November is Long-Term Care Awareness month, and so Shurwest decided to research some of the latest data. Here is what we found.
- 70% of people 65+ will need some form of long-term care.1
However, not all of them will need to be in a nursing facility. Only 35% of people 65+ will need to be in a nursing care facility, for an average of one year.
That doesn’t negate the fact that financial advisors need to plan for the worst case scenario, since the need for long-term care varies from person to person. (For instance, 20% will need it for longer than five years. And women need almost double the length of time in care versus men.) It just means that some of the newest strategies—which give your clients options—may make more sense than traditional long-term care insurance coverage.
- Unpaid, in-home care is utilized by 59% of people 65+.1
But it does bring a level of overwhelm to friends and family members, according to recent research.
Lincoln Financial Group sponsored an online survey2 of 1000+ U.S. residents in August to assess the emotional aspects of caregiving and found that many Americans are not prepared.
“The omnibus study — Emotional Aspects of Caregiving — finds that 52 percent of people would feel compassion if they suddenly became a caregiver, while 44 percent would feel overwhelmed and 38 percent would feel needed. Generation X respondents were very likely to feel compassion and feelings of being overwhelmed, perhaps because individuals in this age bracket (ages 37–52) fall within the ‘sandwich generation,’ adults simultaneously providing care or assistance to children and parents.”
They put together an infographic to organize some of the findings. (Click to access the whole graphic.)
A recent article about the Lincoln study in ThinkAdvisor.com3 pointed out that “In 2007…the idea of providing, or needing, care was an abstract concept for many advisors. Now…everybody knows somebody who’s 90.” Standalone long-term-care insurance may be going through tough times, but LTC planning is becoming a standard, year-round conversation that most financial advisors are having with clients, no matter how tough it can be to talk about.
- Medicare doesn’t cover long-term care.2, 8
As pointed out in the Lincoln Financial Group study, financial advisors must “understand what’s covered by Medicare, Medicaid and health insurance. People often assume these options will provide coverage for a long-term care event, when in reality they provide minimal or no coverage, or come with stipulations.”
“Medicare does not cover nursing home care except for limited stays after a hospital admission of three days or more. Nor does Medicare pay for in-home care if it’s not skilled nursing care.
“Medicaid rules are different for every state. But generally, an individual must have $2,000 or less in assets ($3,000 for a couple) before he or she can be eligible for Medicaid.8
As a financial advisor, it’s your job to educate your clients about their options—and costs.
- Assisted living facilities are utilized by 13% of people 65+.1
Medicaid doesn’t cover assisted living facilities, although according to Eldercarelaw.com4, “Almost all state Medicaid programs will cover at least some assisted living costs for eligible residents.”
“Unlike with nursing home stays, there is no requirement that Medicaid pay for assisted living, and no state Medicaid program can pay directly for a Medicaid recipient’s room and board in an assisted living facility. But with assisted living costs roughly half those of a semi-private nursing home room, state officials understand that they can save money by offering financial assistance to elderly individuals who are trying to stay out of nursing homes…The level and type of support varies widely from state to state…”
In 2017, 43 states and Washington DC offer some level of assistance for individuals in assisted living or other forms of non-nursing home, residential care through their Medicaid programs.9
So what is assisted living? There is no nationwide definition for it, although it is regulated in all 50 states. The level of care differs. Here are some of the differences.5
“Assisted living residents are mainly independent but may need help with daily living personal care tasks such as bathing and dressing, while nursing home residents tend to need 24-hour assistance with every activity of daily living. Assisted living residents are mobile, while those who are bedridden require nursing homes…
“Nursing home residents generally have a single or semi-private room, while assisted living residents typically live in a studio or one-bedroom apartment. Nursing home residents require fully staffed, skilled nursing medical attention on a daily basis, while assisted living residents are more stable and do not need ongoing medical attention.”
According to an article in Financial Planning, “Moving to an assisted living community will be a preliminary step for many clients in their early retirement. While overall prices are increasing nationwide, the cost of care in an assisted living facility varies by state and sometimes city. Advisors with clients who live in pricier states need to be prepared to help them with those expenses.”6
The median monthly cost for an assisted living community in the U.S. is $3,750 per month, an increase of 3.36% from 2016, according to Genworth’s annual Cost of Care study. The median annual cost is $45,000.
- The cost of long-term care is increasing.2
Compared with assisted living facilities, the cost of nursing home care is nearly double, and continues to increase. Genworth Financial’s 2017 study7 puts the average cost of a semi-private room in a nursing facility at over $85,000, or $7,148 per month, although costs vary by state.
Find costs for your state here: https://www.genworth.com/about-us/industry-expertise/cost-of-care.html
Some of the new strategies you might recommend to your clients to cover long-term care expenses include the many new hybrid insurance policies designed for Baby Boomers. We offer many types of products, including universal life policies which provide a death benefit if your client doesn’t end up needing or using the long-term care coverage. Ask the Shurwest Life Team if one of these policies might be right for your client: 800.355.0581.
1 U.S. Department of Health and Human Services, Administration on Aging “How much care will you need?” Longtermcare.gov https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html (accessed November 8, 2017).
2 Lincoln Financial Group “Lincoln Financial Group Research Reveals Many Americans Are Not Prepared for Long-Term Care or Caregiving” Newsroom.lfg.com http://newsroom.lfg.com/press-release/life-insurance/lincoln-financial-group-research-reveals-many-americans-are-not-prepare (accessed November 9, 2017).
3 Think Advisor “New Findings About Long-Term Care Planning Prospects’ Emotions” ThinkAdvisor.com http://www.thinkadvisor.com/2017/10/31/3-new-findings-about-long-term-care-planning-prosp?eNL=59f8bda5160ba0eb0fa97e56& (accessed November 9, 2017).
4 Elder Law Answers “Medicaid’s Benefits for Assisted Living Facility Residents” Elderlawanswers.com https://www.elderlawanswers.com/medicaids-benefits-for-assisted-living-facility-residents-15627 (accessed November 8, 2017).
For more information about Medicare’s nursing home coverage, click here.
For more information about Medicaid’s long-term care coverage, click here.
5 A Place For Mom “8 Things You Didn’t Know About Assisted Living” APlaceForMom.com https://www.aplaceformom.com/blog/things-you-didnt-know-about-assisted-living-2-19-2012/ (accessed November 9, 2017).
6 Financial Planning “The priciest states for assisted living” Financialplanning.com https://www.financial-planning.com/slideshow/10-most-expensive-states-for-assisted-living (accessed November 9, 2017).
7 Genworth “Compare Long Term Care Costs Across the United States” Genworth.com https://www.genworth.com/about-us/industry-expertise/cost-of-care.html (accessed November 9, 2017).
8 Forbes “The Staggering Prices Of Long-Term Care 2017” Forbes.com https://www.forbes.com/sites/nextavenue/2017/09/26/the-staggering-prices-of-long-term-care-2017/#532ecd2e2ee2 (accessed November 9, 2017).
9 Paying for Senior Care “Medicaid’s Assisted Living Benefits: Availability and Eligibility” https://www.payingforseniorcare.com/medicaid-waivers/assisted-living.html (accessed November 9, 2017).