Why you need Long Term Care Insurance
It is not about you, it is about those who care for you
and those who care about you.
This is a study not about risk, but of consequences.
This is about understanding the consequences of long-term care.
The term long-term care generally refers to assistance a chronically ill person needs to get through the day. It can include help with very basic housekeeping chores, such as cooking meals, paying bills, and using the telephone. It almost always involves assistance with the most personal aspects of someone’s life, such as help with personal hygiene, dressing, eating and transferring from one place to another.
The goal of home care is to allow the individual to remain independent in the community, in their home for as long as possible. As a sickness or disability progresses, home care may become more intensive, and a move into an assisted-living facility may become necessary.
Long-term care is rarely nursing-home care. In fact, people don’t go to a nursing home when they should. They go when the caregiver becomes so ill that the caregiver/children have to take the decision away from her or him, as in the case of my mother. What you see is the person providing the care beginning to fail physically and emotionally because of the stress associated with providing the care.
Who needs care: a look at statistics that don’t mean much?
Two examples:- Statistically there is only about a 2% chance of dying during one’s working years. Why then do millions of people buy term life insurance? One word: consequences. For people who love their family and a 2% chance of dying is too high.
- Like most people, you may believe you are at little or no risk of needing care over a period of years, and you may be correct: it will happen to someone else. But what if you are wrong? The answer is summed up one word: consequences. The consequences are to your family and friends who will have no choice but to take care of you. Then there are the consequences to their financial well-being because their retirement portfolio and your retirement portfolio will have to be reallocated to pay for care.
Who provides the care?
Here is a sobering look at what providing care does to those you love:5
Spouses provide little care: In only 6% of long-term care cases in which the patient is fifty years old or older does the spouse play the role of caregiver.
Families provide care: In 83% of cases surveyed, caregivers are family members of the sick or disabled person. Most caregivers are middle-aged women who care for one or more of their aging parents. They’re often the oldest daughters, and have their careers or hold full time jobs and have their own immediate families.
Caregivers tend to fall between the ages of 35 and 64, which means many are members of the sandwich generation – they’re in the midst of raising their own children while caring for older relatives. A large number of these caregivers are also employed. 48% work full time, while 11% have part time jobs. Many leave work early or take unpaid leave to dedicate the time needed to provide appropriate care for a sick family member.
These challenges have particularly adverse financial affects on female caregivers, because women spend an average of 12 years out of the workforce raising children and providing long-term care to aging relatives, that’s twelve fewer years they’re not earning a paycheck which results in decreased Social Security retirement benefits and retirement savings in their IRA &/or 401k down the road.6
Providing care to you could make those you love as chronically ill as you.
While caring for someone you love is honorable and can be a rewarding experience, it can also cause serious mental and physical stress. In fact, caregivers often suffer from increased blood pressure,8 increased stress and commonly, depression.9
The consequences of not having a plan are real – and they can hurt!
The person needing care rarely expected to live a long life, never thought he or she would need long-term care if he did live a long life and had no idea of what providing care to him or her would do to their family until it was too late.
Then there are financial consequences. Paying for care forced couples to reallocate their retirement portfolio and income. The lifestyle of most was destroyed and many had to turn to their children for financial help.
LEVELS OF CARE
The assistance a sick or disabled person needs can be divided into two levels: custodial care (also known as non-skilled care) and skilled care(also referred to as medical care).
Custodial care: More than 90% of long-term care is custodial care. It is generally defined as assistance with activities of daily living (ADLs) &/or a cognitive impairment (generally defined as a deterioration of short or long-term memory, lost of orientation, etc.)
Activities of daily living (ADLs) needing assistance with:
- Bathing
- Eating
- Dressing
- Toileting
- Continence, controlling bladder &/or bowel control
- Transferring
Custodial care is most often given at home.
Formal care is that administered by trained professionals such as nurse’s aides, personal caregivers and housekeepers.
Informal care is referred to as assistance given by family or close friends.
Skilled care is defined as care that can only be administered by a doctor or a RN or equivalent.
How to start a dialogue about long-term care with your family!
The first step is to ensure that the family understands the concept of risk versus consequences.
You must understand that even though you deeply believe that you may not live a long life and need care, if you do need it, the consequences to your family and finances could be catastrophic.
Creating a plan for long-term care can protect your family and financials from these consequences. The plan is composed of two elements:
- Predetermined guidelines that define how and where an individual wants to receive long-term care, if necessary.
- A funding mechanism to pay for the care.
6MetLife Mature Market Institute: The MetLife Juggling Act Study: Balancing Caregiving with Work and the Costs Involved, 1999
8Reverberation of Family Illness: American Journal of Public Health, 2002
9 Psychiatric and Physical Morbidity Effects of Dementia Caregiving: The Gerontologist, 1995
FUNDING YOUR LONG TERM CARE PLAN
There are several options that can be used to fund long-term care, several may have no out of pocket cost to you.
Long-Term Care is tax deductable, in some cases at 100%.