhaust melted it.

Since you were hit from behind it is automatically the other driver's fault. Their insurance should cover it, and there should be no deductible.

I have a 95 with similiar mileage. it is worth about $5000. Deductible is $500. You may have some crushing of the styro foam inside the bumper. If it were a bicycle helmet made of styro I would spend the money to buy a new one. As long as the other protective devices(air bags, side beams, etc.) are not damaged I personally would not spend ten per cent of the value of the car to replace a part that may constitute twenty to forty per cent of the car just for cosmetic reasons at this point. Bumpers, in my opinion, are to protect the body of the car from minor contacts causing major expense for cosmetic reasons. The other protective devices are to protect you from major damage and expense.
Keep on driving!

There is more damage under the bumper. I had the same type of hit. It was more than I expected.