Unpaid caregivers are increasingly becoming the default way older adults are cared for in the United States. With many people failing to plan for future declining health and long-term care, when the time comes, adult children become caregivers, at least initially.
Many people ignore the problem, perhaps because of denial or because they mistakenly think traditional health insurance or Medicare pays for long-term health care. Without planning, a crisis happens within the family.
Health insurance, including Medicare, pays for a minimal number of days for skilled care. However, most long-term health care is custodial care -- meaning help with everyday living activities or supervision due to dementia. Custodial care is not covered by traditional health insurance or Medicare. Medicaid will pay for long-term care services of all types but only for someone with little or no income or assets.
People with Long-Term Care Insurance have comprehensive coverage, but someone cannot buy a policy when they need care; it must be purchased when someone is younger and healthier.
Family Caregivers Juggling Roles Need Help
How do untrained and unprepared family caregivers balance their responsibilities to their families and employers with that of being a caregiver? The State of New York is attempting to help.
The problem in New York is increasing as they have a population older than the national average. The state released a 32-page guide for New York employers to help them support employees who are also caregivers, often for an older parent.
The state says an estimated 4.1 million caregivers are helping loved ones today. New York Governor Kathy Hochul's office also released a survey asking state employees to provide their experiences balancing the roles of being a caregiver along with the responsibilities of their job. Private-sector employers are also being encouraged to survey their workers on the issue.
According to preliminary findings from the state worker survey, more than half of those polled care for at least one person, and more than a third assist a person for at least 22 hours per week or more.
The so-called "sandwich generation," some caring for aging parents and their children, find it challenging to balance work, family life, and the needs of caring for an older loved one. This has pushed caregiving and the issue of long-term health care into the spotlight.
Gov. Hochul says that recognizing caregiving as valuable and crucial individuals can better connect with the many state and local resources and supports specific to their needs.
In addition to making historic investments to expand our long-term care workforce, I am excited to be giving back to the more than four million unpaid caregivers who have already dedicated their time and energy to caring for loved ones.
Unpaid caregivers assist loved ones with various tasks, including accompanying someone to medical appointments, bathing and dressing, shopping assistance and meal preparation, transportation, bill paying, household chores such as mowing the lawn or shoveling snow, and more.
Unpaid Caregivers Big Part of Care System
The governor's office says caregivers significantly contribute to New York's long-term care system. According to AARP, the services provided by unpaid caregivers would cost approximately $32 billion per year.
One in every six employees in the United States is a caregiver for a family member or friend. These individuals spend more than 20 hours per week on average providing some type of long-term health care service.
Quality Care a Concern
Often, families are strained to provide the required quality care that someone needs since long-term care can last years. The result is the care recipient pays for a professional caregiver to assist or replace informal family caregivers. Professional care is costly, even for in-home or adult day care, often used as respite care for family caregivers.
The cost of long-term care services is increasing in New York and nationwide.
Business’s Impacted with Workers Needing to be Caregivers
Gov. Hochul's office says that according to one estimate, businesses in the United States lose up to $33.6 billion per year due to caregiver-related turnover, absenteeism, and productivity loss. This includes situations where caregivers cannot arrive on time or leave early, make phone calls during work hours, leave work to respond to emergencies, or miss work entirely.
Employees have also declined promotions, reduced their hours to part-time, or quit their jobs entirely to continue their caregiving work. The problem is becoming a national crisis that impacts families, businesses, and the government.
Some states are considering action to address their state's Medicaid budgets since, with not enough people planning in advance, many people up on Medicaid. Medicaid was never intended for long-term health care but has become the nation's largest payer of long-term care services.
States Taking Action – LTC Tax
The State of Washington was the first to act, with New York and California close behind, by initiating the so-called "LTC Tax." The state provides a minimal long-term care benefit ($36,500 in Washington) funded by this tax placed on 100% of earned income (with no cap) on anyone age 18 and older who does not own a qualified Long-Term Care Insurance policy.
Much of the revenue from the tax will benefit the state's Medicaid program.
Of course, the state's benefit is considered so small that many people who wish to protect their income and assets from future long-term health care costs will still have to buy an LTC policy. However, they will also pay the tax unless a policy is issued before the tax.
Unlike in Washington, New York, and other states will require a Long-Term Care Insurance policy to be issued by the first of the year that the law goes into effect.
Consequences on Family Members and Care Recipients
The problem of long-term care has many consequences for families, caregivers, and the care recipient. According to the Centers for Disease Control and Prevention, 85% of people who care for an older adult and a child simultaneously experienced mental health symptoms, and 52% had suicidal thoughts.
According to data from the National Alliance for Caregiving and AARP, 70% of working caregivers face work-related challenges due to these dual roles. Plus, 69% of caregivers have had to rearrange their work schedule, reduce their hours, or take unpaid leave to meet responsibilities.
A similar number -70% -reported at least one mental health symptom, including anxiety, depression, suicidal thoughts, and COVID-induced trauma. More of this data is on New York's Office for the Aging's working caregivers webpage.
Planning for Long-Term Care Should Happen Before Retirement
For those who have savings to protect, Long-Term Care Insurance should be purchased when someone has reasonably good health because of the insurance company underwriting rules. These rules vary depending on the insurance company.
While some states may tax you if you don't have an LTC policy, some states offer state tax incentives on top of federal tax incentives. For example, a credit for personal income tax in New York is allowed equal to 20% of the premium paid during the taxable year for a qualified Long-Term Care Insurance policy.
The new $1.7 billion 2023 omnibus appropriations bill includes a provision that could help some individuals pay their Long-Term Care Insurance premium.
The provision would allow 401(k) plan participants to use up to $2,500 of their "nonforfeitable accrued benefits" to pay premiums for inflation-adjusted Long-Term Care Insurance coverage that met federal standards under Section 7702(b).
The distributions would have to be included in taxable income, but the participant would not have to pay the 10% tax penalty on early 401(k) plan asset withdrawals.
The Consolidated Appropriations Act 2023 bill is an omnibus bill that includes legislation needed to fund and operate the federal government.
Several Options to Prepare for Future Long-Term Health Care
The need for a solution to future long-term health care is more than just being concerned about money. Experts say it has to do with access to quality care and easing the stress and burdens that are otherwise placed on family members.
Several top-rated insurance companies offer qualified Long-Term Care Insurance options. Long-Term Care Insurance specialists can help you navigate the many options, underwriting rules, tax benefits, and costs to find appropriate coverage that fits your age, health, family history, and budget. When you get accurate quotes from a specialist, you can decide which plan meets your needs.
Meanwhile, states and other groups can make it easier to help older loved ones who need care now. If you are looking for appropriate care for a family member, these guides can be helpful:
About the Author
Contributor since April 22nd, 2021
Being prepared for the effects of aging and failing health can make growing older easier and improve your quality of life, regardless of how involved your family is or will be in your life.
You want quality care when you need assistance with tasks that most of us take for granted today but, in the future, will require help from someone else. We go to the bathroom, wash our hands, toilet, and dress ourselves without much thought or effort. In the future, it is likely we will need help and assistance.
Long-Term Care Insurance provides much more than asset protection. It enables you to access quality care and live better lives even as your health, body, and mind deteriorate.
The time to plan is when you still enjoy good health. Most people obtain coverage in their 50s to take advantage of lower premiums and good health.
Not only will you protect your 401(k) and other savings, but you will also give your loved ones more time to be family rather than caregivers.
Seek Professional Assistance
Long-Term Care Insurance can be complicated. There are several insurance companies, different plans, underwriting differences, and pricing can vary over 100% between insurance companies.
Getting help from an experienced Long-Term Care Insurance specialist who works with the top insurance companies will help you navigate these differences. They can ensure you are matched with the best coverage at the best value.
Financial advisors and general insurance agents usually have little experience in this area and often only work with one insurance company.
Many people find LTC Insurance affordable, especially if they are in good health. Most people obtain coverage in their 50s to take advance of lower premiums along with better health. Long-Term Care Insurance is also custom designed.
Have Questions About Long-Term Care Planning?
LTC NEWS has many tools and resources that can help you in your research as you prepare for your future retirement and plan for the costs and burdens that come with aging and declining health.
Loved Ones Need Help Now?
Get help finding quality caregivers or long-term care facilities and get recommendations for a proper care plan, whether a person has a policy. - Filing a Long-Term Care Insurance Claim.
If your loved one is lucky enough to own a Long-Term Care Insurance policy, be sure they use it. Sometimes families wait, thinking they can save the benefits for a rainy day. Waiting on using available Long-Term Care Insurance benefits is not a wise idea.
If your parent or parents need help, be sure to get them quality care. LTC NEWS can help. We have put together several comprehensive guides to help you in your process.
The Benefits of Today's Reverse Mortgages
Some people have a large portion of their savings in their homes. With the help of reverse mortgages, you can find ways to pay for quality in-home care, pay for LTC Insurance, and even assist with cash flow during retirement.
Yes, today's reverse mortgages may be the perfect way to pay for a Long-Term Care Insurance policy or even cover the cost of in-home care if you or a loved one is currently in need.
Asking an expert with your questions will help you learn more. Mike Banner, a columnist for LTC NEWS and the host of the television program "62 Who Knew," will respond to your inquiries about long-term care, reverse mortgages, aging, and health.
- Just "Ask Mike." - Reverse Mortgages | LTC News.
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