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Clarifying the Options for Long-Term Care

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Given the growing need for long-term care, more advisors are talking to clients about LTC insurance, hybrid life, and other funding options. Fewer advisors, however, are discussing the specific options for care. To many clients – particularly those who’ve never dealt with an aging parent’s LTC – the whole thing seems hazy and unpredictable.

From in-home help to full-time nursing care, a wide range of services are available, each with pros, cons and varying costs. By educating your clients on the specifics, you can steer them towards sounder funding strategies – and perhaps finally convince them that LTC coverage is worth the cost. Ultimately, if you’re going to talk about LTCI, you need to be able to discuss what care will actually entail. What are your clients really preparing to pay for?

In-home care

According to the AARP, nearly 90 percent of people 65 and older want to remain in their homes as long as possible, and 80 percent believe they’ll stay the rests of their lives.

“I have found, from dealing with institutions and custodial caregivers, that we can retain a much higher dignity and quality of life in the home,” says Roger Bell, president of Roger R. Bell & Company.

For these folks, in-home services make it possible to age in place – at least for a time. Custodial or non-skilled care helps with cooking, bathing and other basic tasks. Caregivers often visit for a few hours per day, but some situations require they live on-site to provide around-the-clock care. This option is common among clients who suffer from Alzheimer’s or dementia, but who have no other pressing medical concerns.

The other in-home option is nursing or skilled care, provided by licensed medical professionals through home health agencies. These providers can manage oxygen, give medications, administer therapy and more. They’re state-licensed and (usually) Medicare-certified, and their services may be covered by Medicare, Medicaid and other forms of health insurance.

However, the waters become murky for clients who require medical assistance and help around the house, which may require service from different providers and funding from different insurers.

Both options average between $3,500 and $4,000 per month, but costs vary wildly depending upon location and the amount of care required.

“In a non-metropolitan area, residential caregivers might start around $14 per hour,” says Bell. In upstate New York or downtown Chicago, on the other hand, rates are closer to $22 – $25 per hour, and they may rise substantially for certain types of skilled care.

Overall, in-home care can be an attractive option, but it’s not always the cost-cutter clients assume it to be. A few hours of daily in-home help may be covered in full by a modest LTCI policy. For dependent clients who need constant monitoring and medical attention, however, the costs could exceed those of residential care.

Residential care

When it comes to facility-based care, the least involved option is assisted living, which combines housing, meals, support services and limited medical care.

“The costs are usually based à la carte on what services are needed,” says Bell.

Some residents essentially pay room and board, while others pay more for medication management, apartment cleanup and other extras.

Typically a shorter-term arrangement, nursing care is for clients with greater medical needs and little to no independence.

“Nobody wants to talk about it, but it doesn’t have to be permanent,” says Adam Hyers of Hyers & Associates. “You might break a hip, receive nursing care for a few months, and then go back to assisted living or even back home.”

The national averages for assisted living and nursing care are about $3,600 and $6,800 per month, respectively. Again, though, costs vary wildly, and a private nursing home room might run more than $10,000 in a major metropolitan area.

“It all depends on the overall cost of living in an area, as healthcare follows suit,” says Hyers.

Ultimately, many clients will want to compare the costs and conveniences of like items. Is assisted living better than aging in place with in-home help? Is moving into a nursing home better than receiving skilled care at home? To help them decide, consider their priorities, current insurance and assets. Just as importantly, familiarize yourself with the costs of care in your area. While the U.S. average for all types of care is $3,445 per month, state-by-state averages range from $2,597 in Georgia to $5,849 in Connecticut, according to

Continuing care retirement communities

If your clients plan for long term care while they’re still healthy, and if they’re sure they’re ready to move, a continuing care retirement community (CCRC) may be a good choice.

CCRCs provide a continuum of care that progresses from independent living to assisted living to skilled nursing as needed, and residents don’t have to move, requalify or renegotiate fees as their needs increase.

The downside? With five- and six-figure entrance fees, CCRCs are prohibitively expensive for most middle-class clients.

“We only have about one or two out of 10 clients choose that option,” says Bell.

Another problem with CCRCs is their lack of continuity of care. If a couple moves in during their 60s and lives well past 80, they’ll inevitably see the turnover of dozens of nurses, caregivers and maintenance staff.

“Continuity of care directly relates to quality of life, and there are few facilities that can advertise low turnover,” says Bell. “It’s a critical issue that should never be overlooked.”

Still, for clients who can afford the entrance fees, a CCRC can provide significant security and peace of mind.

Clearing up confusion

In addition to laying out the options, you might need to clear up a couple of common misconceptions.

“Probably the biggest misconception is how you qualify,” says Bell. Just about every LTCI policy requires impairment in two activities of daily living, and a 90-day waiting period is the norm. Doctors have to sign off on these impairments, and temporary troubles due to accidents and illnesses rarely count – much to the chagrin of some clients.

“A lot of clients are also mistaken about how long nursing care is going to last,” adds Hyers.

The average nursing home stay is between two-and-a-half and three years among clients who stay for at least 6 months, but according to Hyers, most either discharge or pass away in that time.

“If you’re considering insurance plans, you don’t necessarily need the Cadillac plan; four or five years of care is fine for most people,” he says.