Americans are living longer: Let’s celebrate while planning for future healthcare needs
BY MARCIA ISRAEL
This anniversary is notable because in these 21 years, less than 7% of adults in the U.S. have purchased Long-Term Care insurance (LTCI) coverage. Most adults over age 50 have NOT planned for long term care or discussed it with their family. Healthcare brokers, financial planners, accountants, senior advisors and attorneys should be screaming from the rafters that creating a long-term care plan saves money, provides a guideline for the family in navigating care for the loved one, and determines the funding sources to pay for care.
Americans are living longer. Life expectancy in the U.S. has risen. By 2030, one in five residents in the U.S. will be age 65 or older, with 58% of women and 47% of men needing some form of extended care during their lifetimes.
Unfortunately, this isn’t something people plan for. Statistics show that most people do not understand the various forms of long-term care and the different ways to pay for it. Many do not plan for long-term care until a health care crisis hits them. Traditional and asset-based (hybrid) LTCI options are customizable to fit the needs and budget of each client.
When seniors do not plan for long term care, family and friends must scramble quickly to navigate the world of care options: placement, caregiving, insurance, benefits, paying for care. This includes taking out reverse mortgages, spending down savings, and/or tapping into retirement accounts, etc. to pay for care — leaving little or no funds for a surviving partner or for legacy.
It’s crucial to work with your clients to help them create a long-term care plan. Here’s why:
Currently, 14 million Americans need long-term services and support (LTSS); that number is expected to grow to 27 million by 2050. Single, older women comprise the majority who use these services.
Average out-of-pocket costs for personal care in California are $140,000 annually. Home care has reached $28-48 per hour; assisted living averages $5,000+ per month (with additional fees for personal care services). Board and care services begin at $2,500 and space is limited. The toll on family or friend caregivers is enormous and long-term care planning provides for caregiver respite.
By 2050, the number of Americans ages 65 or older living with Alzheimer’s disease and related dementias is expected to double from about 6 million to nearly 13.8 million. (Source: Alz.org)
Two thirds of all new, individual long-term care insurance claims pay for care needed by women (NAIC 2019). The LTCI industry paid out over $11 billion in benefits to some 324,000+ individuals in 2019. Seventy percent of these claims were paid to policyholders ages 80 and over. Living a long life may mean a greater need for extended care in the future. (Sources: Mutual of Omaha; ASPE.HHS.gov)
Help your clients obtain coverage for their future extended care needs Getting people to speak openly about this potentially sensitive subject is challenging. For many adults, LTC is an intangible, a “some-time down the road” need. Most people do not see it as a necessity in their everyday lives. Ultimately, when a loved one has no LTC plan, it’s the family members who are suddenly plunged headlong into the fragmented maze of private and public services, while trying to make immediate and critical decisions. Planning in advance for LTC creates peace of mind and protects the children, grandchildren, and friends.
Help your clients obtain coverage for their future extended care needs
As healthcare ambassadors, help facilitate clients’ planning now so that their eventual transition to custodial/personal care goes smoothly. With long-term care, the focus is on family, love and comfort, while also respecting the needs and wishes of the loved one.
Speaking with clients about long-term care planning
Conversation starters: Asking simple, open-ended questions offers insight into clients’ knowledge and provides a blueprint for their future LTC wishes. There may come a time when they may no longer be able to do that for themselves.
Who do you know who has needed custodial care? If they know someone who’s needed long-term care services, or they’ve been a caregiver themselves, they can better appreciate the emotional, physical and financial toll on the whole family.
What’s your plan for LTC? Most people plan to live a long life, but oftentimes they fail to consider what that means. As people age, they typically need personal care at some point. Discuss how their plan to live a long life could impact their family. Ask about where they would prefer to receive their care — at home or in a community. Most prefer to remain in their own home.
How do you intend to pay for LTC? Medicare does NOT cover custodial/personal care, if that is the only care needed; it covers care in a certified skilled nursing facility (SNF) so long as that care is “medically necessary.” Medicare does cover all medical and therapy needs, but it is aimed at helping people get back on their feet after an illness or injury. It is short term.
Ask if their plan for retirement includes paying for long-term care services out of their own pocket, or if they even qualify for Medi-Cal. Maybe their plan is to have friends and family help defray the costs. Ask if they have considered purchasing LTC insurance. If not, a final question might be to ask which assets they have ear-marked to pay for LTC. (Source: Medicare.gov.)
Who do you wish to be your caretaker(s)? If family/friends are designated as caregivers, has your client considered the physical, psycho-emotional, family, and financial onus placed on the caregiver? Caregiver burn-out places a tremendous stress on the family.
Anticipate common objections about LTC and LTC Insurance
Many of our clients have preconceived ideas about LTC. Help set the record straight by engaging in a meaningful conversation.
“What happens if I never need long-term care?”
No one believes they will need care as they get older, but we all age in varying ways. It’s estimated that over 70% of those ages 65 and over will need some form of long-term care services during their lifetime. It is protection for the family. No one can predict our future health needs.
“I can’t afford long-term care insurance”
When the numbers are crunched most people find they can’t afford not to insure and transfer at least part of the LTC risk to a carrier, especially when we consider the cost of 24/7 home care is at least $90,000+ a year and a nursing home costs nearly $112,000+ a year. On the other hand, the monthly cost of a policy can be affordable. (AALTCI). Prime ages for LTCI 48-68.
“I can self-insure”
That depends. Disposable income or assets of at least $225,000 per domestic partner may do the trick. Otherwise, a financial portfolio may be depleted in no time. Only 35% of Americans say they have set aside money to meet long term care needs.
It may not be worth risking a family legacy with the absence of planning ahead.
“What about Medi-Cal?”
Medi-Cal (Medicaid), a state- regulated and needs-based welfare program, comes with stringent requirements for qualification. It’s strictly meant for those who need government assistance. Medi-Cal (Medicaid) does cover the costs of nursing home care or care at home. The caveat with Medi-Cal is that the number and availability of beds (and locations), the communities, and the quality of care is determined by the state. This should be the last resort when paying for long term care services.
Why aren’t advisors talking to clients more about LTC planning and LTC Insurance?
Advisors assume the clients are not going to spend as much in their late 70’s and into their 80’s. There is also the assumption that investments, savings, friends & family, mortgage loans, retirement funds, sale of life insurance, and liquidation of assets will be there to pay for LTC — but that is not always the case. Speak with clients about transferring that risk to long term care insurance insurers via Traditional or Asset-based (Hybrid) LTC Insurance
Why Long-Term Care Matters If You Sell Medicare and Healthcare Plans?
There is an enormous cost to waiting or to not planning at all; the numbers tell the story:
Percentage of Seniors ages 65 and over who have utilized LTC Services over the past 5-7 years:
• Adult day services center participants: 62.5%
• Home health agency patients: 81.9%
• Hospice patients: 94.6%
• Nursing home residents: 83.5%
• Residential care community residents: 93.4% (Source:CDC. gov)
To best serve our clients
As healthcare agents, we are the boots on the ground educating clients about the best coverages for healthcare, Medicare, LTCI, and ancillary or voluntary products. With the “graying” of America and the “Silver Tsunami” approaching, might we also consider guiding our clients and their families, (with input, of course, from their accounting, legal, and financial advisors), as they develop a comprehensive plan for future extended care needs?
MARCIA ISRAEL, MEd, VP of Stan Israel Insurance Services, Inc., is passionate to get the word out about the importance of Long Term Care Insurance and planning for a long term health event. Her goal is to educate the general public about the need, cost, and financing of Long Term Care. She offers free referrals for clients and seniors to help find placement with home care, assisted living, board and care, and free government services as well. Marcia, a Life and Disability Income agent for over 35 years, is a former educator in Los Angeles as well as a professional writer. Marcia and Stan are regular presenters for CAHIP, NAIFA, Fiduciary, and other financial, legal, and insurance industry associations.