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

"Truth or Consequences" began as a radio game show in 1940 before transitioning to television. Contestants tackled trivia, and incorrect answers led to performing potentially embarrassing stunts. From 1956 to 1975, Bob Barker famously hosted the show.

Life often mirrors this "truth or consequences" dynamic. Decisions we make carry consequences, some affecting our families significantly. Many defer decisions on aging and health until a crisis emerges, inadvertently making a choice. The repercussions of neglecting long-term care planning extend beyond finances.

Some mistakenly believe they won't need long-term care. Whether they're in denial about aging and potential health declines or misinformed about Long-Term Care Insurance costs and eligibility, many overlook the importance of planning. However, the reality is many of us may require assistance with daily activities or face cognitive impairments. 

With a Long-Term Care Insurance policy, families can access vital resources and services, mitigating the consequences of unforeseen health and aging challenges. Those in the care industry witness the advantages of early planning and the pitfalls of its absence.

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 dive into the repercussions of having—or not having—a strategy for long-term health care. Here are some scenarios to think about:

1. No Action, No Care Required Ideally, you'd choose not to plan and somehow avoid ever needing care. But without a guarantee, relying on luck isn't the wisest strategy.
2. No Action, Care Required Choosing not to plan is, in essence, making a choice. If care is needed, the financial weight falls on you (and your family may become your caregivers or managers of your care)—unless you have limited assets or income, in which case Medicaid might be an option.
3. Underestimating Costs Assuming your income and savings will cover all care expenses is risky. Several unknowns persist: when your care will be needed, for how long, and the potential cost inflation over the years. Also, the financial market's state when liquidating assets for care payments is unpredictable. For instance, imagine needing to liquidate during the September 2008 market crash. Or think back to major market drops like October 19, 1987, or August 1, 2011. Such financial downturns can erode savings significantly, especially if assets are sold at a loss.

But the consequences aren't just monetary. The emotional toll on families, often unprepared for the caregiver role, is immense. The physical and mental demands of caregiving, coupled with their existing responsibilities, can profoundly affect their lives. This strain on families—especially adult children who might need to step in—can't be underestimated.

Opting for Long-Term Care Insurance, But Not Needing It 

If you decide to obtain a Long-Term Care Insurance policy and never end up needing it, it might seem like an unnecessary expenditure. But the unpredictability of life means none of us truly know if we'll require long-term care. Predictions based purely on confidence or a perceived sense of invincibility aren't rooted in reality. Keep in mind that LTC Insurance policies may offer options for a return of premium or a death benefit, although at a higher cost.

Research shows that many who opt for Long-Term Care Insurance appreciate the 'peace of mind' it provides, reducing potential stress on family and finances. Generally, the policy premiums are much less than the potential future costs of long-term health care.

Having Long-Term Care Insurance and Needing It 

In this scenario, your foresight pays off. Recognizing the potential risks, you secured tax-free resources to cater to your desired quality care, including at home. Your family can focus on being family, rather than caregivers. The added benefit of most LTC Insurance plans is case management, offering families support in sourcing and coordinating care.

In real-life situations, long-term care's emotional and financial implications are significant. Many experts may dive deep into the numbers, but we cannot overlook the profound effects on families.

Most wouldn't require research to ascertain that they don't wish to burden their family members, be it spouses or children. Not planning for long-term care puts this weight squarely on their shoulders. While the financial aspect is crucial, emotional well-being matters too. Most wish their families to remain just that—families—without the added strains of caregiving and significant decision-making.

When considering potential missteps, it's worth asking: which error would have the least impact on your loved ones and your financial security? Many choose to add Long-Term Care Insurance in their 40s or 50s as part of a comprehensive retirement plan. At these ages, your health often provides more options and lower premiums. It's recommended to consult a Long-Term Care Insurance expert to guide you through the process.