Truth and Consequences - Understanding the Impact of Long-Term Health Care on Families and Finances

Truth or Consequences was a TV game show that started on radio in 1940. The show asked a studio contestant to answer trivia questions, failure to answer correctly meant that the contestant had faced "consequences," often by performing an embarrassing stunt. Bob Barker hosted the TV version of the show from 1956 to 1975.

Life usually revolves around truth and consequences. We see the consequences for every decision we make in our lifetime. How we respond to life's challenges will affect the consequences of our decisions. The implications of some of these life choices can greatly impact our families.  

When it comes to the consequences of aging and declining health, many people avoid making any choices until something happens. That, of course, is a choice. The consequences of ignoring long-term health care are more than just financial. 

Ignoring Reality?

There are some people that think they will never experience the need for long-term care services. For whatever reason, these individuals can never see themselves needing help with daily activities. They certainly can't ever imagine them suffering from dementia and needing to be supervised.

If we consider why people fail to consider the consequences of aging further, the answer is pretty simple. Some people are in denial of the aging process and how declines in health, body, and mind can have an adverse effect on family and finances. Other people, however, have received poor information and made a decision based on that insufficient information. Often it involves the costs of Long-Term Care Insurance or a person's insurability. 

Truth

The 'truth' is there is a good chance you may need help with daily living activities or supervision due to memory loss. The 'consequences' when you own a Long-Term Care Insurance policy are your family and finances benefit from the resources and services available through the policy.

Those who provide long-term care services know this firsthand. They see the impact and see that those who plan can avoid the negative consequences of a lack of planning.

Consequences

Kimberly Akers, CSA, is the co-owner/operator of Amada Senior Care in Mesa, AZ. 

She recalls the story of "Steve," who was experiencing a decline due to ALS (Lou Gehrig's disease). His wife was trying to be his caregiver for about a year. He has been living with ALS (Lou Gehrig's disease), and his wife served as his primary caregiver until about a year ago when it became too overwhelming for her to solely manage her husband's symptoms and help with his ADLs (activities of daily living).  

The good news was Steve owned a Long-Term Care Insurance policy, and they decided they needed to start using the benefits from the policy.

Kimberly Akers, CSA

"Steve decided to start his Long-Term Care Insurance policy benefits, seeing that they would cover in-home care costs. Having this funding option has been a relief to both spouses. His wife is not ready to move out of their home, and now Steve can get the extra support he needs as he manages a new stage of ALS that makes everyday activities like getting ready in the morning more challenging," Akers explained.

Akers said Steve's wife had shared that they had discussed canceling the policy many times, thinking, at times, it was an 'unnecessary expense.'

"They feel so fortunate to be utilizing its many benefits now," she said.  

Akers says the LTC policy included a home modification benefit that helped cover the $15,000 cost of remodeling the bathroom, thus making it accessible for Steve's rolling shower chair. 

The Long-Term Care Insurance policy has given Steve and his wife the ability to live in their own home. Akers said the benefits from the policy paid for the highly trained caregivers that Amada provided to manage his ALS symptoms. 

Quality Care is Not Cheap

The quality of care is a major concern for the adult children, who usually must manage a long-term care situation when no plan is in place. Quality care is expensive and rising as increasing demand and labor shortages push costs up nationwide. The costs do vary depending on where you live, according to the LTC NEWS Cost of Care Calculator - Cost of Care Calculator - Choose Your State | LTC News.

"Having access to quality health care should not be considered a luxury in the Country. It should be viewed as a necessity," said Mike Banner, host of the TV Show "62 Who Knew" and an expert on long-term care planning. 

In recent years the term "everyone should have access to quality health care" has become the catchphrase of politicians on both sides of the aisle and every drug company trying to sell you something.

"The real truth that no one wants to deal with is, everyone in this great country does have access to quality health care. The problem is not everyone can afford it," Banner explained.

Banner says Long-Term Care Insurance and reverse mortgages are available to provide the funds needed for quality care options. 

He says the ability to receive quality care services in today's health care environment continues to get more complicated and expensive over time. Banner notes the combination of skyrocketing costs of long-term care services, the shortage of personnel in the nursing and home care industries, and the many "variables" that COVID-19 (and its many variants) make it even more important to be proactive. When you have a plan in place, you can reduce the adverse consequence of aging and changing health as you get older. 

Let's first talk about the possible consequences of having - or not having a plan for long-term health care in place. There are only a handful of outcomes to ponder:

• You Do Nothing and Never Need Care

This is perhaps the best plan if you can arrange for it. You decide you don't plan (which is still a decision), but you are lucky enough never to need care. Unless you have a crystal ball, this really isn't the best decision, but the outcome is good if it happens. 

• You Do Nothing but Need Care

By doing no planning is, frankly, not doing nothing. You have decided to accept the outcome of needing help with daily activities or supervision without any help or assistance from an insurance policy. The financial responsibility is yours alone - unless you have little or no income or assets. If that is the case, you could easily qualify for Medicaid benefits.

You might think you have enough savings to pay for any future long-term care but do you? There are a few parts of the equation that are unknown. First, when will you need care and for how long? We have an idea of the costs today, and we have an educated guess about the costs in the decades ahead. However, because we don't know how long you will need, we can only guess the potential financial impact.  

Second, we don't know what the financial markets will be when you need care, and your family starts to liquidate your assets to pay for your care. 

Consider this, it is September 2008, and you need long-term care. You have a nice nest egg that you have put together from your working years. Your family starts to liquidate your assets to pay for your care. But, at the height of the presidential campaign, on September 29, 2008, the Dow Jones Industrial Average fell 777.68 points. Now, your family is selling off assets at a loss. Some of these 'losses' were still taxable gains. 

Maybe you remember Monday, October 19, 1987. The markets sunk 22.6% in one day. Then there was August 1, 2011, when the markets declined 21.58%. Then there was August 18, 2015, when the markets fell 588 points during a two-day period and 1,300 points from August 18–21. On Monday, August 24, world stock markets were down substantially, wiping out all gains made in 2015.

You can't time the markets nor the time you need long-term health care. So, not only did you use your own money, but the costs might also even be more expensive depending on the timing you need care, when, and for how long.

The consequences, however, are more than just financial. Your family must step in and deal with the situation. It probably won't be a spouse as they will either be older and not the best person to be making these decisions or have already passed away.  

Your adult children may attempt to become your caregiver. Being a caregiver is physically and emotionally demanding and interferes with their careers, families, and lifestyles. Typically, they are unprepared and untrained for being a caregiver as well. The strain and burdens on your family are very real and will have a lasting impact on their lives. 

• You Buy Long-Term Care Insurance and Never Need Care

You make the proactive decision to purchase a Long-Term Care Insurance policy. But, you end up living a long, happy life and never need long-term care. If you knew, for sure, this would be the outcome, you would never buy an insurance policy.

We don't know if we will need long-term care in the real world. Sure, there are statistics, but it will either happen or won't. Anyone who tells you that they know they will never experience declines in their health, body, or mind is not living in reality.

Surveys tell us that most people who purchase Long-Term Care Insurance enjoy 'peace of mind' knowing they have a solution in place which will reduce the stress placed on their family and finances. 

The premiums you pay for a policy are usually substantially less than the future cost of long-term health care and the consequences placed on your loved ones. 

• You Purchase Long-Term Care Insurance, and You Require Care

This one is easily explained. You understood the risk, and you received the guaranteed tax-free resources to pay for your choice of quality care options, including in-home care. Your loved ones have the time to be family instead of caregivers. Plus, since most LTC Insurance plans have case management, the family will get assistance in finding your care and making those arrangements. 

In the above example, you owned a policy and had a solution. The 'consequences' were managed, easing the stress and anxiety on everyone in the family. 

If you discussed long-term care planning, they generally avoid talking about family. They deal in numbers. In the real world we live in, we understand the consequences on our family - and our finances. 

We probably don't need research to tell us most people don't want to burden our spouses or adult children. Failing to plan for long-term care places the entire responsibility on our family. 

Sure, money is important, and future care costs are enormous. But feelings are important as well. Most people say they want their loved ones to have the time to be family and not have to deal with being caregivers or having to make huge decisions and arrangements for professional care. It is emotionally draining. 

You might make a mistake. Which mistake has the fewest consequences on your family and finances? Most people who purchase Long-Term Care Insurance do so in their 50s when good health allows them the most choices and the smallest premiums. Be sure to seek the assistance of a qualified Long-Term Care Insurance specialist to assist you in your shopping and planning.