Given medical advancements, increasing life spans and the rising prevalence of Alzheimer’s, it’s safe to assume most of your clients will require long-term care. In fact, according to LongTermCare.gov, 70 percent of seniors currently 65 and older will need some form of long-term care.
When you account for the increasing longevity of baby boomers and the longer average life spans of married individuals, it’s almost certain that at least one spouse per client couple will need nursing assistance, assisted living, or a part-time in-home helper at the very least.
Still, quite a few soon-to-be and current retirees don’t know what to expect out of long-term care, and perhaps even more have neglected to plan. A recent Nationwide Financial Retirement Institute survey showed that seven in 10 affluent baby boomers mistakenly believe the Affordable Care Act will cover their costs. The reality is that neither the ACA nor Medicare have much to do with covering long-term services.
Overall, it seems few seniors fully understand their long-term care options: the types of services, amenities, funding and insurance plans they can access, as well as the coverage available to those who live far longer than they expect. To help clients make the best decisions possible – ideally before they lose their independence – it’s critical that you educate them on the types, qualities and overall costs of services they’ll probably need.
Wealth and Income: Important, but Not the Only Concerns
Not surprisingly, income and assets are the main determinants of the amenities retirees can expect in long-term care.
“It’s all about their overall financial profile in that moment they need care,” said Lisa Horowitz, New York-based CLU, ChFC and long-term care expert. In most cases, clients’ remaining assets, Social Security benefits and other income streams will determine whether they get wind up in lavish retirement communities, minimalist Medicaid-backed facilities or something in between.
That said, there are plenty of insurance policies that will help seniors maintain their living standards late in life, even as many insurers are hiking their premiums or leaving the long-term market. While few policies fully cover around-the-clock in-home help or decades of nursing care, average policyholders don’t typically need such services – at least not for long.
“The average claim is still less than three years,” said Andrea Graham, an insurance broker specializing in long-term care. “If you’re average, you’re not going to outlive your policy.”
As for the types of care clients may require, “It all comes down to their physical and mental needs,” said Patricia Maisano, Professional Geriatric Care Manager and founder of IKOR, a national healthcare advocacy group for seniors. “Their needs will determine whether they need skilled care, assisted living or independent living.”
Ultimately, a consideration of assets, insurance coverage and current and future needs will help clients choose the amenities they can afford not just in their current states, but as their conditions potentially worsen with age.
Facility-Based and In-Home Options
When it comes to facility-based care, options vary wildly based on residents’ needs, preferences and finances. Some individuals and couples will first move into independent living communities, which usually feature easy-to-manage, apartment-like homes and minimal help from caretakers. While an early move to such a facility may be the ideal option in terms of quality of life, longevity and lifetime costs, most people who require long-term care begin with assisted living.
Within assisted living facilities, there are usually four levels of care, according to Maisano. Level 1 residents must maintain almost complete independence, while level 4 residents receive daily care and assistance.
“Level 4 in assisted living is still not going to be the level of service or attention you’d get from a skilled nursing setting,” Maisano said. “Level 4 would include someone who comes to your door and leaves your lunch there. In a skilled care setting, it would mean help cutting and eating your food.”