LTC is the #1 Unplanned Health Event for Seniors
BY MARCIA ISRAEL
Eventually, more than 4,000 senior communities were overrun with the virus. Unprepared, families and caretakers scrambled to figure out health protocols; tough decisions had to be made all too quickly — should we keep mom and dad in a nursing home or bring them home for care? These decisions came with great consternation and a new understanding that senior care is multi-faceted and complex.
By April of 2021, with the availability of the vaccines, senior communities began to re-open and welcome back new and returning residents. However, there are still challenges with COVID-19 and health safety, and some families are sticking with home care, bearing those costs and services.
Paying for LTC
Many seniors who now wish to reside in a LTC community are finding that the facilities accept only private payment or some Medi-Cal, with very limited bed space. The fortunate are those seniors who had the foresight and financial ability to purchase LTC insurance in their 50s and 60s, about 10 to 30 years ago. These folks now make up the lion’s share of assisted living communities or whose LTC insurance pays for home care. Families with no LTC insurance must scramble to find reverse mortgages, sell any life insurance (think life settlements), depend on family member contributions, or spend assets down to Medi-Cal limits. With care averaging about $39+ per hour for home care or $5,000+ a month for assisted living (plus costs for personal/custodial care), shouldn’t we all have these conversations with our clients? medicine
Our life expectancy has been extended because many diseases and chronic Illnesses that resulted in death years ago are now treatable.
Care facilities all say that having LTC insurance makes the care transition all that much easier. Loved ones who have LTC insurance and a Long Term Care Plan in place fare much better because financial, care, end-of-life, inheritance, and medical decisions are set so their wishes can be met and they can spend quality time with the family.
What about caregivers?
Most spouses and children become caregivers and do so gladly. However, with no LTC plan in place, the toll on these family heroes becomes more apparent over time. Spouses get tired or struggle with their own physical ailments as they care/lift/clean/do all household chores and shopping. As the caregiver’s health suffers, some even die before the “patient” does. Other caregivers may also require LTC (with those additional costs) alongside their loved one. With family caregivers the toll is different, especially for daughters (who are relied on more often than others). They can lose time away from work (and their own family), lose income, health benefits, retirement benefits, and may also suffer health challenges.
This secondary toll of caregiving affects the whole family once more. An LTC plan and LTC insurance assists family caregivers and pays for respite care, additional caregivers, even adult day care.
Modern medicine and longevity
The “Silver Tsunami” is upon us. California will need to provide care for the increasing number of seniors who turn 65 each day. More seniors than ever are living into their mid-90s; some have become centenarians. This population will absolutely need care in their platinum years.
Our life expectancy has been extended be-cause many diseases and chronic Illnesses that resulted in death years ago are now treatable. However, the resulting chronic, lingering symptoms and conditions require not only medical care, but also non-medical care such as assistance with the ADL’s. COVID-19 patients may suffer from a variety of lingering physical ailments, but not all of these may be covered by Medicare or health insurance.
Long Term Care by the Numbers
Simply put, not enough seniors have the savings or the insurance to fund even 3 to 6 months of care.
What percentage of the population needs Long-term Care?
• 42%: Percentage of people older than age 85 who need long-term care services
• 47%: Estimated percentage of men 65 and older who will need long-term care during their lifetimes
• 58%: Estimated percentage of women 65 and older who will need long-term care during their lifetimes
• Just 1 in 4 Americans can afford the cost of LTC for a year
• Among people ages 70-84, about 16% will need assistance with at least one activity of daily living (ADL)
• After age 85, 45% will need assistance with at least one ADL
• About 30% (1.5 million people) have substantial LTC needs (multiple ADL limitations)
• The average yearly cost for care in California is $138,000
• The average nursing home stay is 3 years
• 13 % of older seniors may require 5+ years of care
• Authentic Home Care in California runs $38-$43 per hour. Health insurance covers less than Medicare when it comes to
• Long Term Care.
The long-term effects from COVID-19 are yet to be re-vealed — the impact on the long term care community and families, as well as on the insurance industry is unknown. Stroke and Cognitive Impairments also add to the list of conditions which may persist for a longer period of time.
Dispelling Myths About Medicare, LTC and Aging in Place
“LTC” is too often referred to as “nursing home insurance.” In reality, most people who need care re-main at home.
Medicare does not pay for LTC. A few Medicare managed-care plans may provide some modest long-term support and services. MediCal pays for about half of all LTC costs, and is for those with low incomes or other needs. Families often pay for LTC costs them-selves or provide care on their own.
Medicare services for in-home care, for an extended time or permanently, are temporary. Medicare Part A and Part B cover intermittent nursing care (part-time, skilled nursing care) for up to 21 days. Medicare does not pay for 24 hour/day home care, meal delivery, homemaker services, or help with ADL personal care: bathing, dressing or using the bath-room. Medicare does NOT pay for LTC (custodial care) in a skilled nursing facility, including assistance with the ADL’s: continence, transferring, walking, bathing, eating, dressing.
In a skilled nursing facility in 2021, under a doc-tor’s orders for longer than 20 days, a patient pays a $185/day coinsurance for days 21-100 and ALL COSTS after 100 days. Medigap insurance may help fill the “gaps” (days 21-100) that Medicare won’t pay copayments, coinsurance, deductibles. If a person is expected to improve and a physician prescribes physical, occupational, or speech therapy temporarily, the patient still pays a 20% deductible — with just Part A or Part B and no additional insurance.
Aging in place (at home) is not always the best care option for seniors. The family may wish to provide the loved one a consistent support network at home. The challenge is navigating the complexities of services and health needs, including: home modifications, home care aides, transportation, medications, meal deliveries, adult day programs and coordination among many health-care providers. Many older adults benefit from community-type living and having access to increasing levels of care. For others, living independently and autonomously from their children affords them the freedom to make the final decisions about residence and care choices. However, seniors who live alone can be terribly isolated; some suffer serious health risks which have been exacerbated by the pandemic.
This California will need to provide care for the increasing number of seniors who turn 65 each day. More seniors than ever are living into their mid-90s; some have become centenarians. This population will absolutely need care in their platinum years.
How California, other states, and the federal government are addressing the impending “Silver Tsunami”
California Governor Newsom recently empowered the California Department of Insurance (CDI) to es-tablish The California Long Term Care Insurance Task Force, charged with creating a feasibility study with the purpose of creating a statewide insurance pro-gram for LTC services/supports.
The state, NAIFA CA, CAHU, and other legal, finan-cial, and insurance experts have monitored the roll-out of Washington state’s Cares Fund, a payroll tax to fund state-provided LTC. In Washington there was a lack of clear communication about what the tax was for, how/why to purchase LTCI ahead of the tax (we re-ceived numerous calls to our agency among others), and what the “opt out” process was. Also, the benefit pool was way below the current costs for care. Other states and the federal government are also looking to offer public or private options to help fund LTC for many more people. It’s a work in progress with no clear path for funding any type of LTC for all. Refer to: Well-Being Insurance for Seniors to be at Home, or WISH Act (H.R. 4289; https://wacaresfund.wa.gov/.
What’s the take-away? Create a blueprint for the future
As financial advisors who work to ensure that our clients are insured and protected for many circumstances in life, we should discuss retirement and legacy options. Invite clients and their families to create a blueprint for future extended care.
Creating a blueprint:
- Gather financial, insurance, health, military, and legal documents
- Determine who will coordinate the care plan (a trustee of sorts)
- Together with the loved one, center the dialogue around care and placement options, which assets to use, residential or home care options and hospice and end-of-life wishes.
- Discuss the needs for the surviving spouse/partner as well. There is no time like the present.
MARCIA ISRAEL and her hus-band, Stan, principals at Stan Isra el Insurance Services, have been LTC Insurance Specialists and Industry Innovators for 37 years. Their product portfolio also includes Life, Disability, and Life Settlement products. An educator and insurance advisor for more than 35 years, Marcia speaks passionately to senior, financial, and legal forums about the great need for families to plan ahead for a long-term health event. Her agency is active with various CAHU and NAIFA chapters. Marcia can be reached at (818) 706-1100.