There’s a phrase I’ve been saying since I had my first ‘aha!’ moment as a new long-term care (LTC) specialist two decades ago: “Long-term care isn’t about dying, it’s about living!”
That might seem obvious, but in years of listening to advisors and clients I’m frequently reminded of how people think of long-term care incorrectly — in terms of death — but it’s really about the exact opposite.
Long-term care services are rendered with the intent of making life easier! Unfortunately, it has an adverse effect on too many individuals and their families because they don’t plan for it in advance, jeopardizing not only their financial assets but also their own livelihoods.
If you already offer LTC planning services, you know exactly what I’m talking about.
But, unfortunately, too many financial planners — particularly those still new to the field, who may not yet have experience with clients facing long-term care realities — neglect to discuss long-term care with their clients until it’s too late.
Many advisors still do not fully appreciate the financial and emotional issues that surround LTC, mistakenly believing that they can’t help their clients. This perspective couldn’t be more inaccurate.
As my friend and elder care attorney Harley Gordon rightly points out, failing to discuss LTC with your clients also exposes you — the advisor — to risk in the form of reputation loss.
To get the ball rolling, you’ll need to clarify some common misconceptions around LTC and long-term care insurance (LTCI) before developing the right plan for each of your clients. Here are a few questions to get you and them started on better understanding LTC and their future plans.
What does long-term care do?
Long-term care is care that generally extends beyond 90 days and is practical in nature, rather than medical.
Long-term care is the assistance or supervision you may need when you are able to do some of the basic activities of daily living (ADLs) – Bathing, dressing, eating, continence, toileting and transferring that most of us take for granted.
Some policies may even cover assistance of household chores such as errands, cooking, bill paying and other daily activities. For some, services include in-home visits that may be weekly or daily; for others, the care required necessitates 24 hour assistance at a nursing facility. Importantly, LTC is not strictly for the elderly.
Long-term care events can affect anyone — at any age — who requires assistance with normal tasks.
Who pays for what?
If your client expects their health insurer to cover their long-term care needs, they’ve got a lot to learn about LTC.
Health insurance covers very limited and specific services restricted to health care following an acute health issue that typically expires after 100 days.
Medigap policies likewise do not cover care that lasts beyond 100 days (if that). Disability insurance covers only a portion of a working person’s income but does not cover any costs associated with long-term care nor with those who are no longer in the workforce.
What about Uncle Sam, you ask?
Medicare focuses exclusively on medically-necessary care (ex. hospital stays, drugs and doctor visits) for the short-term and not the practical services offered from LTC. Medicaid does pay for some long-term care — on the government’s terms — but comes with exceptionally tight financial requirements (ie. poverty level income and savings) that make most Americans ineligible.
What are your clients’ familial obligations?
All of this leaves most families reliant on themselves to provide long-term care services. Some of your clients may wish to cover the costs of long-term care for their spouses or even parents (so prepare accordingly); others will provide the care themselves, even if that means leaving the workforce (voluntarily or otherwise).
It’s imperative that you start a conversation to understand your clients’ expectations around these very real issues that impact families every day. Thanks to an aging baby boomer population, more and more Americans are seeing their entire life’s savings depleted from the costs of long-term care rendered that could have been foreseen and planned for. Sadly, this depletion of assets directly affects those left behind — often a spouse or child.
Does your client have additional risk factors to consider?
I’m not suggesting that you pry into your clients’ detailed medical histories, but it is imperative that you have some grasp of their risk factors when planning appropriately for their future.
A client who lost her mother to Alzheimer’s may not develop the disease herself, however her risk is higher; knowing this, you and she can work together to prioritize her spending now while saving sufficiently for future possibilities.
This gives her more control over her future while reinforcing your reputation as a caring advisor who approaches financial planning from multiple angles.
Isn’t all LTC insurance created equal?
Long-term care policies can help bridge the gap between your clients’ assets and the increasingly high costs of care that can continue for years on end. That said, LTCI is a very complex product that requires the skill and understanding of someone who thoroughly understands the product and the client. Too often, I’ve overheard well-intentioned advisors tell clients that any policy is better than no policy… but this is unequivocally incorrect.
The right plan for any given client must take into account multiple factors including their age, health history, retirement savings, future plans, family obligations and expectations and more. LTCI plans are equally as diverse as the people who purchase them, so leverage a specialist to better grasp which ones may be the best fit for any given client.
Above all, remember that you can uniquely assess your clients’ needs, educate them on the realities of LTC, and work with them to create the most appropriate solution. Any less will waste their money and offer them a false sense of protection at best, while potentially putting their entire life savings and family’s assets and emotions on the line at worst.
LTCI goes well beyond dollars.
Though you will be rightly content knowing that you have protected your clients’ assets, that’s not the aspect of LTC planning that resonates most with them. In fact, my clients on claim and their loved ones rarely talk about the financial benefits of their LTC financial strategy and policies. Instead, they tell me how much stress they relieved knowing that their children could continue to work and live according to their own plans without needing to move across the country and care for them in older age. They tell me how fortunate they are that their parents had the insight to purchase the right LTCI policy that allowed them to receive the assistance they needed when they needed it most. After nursing a husband during the arduously difficult end of life process, they tell me how their sister could move on with her life — on her time, in her home, with her own future savings intact.
You see, long-term care really isn’t about death and dying… it’s absolutely about living! It’s about ensuring that those we care most for will be cared for and those that remain will not be saddled with unnecessary financial burdens. Start this conversation with your clients now — while there’s time — and find the right plan for them. Until next time, keep on moving!