Unfortunately, the long-term care (LTC) conversation comes too late for many families. Too often, families are left to scramble for options when an elderly parent or a spouse has an LTC event, such as a stroke, the advancement of chronic conditions like Alzheimer’s or dementia, or other illnesses. Failing to plan ahead can have serious financial, emotional, and health consequences for a family.
November is Long-Term-Care Awareness Month, which is an effort to educate consumers about the importance of proper LTC planning and financial solutions like long-term care insurance. Take the opportunity, this month, to start an LTC conversation with your clients. For many, the first step in learning about potential solutions like LTC insurance is to learn the basics. After all, while most Americans understand the likelihood of needing care, more than 75% of Americans age 30 to 65 think they should know more about LTC coverage, according to the “3in4 Need More” Association. There’s no better time to share the following facts:
1 Health insurance Doesn’t Cover LTC services
Seven in 10 Baby Boomers believe that the Affordable Care Act will cover LTC costs, according to a report by the Bipartisan Policy Center. To help explain long-term care, think care versus cure. Long-term care generally focuses more on caring than on curing. Long-term care is the assistance, care or service that a person needs when they cannot perform basic activities of daily living, such as bathing, dressing or eating – a need that often increases over time. In contrast, health insurance covers the skilled or acute care that is needed to return someone to good health.
2 Often, Government Programs Don’t Meet LTC Needs
Medicare and Medicaid may help pay for some LTC services, but only under certain circumstances. Medicaid has rules and requirements about which LTC services are covered and state-specific poverty guidelines, which can require families to spend-down their assets. Medicare is a senior health insurance plan that covers skilled care designed to improve a patient’s health condition. It does not cover custodial care. Additionally, these programs often don’t provide home care.
3 Paying Out-Of-Pocket Can Deplete Your Savings Quickly
It can be very hard for most people to save enough money to pay for LTC costs on their own. Paying out-of-pocket for just a few years of long-term care can erase a lifetime of savings and threaten the retirement that your client spent decades building. The average annual costs for long-term care services in California are $52,510 for care at home, $44,520 for care in an assisted living facility, and more than $97,000 for care in a nursing home (private room), according to the National Clearinghouse for Long-Term Care Information. For this reason, many consider LTC insurance to be an integral part of a person’s financial plan.
4 LTC Insurance Covers Much More Than Nursing Home Care
Many LTC insurance plans allow policyholders to get care in the setting they prefer. LTC insurance can provide benefits for home care for those who prefer to age in place, as well as for care in an adult day care, hospice center, assisted living facility or nursing home. In fact, most newly opened LTC insurance claims are for home care. Waiting for a crisis or going without a LTC plan severely limits one’s options.
5 LTC Insurance Is More Affordable Than You Think
Can your clients afford $270,000? That’s the cost for three years of long-term care in California (six months of home care, 2.5 years in a nursing home), which is the average duration of need, according to the National Clearinghouse for Long-term care Information. -Clearly, most people will have a harder time affording long-term care services without insurance. Many LTC insurance plans are designed to fit a range of budgets with benefit levels that fit personal needs. Having some protection from the financial demands of long-term care is better than having none; it doesn’t have to be an all-or-nothing decision.
6 Age and Health Make A Big Difference
Many people put off LTC planning, which can be a costly mistake. Age and health are two of the most important factors when applying for LTC insurance. The younger and the healthier an applicant is, the more likely they are to qualify for a lower premium. -Additionally, accidents and chronic illness, which can happen at any age, can necessitate extended custodial care. Applying at a younger age helps make LTC insurance more affordable and provide more coverage options (the average age for new LTC insurance applicants is 57). The bottom line is that LTC insurance is not just for older seniors; the earlier your clients start planning, the better.
7 Optional Features Can Make Coverage More Affordable and Flexible
Many LTC products offer a shared care feature that allows couples to share their benefits even if one policy is exhausted and care is still needed. LTC insurance can also include a future purchase option, which allows policyholders to increase their benefits every few years without submitting evidence of insurability. This offers younger buyers affordable protection now and the ability to add coverage down the road when they are more likely to need it. In most states, consumers can also purchase LTC insurance policies that qualify for the Long-Term Care Partnership Program, which protects a portion of a policyholder’s assets from Medicaid spend-down requirements if a policy is exhausted and care is still needed. In many cases, these policies are transferrable between states, should the policyholder relocate.
8. LTC Insurance Supports Family Caregivers
Family and friends play an important role in long-term care. According to AARP, more than 42 million Americans provide care to an adult with limitations in daily activities. When this care is prolonged, it can bring significant strain to the caregiver – physically, emotionally and financially. LTC insurance can help supplement such informal care and ensure that care is received if a spouse or family member isn’t physically capable of providing care.
9 LTC a Critically Important Issue for Women
Long-term care truly is a women’s issue. Women make up 66% of our nation’s caregivers, according to the National Alliance for Caregivers. The burden of caregiving affects their finances, health and family. Consider the following:
• Women live longer than men and generally need longer-periods of long-term care.
• As primary caregivers, many women use their retirement savings to care for their spouse, leaving little or nothing for their own care.
• Women make sacrifices at work due to their caregiving roles, such as passing up promotions, cutting their hours or even quitting all together. Such sacrifices can add up to more than $324,000 in lost salary and benefits over a lifetime for women caregivers over 50 who leave the workforce, according to AARP.
• Elderly women are far more likely than men to run out of resources and end up in poverty.
Don’t let your clients wait until it’s too late. Talk to them about LTC planning. Helping them understand why solutions like LTC insurance provide a critical piece of a retirement puzzle will help you understand their financial concerns and priorities. In the end, opening the door to a LTC conversation and sharing this important information might just help you close a sale
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Brian Vestergaard is vice president of Product and Marketing for LifeSecure Insurance Company, based in Brighton, Mich. LifeSecure provides uncomplicated insurance and non-insurance solutions to help people protect themselves from unforeseen health-related risks and expenses. The company’s insurance products are sold through a network of independent marketing organizations, brokers and agents. Additional information is available at www.YourLifeSecure.com.
Jesse Slome is executive director of the American Association for Long-Term Care Insurance, the national organization headquartered in Westlake Village, Calif. Slome founded Long-Term Care Awareness Month in 2001 and was selected in 2014 as one of four ‘visionaries who are changing the future of the insurance industry’ by the National Underwriter. Slome is publisher of the LTC Insurance Industry Sourcebook. For more information, visit www.AALTCI.org.