Every November, since 2001, Americans are asked to be aware of long-term care. Every year since then, more American families are impacted by the consequences of a loved one's long-term health care. In 2020, due in part to the COVID-19 virus crisis, even more people have become aware of long-term care.
Long-Term Care Awareness Month
So, November is Long-Term Care Awareness Month. The question is, will this awareness lead to you taking action to plan for the future financial cost and burdens that come with aging?
People require long-term health care services due to an illness, accident, or the consequences of longevity. The consequences are numerous. The common denominator of the impact of long-term care is it will adversely affect your family and finances.
Being prepared starts with being aware.
"This is an enormous issue facing individuals, their families, and our nation as a whole. I'm proud of the steps we are taking to further awareness and discussion of the issue," said Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance.
Slome says Americans should become aware of the importance of long-term care planning and the many available solutions to reduce the financial and physical burdens placed on American families.
Family Can Face A Crisis Without Long-Term Care Plan
Without advance planning, the family faces a crisis. A family member, often a daughter or daughter-in-law, takes on the responsibility of caregiving or managing paid care services. They are usually unprepared and unskilled to take on this role. Family caregivers often face numerous challenges, physical, emotional, and financial.
Many people, including financial advisors and insurance agents, focus primarily on long-term care's financial impact. However, many specialists in this area say the real concern is the physical and emotional repercussions of long-term care on these family caregivers.
“Caregivers experience higher rates of depression, more health issues and social isolation. Having a plan for long term care will provide your loved ones with resources to make sure that your care needs are met without bearing the entire burden themselves,” said Kerry Peabody, CLU, CLTC, RICP, a leading expert on long-term care planning.
Family Caregivers Must Juggle Responsibilities
Kaye Dent, an elder care attorney in Illinois, says she still has some clients think their adult children will easily be able to provide any care they may need in the future.
She reminds her clients that times have changed, and their adult children, including their daughters and daughters-in-law, will have careers and other family responsibilities, making the role of caregiver nearly impossible. Since they work outside the home, juggling all the responsibilities they face in addition to the role of "caregiver" becomes problematic.
Longevity is part of the problem, according to Dent.
"A 90-year-old's 60-70ish kids don't usually have the physical ability and stamina to provide care, and they may even need care themselves," she explained.
In that situation, you may have multiple generations needing long-term care simultaneously, and the adult grandchildren are still working unable to handle the responsibility.
"I think everyone underestimates the toll of caregiver stress. It's nearly impossible to be a child and a caregiver at the same time. Don't make your kids chose. Absolutely everyone needs to assume that they could need long term care at some point," said Dent.
Dent says that you should have several items in place to prepare, including Long-Term Care Insurance, powers-of-attorney, living wills, and sometimes other financial products to reduce the overall risks and burdens of aging.
America’s Tsunami of Caregiving
Lawyer, speaker, and author of the book, "Who Moved My Teeth" Preparing for Self, Loved Ones and Caregiving," Cathy Sikorski, says too many people remain unprepared for the tsunami of caregiving.
"It's coming for you and all of us. You need to have your legal documents in order yesterday, and you need to have a plan for the cost of long-term care. Consumers are shockingly unaware of the debilitating cost of a long-term disease or aging loved ones, including themselves, and so they fail to have a plan, any plan," she said.
Sikorski says you need a plan for long-term care. She says there are numerous ways to plan but having no plan is the worst plan.
"I assure you, if you don't start with having your financial and health care powers of attorney and a conversation with the important decision-makers in your life, you will go down a road of hemorrhaging money when it does not have to be that way," she explained.
Laura Pierce is the Chief Operating Officer of Talem Home Care who provides in-home health care services for clients in Colorado, Connecticut, and Wisconsin. She says planning ahead with Long-Term Care Insurance is the best gift you can give your children.
"As a home care services provider, I have seen policies that have given families the choices and proper care that was needed to allow the patient age in place," she said. "Finding a knowledgeable agent and that can guide you is key to purchasing the right policy.
Pierce says that she has seen policies where the agent failed to educate the client properly. The end result was the client was either dramatically underinsured, or they outlived their policy.
Goal: Maintain Control and Independence with Aging
Many experts suggest that planning allows for a person to maintain control and independence. This control also involves where a person receives care in the future. The COVID-19 crisis has again highlighted that being at home, for many, is where they want to be when they require help with daily activities.
Dallas financial advisor Liz Pace, CLU, ChFC, CLTC, says the pandemic’s effect on long-term care facilities have highlighted the need to have more control and more options over when and how you receive future care.
“Clients with Long-Term Care Insurance may have been able to change where their care was being provided and alleviated the concern of having to stay in a facility during this international health crisis,” Pace explains.
Pace reminds us that aging is a natural progression of life. Aging with options and dignity when addressing long-term care services comes down to planning for the future when you are healthy today.
"Addressing long-term care while implementing your core financial plan strategies can provide a solid foundation that answers how to pay for and control when, where, and how services will be provided," Pace said.
Avoid Running Out of Money in Retirement – Maintaining Lifestyle
Many experts agree there are three areas to consider when planning for the financial costs and burdens that come with longevity. These are income and asset protection, family, and independence, and control.
Lynn Rockwell, CLTC, a Long-Term Care Insurance specialist from New Jersey, says that people fear running out of money in retirement, and often that is due to the costs of health care as they get older.
Like many Long-Term Care Insurance specialists, she says the three areas of concern should be reviewed when considering your future retirement. Rockwell explains that even for those who may think they have enough money to self-insure, the insurance is a hedge against using those assets and preserving them for family or more beneficial causes.
LTC Costs are Expensive and Continue to Rise
Too many are unaware of the substantial costs of long-term care. The LTC NEWS Cost of Care Calculator says a nursing home could cost over $100,000 a year. Assisted Living and Memory Care facilities are less expensive but not cheap and will drain assets. In-home care can cost $50,000 a year depending on the number of hours required and your location.
The calculator will show you the current and future cost of long-term health care where you live - click here and find your location.
Rockwell says people she speaks with want to maintain their dignity.
"The freedom to choose caregivers or facilities is very vital to remain in charge of your life," she said.
Self-Funding Long-Term Care
Some financial advisors suggest self-funding future long-term care costs. But long-term care is an income problem in addition to a family problem. The cash flow issue changes lifestyle and drains savings adversely impacting not only you but your legacy.
According to Noel Evans, a Washington, DC Long-Term Care Insurance specialist, there are inherent problems with self-funding.
Evans says some people might be able to pay for future long-term health care costs, but those costs can become very expensive, and for some people, the costs could wipe out a substantial amount or all their assets.
"Self-insuring involves timing. When will long-term care be needed? What happens if it is in a recessionary environment or a bull market? Then there are liquidity questions. What if your money is tied-up in the market or retirement accounts or real estate? You might not be liquid at the time of your need," Evans explained.
Indiana specialist Don Strickler agrees self-funding can be short-sighted.
"From a financial planning perspective, many consumers who are still active in the workplace make the mistake of looking at the current cost of care and measuring that risk against their current income and conclude that they can self-insure. However, the math changes dramatically because their income will go down when they retire, and the cost of care will double by the time they reach the age when they are most likely to need care," Strickler said.
Plus, self-funding is dependent on your assets to be there when you need them.
"There is no "safe return on investment" available to you as an individual or with a spouse/partner to accomplish what an insurance company and the tax code provides in a Long-Term Care Insurance Benefit," adds Raymond Lavine, an extended care benefits advisor from Gig Harbor, Washington.
Lavine is reminded that his mother owns a Long-Term Care policy despite having millions in income and assets. When asked why she had a policy, she explained that no one has that much money to pay for lifestyle expenses and pay for part or full-time caregiving. She is now 100 years old and has used her Long-Term Care policy for over ten years.
Leveraging Existing Assets for Future Long-Term Care
Some specialists and financial advisors support the idea of leveraging an existing asset to plan for future care. One such expert is Mark Goldberg, President of FPS Insurance Agency in Frisco, Texas.
"There is no better instrument for leveraging money like a Hybrid Long-Term Care policy. The policy removes the risk of someone ever losing any principle. It is just sound financial planning. About 25% of my clients can self-insure, but they choose to transfer the risk to an insurance company smartly and efficiently," Goldberg explained.
Goldberg said some companies offer a cash benefit adding to the flexibility of how benefits get used at the time of claim.
But long-term care awareness involves multiple concerns that too many people fail to consider until an event occurs. Avoiding the crisis before it becomes a crisis is essential.
"Long-term care planning is about wealth preservation, undeniably. For me and my clients, it is equally or more about dignity, choices, grace, consideration, and quicker access to higher quality care, with much less pause or hesitation. This perspective is often overlooked by the public and by many professionals who serve them," said Long-Term Care Insurance veteran expert Honey Leveen who has been helping clients for 30 years.
Taking Action Now for a Happier Family
Awareness is one thing. Taking action is the only thing that will safeguard your income and assets and reduce the stress, anxiety, and burden that aging places on you and your family.
Several solutions are available. For many American families, affordable Long-Term Care Insurance is the best way to protect your family and finances.
For families that pre-fund future long-term care in some fashion are much happier and more unified than those who don't, according to Arosa+LivHome CEO Ari Medoff. The company provides in-home care and other services in California, Florida, Illinois, North Carolina, Tennessee, and Texas.
"When adult children call to inquire about home care for a parent, we hear the relief in their voice when they share with us that their mother or father has Long-Term Care Insurance. We reassure them that it will pay for in-home care. The desire for seniors to age in place is stronger than ever," Medoff said.
He says that purchasing Long-Term Care Insurance is a gift you give your spouse, your children, and all those who love.
"The policy removes or mitigates the cost of care when the time comes and allows the family to focus on arranging the best care in your preferred setting," he said.
Ohio financial advisor and long-term care advisor Greg Seals says it is simple, you either have a plan and not need it or need a plan because to require care and not have it. He says the lessor of two evils is having a plan and never needing it.
Researching LTC Planning Options
Considering the high cost of extended care and the consequences needing care has on your family, having a plan might be the right decision.
Now you have something to be aware of this November, but do you really need a month to be reminded that your family is important to you? You can think about and research long-term care any time, but the best time is now when you still enjoy good health. LTC Insurance is medically underwritten so planning before retirement is always best.
There are several tools and resources available to start your research on long-term care.
- LTC NEWS has many tools and resources - click here
- The Ultimate Long-Term Care Guide is a good overview
- The American Association for Long-Term Care Insurance has several resources
- AARPs Planning for Long-Term Care provides reliable information
- The U.S. Department of Health and Human Services LTC website
All the experts suggest finding a qualified Long-Term Care Insurance specialist who can help you navigate all the options, underwriting, policy design, and more. You can find a trusted and experienced specialist by clicking here.
There are also tax incentives available in some situations if you own a qualified LTC Insurance policy.
Forty-five states offer Partnership Long-Term Care Insurance policies with dollar-for-dollar asset protection. You are able to shelter part of your estate no matter how long your long-term care event may be. With this special type of policy a small plan can still provide substantial asset protection. See if your state offers partnership policies by clicking here.
The topic of long-term care is not something most of us want to think about, but that is probably why they named a month for awareness. This way, we can become more aware of something that we are already aware of in our gut.
"Most of us that are at least 40 years-old have noticed changes in our health and bodies. It is normal even if we work hard to eat right and exercise. Nature takes its toll. Now imagine the changes we will see with our health, bodies, and mind in the decades ahead. These changes are the reasons we should think about long-term care. Planning is easy and affordable as long as we get away from our own denial," said Matt McCann, a leading expert on long-term care and the CEO of LTC NEWS, LLC, and publisher of this website.
Long-Term Care Awareness Month. Now you are aware.
LTC NEWS offers many resources to help families address the consequences of long-term care, aging, health, caregiving, and other retirement issues. You can be part of the effort to help educate consumers throughout the U.S. and around the world.
Find all the resources on LTC NEWS by clicking here.
One of the best tools is the LTC NEWS Cost of Care Calculator. You can find the current and future cost of long-term health care where you live. This information will help you design an appropriate LTC Insurance policy.
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