Should We Be Thinking About Long-Term Care Amid COVID-19?

You know the story. The world is upside down due to COVID-19. The virus crisis is impacting every aspect of our life. Yet, many of us are trying not to allow world events to paralyze us. Many people are working remotely. We have changed our level of activity and practice social distancing. Do we just stop there and not do anything else until the coast is clear?

One of the many things we have learned is unexpected events influence our savings. Events like 9/11, the 2008 sub-prime mortgage crisis, and the current virus crisis can create losses when we least expect it. The current COVID-19 crisis tanked the markets even though the economy was outstanding.

One thing that is not unexpected is aging and longevity. More of us will live well into our 80s, and that presents many family and financial challenges that need to be addressed before we reach those ages.

Look at the actuarial facts. The federal government’s life expectancy calculator shows at a 54-year-old male should live to age 82.3 years.

However, if that same man makes it to age 67, their life expectancy rises to 85.3 years. If this man makes it to age 70, his life expectancy increases to 86.2 years.

A 54-year-old woman will have more longevity than her male counterpart. Her current life expectancy is 85.6 years, 3.3 years longer than the male. Once she reaches age 67, the life expectancy increases to age 87.6 years. When she reaches age 70, her life expectancy goes to age 88.2 years.

You can find your life expectancy by visiting the Social Security Administration’s Life Expectancy Calculator by clicking here.

Preparing Family and Finances for Longevity

Longevity creates several questions to consider. Your retirement plan should consider your ability to fund your future and hopefully successful retirement. A financial advisor will help you design a plan so you don’t run out of money.

However, what most financial advisors don’t seriously consider is the financial costs and burdens of aging. As you get older, the risk of you needing long-term care services increases as well. You might need extended care due to an illness. Chronic illness often leads to a need for help with everyday living activities. However, there are other reasons we need long-term care services.

You could need extended care services due to an accident. Falls are not only a leading cause of death for older people, but it is also a leading reason they require long-term care. Accidents and illnesses happen at all ages, but again, with longevity, your risk increases.

Illness and accidents are only two reasons people need care. The impact of aging, just frailty, and cognitive decline accounts for many people to need long term health care.

Expect the Unexpected

But is long-term care really worth thinking about, especially today?

The answer is yes. The unpredictable world in which we live in is exactly why planning for the financial costs, and burdens of aging are so important. Advance planning is essential to get done sooner than later.

“While this feels like uncharted territory, the unexpected jolt this virus has caused is similar to how people feel when their health changes. We can’t know when things will go sideways, and if we’re in good shape now, odds are good we’ll live a long time. The need for care is shocking and difficult no matter when it happens, and the only way to mitigate the burden is with advanced planning,” said Cassandra Watson of NextGen Long-Term Care.

The odds are high. There are several statistics, some can be a bit exaggerated since it includes any type of help with living activities, but as you get older there is a significant risk of you needing long-term care services. This is care in which you either need another person’s help. This assistance can be “hands-on” or even “stand-by.”

Many people require supervision when their cognitive decline is enough to put them in danger without it. Unfortunately, as we get older, our chance of memory loss also increases.

Watson says to look at the options available when your health is good in order to obtain an effective and affordable plan.

“Long-Term Care Insurance can be both effective and affordable when designed appropriately to fit each individual’s needs,” she explained.

Family Caregivers Face Many Challenges – Paid Care is Expensive

Your family will not be in a position to become your future caregiver. Thinking your loved ones will quit their jobs and leave their own family responsibilities to take the role of your caregiver is not realistic, nor is it fair to them. Being a caregiver is not easy physically or emotionally. The financial and family strain it places on your loved ones should also be considered.

What will happen is your family will start selling off assets to pay for care services. The cost of long-term care services are expensive and will drain assets and adversely impact income, lifestyle, and legacy. The LTC NEWS cost of care calculator shows you the financial impact of long-term care.

Below you will find the median retail cost of long-term care services nationally:

• Home health aide services: $51,852
• Adult Day Care Centers: $19,284
• Base assisted living facility: $49,440
• Nursing home, semi-private room: $91,990
• Nursing home, private room: $103,392

The cost of care does vary depending on your location. Care costs increase as labor costs increase. Many experts suggest the cost will increase a little higher due to demographics. As Generation X and Late-Boomers all age with the remaining Baby-Boomers still living a supply and demand factor that will increase these costs more the in decades ahead.

You can find both the current and future cost of care services where you live by using the LTC NEWS cost of care calculator by clicking here.

Most People Think LTC Planning is Key – But They Fail to Plan Themselves

A study conducted by Versta Research on behalf of Lincoln Financial suggests most Americans think planning for long-term care is important but not for them since it will be somebody else who will require care. 

While everyone is pointing at each other, we all face the same problem of longevity, and the impact aging will have on our family and our finances.

The research says that 97% of those asked said: "most people" should plan for their future long-term care needs. However, few people have done so themselves. Only 10% have actually obtained Long-Term Care Insurance to address this concern.

A recent article written by Sandra D. Adams published on the website "The Street" defines people into three groups.

The Three Groups Who Fail to Plan

People in Denial – These are people who think they will be immune to any future need for care. Some of these people think because they are in current good health they will never require care in the future. Yet, those who are healthy may actually be at higher risk since they may enjoy more longevity.

Some of this group of deniers feel since their parents or grandparents didn't need long-term care; they will never require long-term care. The problem with this logic is two-fold. Many people in previous generations may have needed care, but a spouse or family member took care of it without your knowledge. Likewise, the care they did require may not have been recognized as "care." Often, helping a person with bathing, dressing, going to the bathroom, etc. isn't regarded as "care." It is care, and it isn't easy to provide that care.

The other factor is medical science. The advances in medical science have increased our longevity. This means health issues that used to kill us no longer do. We either recover and continue to age (subjecting us to future aging issues) or we don't die, but we don't recover and thus require long-term care.

Let's not forget that unexpected health issues like COVID-19 can be a "tipping point" that may lead you to a higher risk of extended care. Denial, not the best plan.

Procrastinators – Let's face it - if you don't tend to procrastinate, you know someone who does. The problem is waiting is never a good idea since your health can change at a moment's notice. That change in health can make you either difficult to insurance or uninsurable. Even having the COVID-19 virus can make it difficult to obtain coverage.

The saying "the fragile 50s" came into being as this is the decade in life when many people first start seeing health changes. These include high blood pressure, diabetes, cholesterol, obesity, and other health problems that can create problems with insurability.

As these health issues mature into your 60s, your insurability can be dramatically impacted if you wait too long. This chart, published by the American Association for Long-Term Care Insurance, shows the 2019 decline rate by age for applicants of Long-Term Care Insurance.  

Plus, premiums are calculated in part by the age you are when you apply for coverage. Your health is also a significant consideration in calculating the premium. As you get older your health generally declines.

The need for extended care is not limited to those who are older. You can require long-term care at any age. The combination of these facts suggests procrastinating is not a good strategy.

Self-Insurers – This group of people feels they have enough income and assets to pay for their own care once they need care. Some people do have enough assets. Generally, if you have $5 million or more in savings and investments, not counting real estate, you could consider this option. 

However, self-insuring has its own challenges.

An individual who wants to self-insure must understand they are willing to use their own money instead of an insurance company’s money to pay for future care. The idea of you being the insurance company means you … or most likely a family member … will decide which asset to sell to pay for your care. They may not make the same decision as you would. There can be tax ramifications as well. You might be selling off assets during a market drop as we saw after 9/11, the 2008 sub-prime mortgage crisis, and the virus crisis. Losses are locked in only when you sell the asset. Of course, that “loss” could still be a taxable “gain.”

The other consideration is a family member would still be responsible for finding and arranging for care in addition to paying for it out of your estate. You would hope they would make the best decisions based on the quality of care and your preferences as opposed to other considerations kike preserving estate for future inheritance.

Even if they have the best intentions in mind, managing a long-term care situation is stressful and takes time. Perhaps it is easier than actually providing the care, but the pressure and burden will have an impact.

If you have more than one adult child, they may disagree on the decisions being made, which adds to family strife. This discord often has a lasting impact on the family.  

Often self-insurers think long-term care will never happen to them. They tend to still have insurance on other risks that statically are less likely to happen. The self-insurer generally feels they are immune to the normal aging and health issues most of us will face as we get older.

Finally, often a self-insurer usually doesn’t have enough money to really self-insure in the first place. They don’t factor the higher cost of care in the future as well as normal increases in the cost of living. You never know “when or “how long” you will need care, so this group adversely impacts their lifestyle and legacy by self-insuring.

Key Benefits of Affordable LTC Insurance

An affordable Long-Term Care Insurance policy is a plan that experts say will provide the following benefits:

• Preserve income, assets, lifestyle, and legacy
• In 45 states partnership policies offer additional asset protection

• Reduce burden and stress on your family
• Allow family the time to be family
• Choice of quality care either at home or a facility of your choice
• Control and independence
• Peace-of-mind

Darlis Kirchhofer, who has helped thousands of consumers over her many years in the insurance industry, says we have more choices when we are proactive and plan ahead rather than wait until someone needs care, which causes us to be reactive and have fewer choices.

“People buy insurance for the guarantees to help them through unexpected occurrences. Having a Long-Term Care policy gives the peace of mind and guarantee that when you need care, you will have a plan set aside to help pay for LTC expenses,” Kirchhofer said.

She explains that even in a good economy, the unexpected can happen.

“Plan and prepare now for the future so the emotional and financial burden can be reduced at the time of need,” Kirchhofer said.

If you care about your hard-earned savings, your lifestyle, your family, and your legacy planning for long-term care is an essential part of a retirement plan. For many people, affordable Long-Term Care Insurance provides the resources to keep you in control.

Since LTC Insurance is easy and affordable to obtain, if you act early, be sure to take advantage of the low premiums and even preferred health discounts that may be available for you.

Many states have additional tax incentives on top of the federal tax incentives that you may qualify for. Remember, policies are custom designed to fit your needs and budget.

Know the facts and speak with a qualified Long-Term Care Insurance specialist who represents the top insurance companies. Start your research, ideally in your 40s or 50s.

Find a trusted Long-Term Care Insurance specialist by clicking here.

Use the resources from LTC NEWS to start your research by clicking here.