Proactive or Procrastination - Avoiding the Crisis of Long-Term Health Care

When you were young, did you wait until the last minute to complete that assignment or study for a final exam? Many of us procrastinate from time to time despite knowing there could be unfavorable consequences for doing so. Often, we delay acting on things we deem to be unpleasant. 

Thinking about the consequences of declining health and aging is a good example of something that, if left unplanned, can be challenging for our families and finances. 

We rationalize why we can delay or ignore future long-term health care planning. Maybe you have made some of these statements:

• I'm healthy; I don't need Long-Term Care Insurance. 
• I'll die before I would ever need long-term health care. 
• My spouse or family would take care of me if I needed care in the future. 
• I have good health insurance now, and later Medicare will pay for long-term care. 
• The government will solve this problem in the future; I don't need to buy insurance now. 
• Long-Term Care Insurance is too expensive; I can't afford it. 
• I don't trust insurance companies; they won't pay claims. 
• I can wait until I get older or when my health deteriorates, and then I'll buy LTC Insurance. 

These statements are false. We make these rationalizations because we want to procrastinate and avoid taking positive action. There are serious consequences when we delay planning for the costs and burdens of declining health and aging. 

Family Crisis

People need long-term health care due to an illness, accident, mobility problems, memory loss, or general aging and frailty. When a person avoids planning, we have planned to fail, resulting in a crisis within our families. 

The need for long-term health care happens at all ages but increases as we get older. When we are older, our spouse is also older. An older spouse will not be able to either be a caregiver or a manager of professional care. 

Your adult children will have a career and their families to be concerned with, and juggling responsibilities is difficult, if not nearly impossible.

"I've worked with hundreds of families through the transition to care for a loved one – and most of the time, it's a crisis situation. That's not the time to start your research. Families get 'sticker-shock' when they learn the costs of care, either in the home or in a community – and don't have a plan in place to pay for it," said Cindy Paige CSA, MBA.

Cindy Paige, CSA, MBA

Paige is a senior advisor, advocate, and author who works with Oasis Senior Advisors where they help families during these times of crisis to help them find senior housing and care.

She explains that researching the costs and options available before a person requires long-term health care will eliminate much of the stress when a parent or loved one needs help with daily living activities or supervision due to memory loss. 

Since so many older people will experience an age-related decline in health or a disease-related condition, preparing for such events will ease the family and financial stress.

"Families also need information on how to pay for long-term health care. I find that many adult daughters and sons in the early stages of arranging in-home care don't know their parents' financial situation.' I encourage families to sit down and find out what kind of funds are available – the earlier in the senior care journey, the better," said Josh Zuieback, owner of Amada Senior Care franchise in Northern Colorado. 

Even though more people own Long-Term Care Insurance than ever before, Zuieback says some families don't know when to start using their parent's policy benefits. Most Long-Term Care Insurance policies cover in-home care, which most care recipients and their families prefer.

"I run into policyholders all the time who think they have to hold on to their policies so that they have resources later. They don't realize that their benefits go away unused should they pass away. Using their LTC Insurance policy early is the smartest and most affordable way to fund care needs," said Zuieback.

Care coordinators, which many Long-Term Care Insurance policies pay for, can help the family make decisions and explain available options. Without insurance, these responsibilities often also fall on adult children who don't know where to turn to for help and assistance. 

Soaring Costs Create Financial Burden

Long-term health care costs are soaring for many reasons. There is a greater demand for services in all sectors of long-term care. This demand for long-term health care will continue to increase as there are now 55 million Americans aged 65 and older. 

Baby boomers have changed the face of the U.S. population for more than 70 years and continue to do so as more enter their senior years. The 2020 U.S. Census estimates at there are about 73 million baby boomers in the United States. This demographic shift is often referred to as a "gray tsunami."  

Baby boomers are those who were born from 1946 to 1964. The tail end of the boomers has not yet reached age 65! There is a younger group that is also rapidly getting older. Generation X (GenXers) were born between 1965 and 1980. This group of people now in their 40s and 50s are actively planning for retirement and often considering the need to plan for the costs and burdens of aging.

All these people are putting pressure on professional caregivers and long-term care facilities. The greater demand for services and higher labor costs have resulted in ever-increasing costs for all types of long-term health care.

There is financial pressure on families as health insurance, including Medicare and supplements, will not pay for most long-term health care services beyond a handful of days for skilled care services. Medicaid will pay for long-term health care, but you must have little or no income and assets, and the care is often delivered in Medicaid nursing facilities.  

Long-Term Health Care Costs Vary Depending on Location 

The LTC NEWS Cost of Care Calculator illustrates the financial problem that long-term health care can have on families. Costs vary depending on where you live and the type of care you or a loved one will need. Long-term health care costs are more expensive in, for example, Boston or Seattle compared to Tuscaloosa, Alabama, or Jackson, Tennessee. 

These costs are increasing rapidly every year. You can find the current and future cost of care services and other state-specific information where you live by using the calculator - Cost of Care Calculator - Choose Your State | LTC News.

Better Awareness 

Tafa Jefferson is the founder and Chief Executive Officer of Amanda Senior Care, one of the nation's leading home health care agencies. He says that more people today are aware of the consequences of changing health and aging. 

Tafa Jefferson, CEO of Amada Senior Care

"Families are now preparing for future long-term health care unlike never before. The COVID-19 crisis has brought health care in general and long-term health care specifically to the forefront," Jefferson said.

Jefferson says the post-pandemic environment should cause grave concern for many of our aging Americans. The costs are increasing. More long-term health care is being delivered in a person's home. Being prepared for long-term health care has become a vital part of retirement planning. 

States Taking Action for Additional Revenue

The government is rethinking its role. States are considering following the State of Washington's lead in taxing those without Long-Term Care Insurance. Several states, including California and Minnesota, are actively looking at implementing such a tax. 

Medicaid is the top payor of long-term health care in the United States but is only available for those with little or no income and assets. States must find ways to come up with additional financial resources to pay for the ever-increasing costs.

"We anticipate, as demonstrated by residents in Washington State, to set off panic purchases of Long-Term Care Insurance products in the very near future," Jefferson explained.

These new taxes on those who do not own LTC Insurance may happen quickly, and it is unknown whether states will give much time for their residents to buy Long-Term Care Insurance before the new taxes take effect.

"Families do not have the luxury to procrastinate if they intend on avoiding a tax or planning to age in place, access quality care, and protect savings," he said. 

Many Long-Term Care Insurance specialists recommend that if you have income over $75,000 a year to be proactive in obtaining coverage before the tax is enacted. Nobody knows how each state will implement the program and how much time will be allowed for residents to purchase coverage to avoid the tax. 

Long-Term Care Insurance provides guaranteed tax-free benefits to access quality in-home care services or long-term care facilities like assisted living. Many people erroneously assume that Long-Term Care Insurance is too expensive. However, it is much less expensive when you obtain coverage when younger and healthier. 

There are also federal tax advantages for some people when they own a Long-Term Care Insurance policy - some states also have tax incentives in place. 

Some Financial Professionals Not Addressing Long-Term Health Care

Some financial advisors and even insurance agents tell consumers they can't afford LTC Insurance or should try to "self-fund" their future long-term health care. Many of these financial professionals don't even talk about long-term care at all. Some of these professionals lack the understanding of the consequences a long-term health care event has on the family. Long-term care is both a cash flow problem and a family problem.

Bill Comfort, CSA, CLTC

"Long-Term Care Insurance does not have a product or pricing issue - it has an agent/advisor issue. Ninety percent of all agents/advisors are either ignoring the subject completely or are not effectively proactively raising the subject," said Bill Comfort, CSA, CLTC, during a session at a recent industry meeting. Comfort is a leading industry expert, Long-Term Care Insurance specialist, and instructor for the industry's CLTC designation program. 

Many experts suggest seeking the help of a qualified Long-Term Care Insurance specialist instead of a financial planner or general insurance agent, who can help you navigate the many available options. 

Specialists can help develop an affordable plan based on your specific needs and the knowledge of how LTC Insurance can ease the burdens otherwise placed on family members. The consequences are real. The impact can be life changing. Being prepared benefits the entire family.

Being proactive is undoubtedly better than reacting to a crisis. Procrastination reduces your ability to stay in control. For those who never planned, adult children can help their parents when the crisis has already started.

Funding a Long-Term Care Insurance Policy

There are several ways to fund a Long-Term Care Insurance policy. Many policyholders use their income to pay for the premium since the premiums are low enough to do so. Some policyholders use money from savings or earnings from investments to pay the premium. There are other ways to come up with the money to pay the premium.

Mike Banner is a nationally known senior expert and host of the TV Show "62 Who Knew." He also is a reverse mortgage expert and runs a firm that provides these products that can help in crisis situations. 

For some people with equity in their homes, a reverse mortgage can help them stay at home and fund quality in-home care. Many Americans have much of their money tied to their home. There are ways to use a small part of that equity to ensure your choice of quality care services without placing a burden on those you love, whether they use the money to buy insurance or, in necessary, pay for in-home care.

Mike Banner

"Unfortunately, some people have procrastinated just a bit too long. Proceeds from a reverse mortgage can assist with in-home care for their ailing loved one," Banner explained.

Reverse mortgages can also be used to reduce expenses in retirement and pay for Long-Term Care Insurance. 

"My company has secured a reverse mortgage for those aged 55-65 to purchase their Long-Term Care Insurance. Some of those past clients are now using the proceeds of their reverse mortgage to eliminate all their remaining debts, so they can live their retirement years knowing their financial future is secure and, if necessary, the benefits from their Long-Term Care Insurance policy will allow them to afford high-quality in-home care," Banner said.

You can learn more about how reverse mortgages can help you or a loved one by reviewing the LTC NEWS section on Reverse Mortgages | LTC News.

Avoid Denial

Remember those statements many of us will use to avoid planning for long-term health care; some were listed at the top of this article. The facts tell us that the consequences of aging and long-term health care are real. If you are healthy today, you will live a long life and that - on its own - is a risk for needing future long-term health care.

We get all will get older, our bodies deteriorate, we become frail, we get ill, we suffer from accidents, and our minds decline. As a result of these very human frailties, many of us will need help with daily living activities or supervision due to memory loss. 

Long-Term Care Insurance is an affordable solution for many families. However, don't delay until it's too late or options are too expensive. Most people obtain coverage in their 50s.

If you or a loved one already owns Long-Term Care Insurance, don't drop it - it is far too valuable. If you or a loved one needs care, be sure to use the benefits. Do not delay thinking you might be better off saving the benefits for a rainy day. 

LTC NEWS can assist you in getting benefits from a Long-Term Care policy - Filing a Long-Term Care Insurance Claim | LTC News.

Avoid procrastinating - be proactive, and you and your family will benefit.