Title: Critical Conversations About Financing LongTerm Care
1Critical Conversations About Financing Long-Term
Care
- This curriculum was developed by Marlene S. Stum,
PhD., a National Initiative Development Team
Member, from the University of Minnesota
2- Plan for changing health and independence
- --including long term care
- Act
- Identify how you will manage the
- risk of long-term care
- Evaluate
- Make changes as needed
3We didnt think it would turn out this way
No one plans to have their health change or wants
to admit they might need long term care
someday.
4Financing Long Term CareDilemmas and Decisions
- Major gap in financial planning throughout the
lifecycle - Critical gap in later life financial security
- Few have done any planning
- we planned for a shorter and healthier
retirement - I never expected to live so long!
- Wont admit we might personally be affected
5Financing Long Term CareDilemmas and Decisions
- We think we know more than we do!
- Dont understand risk, costs, financing options
- Believe we have coverage when we probably do not
(existing insurance/government sources) - Gaps in knowledge makes it tough to plan for
long-term care!
6Reasons to Avoid
- We might make the wrong decision
- We dont know how to begin
- It is too complex and overwhelming
- We dont talk about money
- We wont have any choices anyway
- Family members will never agree
- It is disrespectful to raise the issue
7Critical Conversations About Financing Long-term
Care
- Recognize your risk of long term care
- Understand possible costs and potential financial
implications - Sort out expectations and goals
- Understand financing alternatives and
consequences - Take action now, before a crisis
8Long-Term Care
- Help with daily living activities and remaining
independent - Eating, bathing, dressing, transferring, walking,
toileting, taking medications, shopping - Wide range of personal, social and medical
services - Provided in a variety of settings in-home,
community, skilled nursing facility
9Most who need long term care
- Live in their own homes
- Receive unpaid care provided by family/friends
- Overestimate the chance of needing skilled
nursing care - Underestimate need for in-home and community
services - Are unprepared for needs increasing gradually
overtime - Are unfamiliar with new and changing options
10Whos at risk?
- The long-term care population is diverse in age
and level of disability. - A risk across the lifecycle
- 57 over age of 65
- 40 below 65 years of age
- 3 are children
11Whos most at risk?
- Individuals 85 years and older
- Need help with more activities of daily living
- Experience increased rates of home care and
nursing home use - Individuals with chronic health problems
- Individuals who lack social support and unpaid
caregiver
12Whos most at risk?
- Women
- Longer life expectancies
- Outlive unpaid caregivers
13Prevalence of Long Term Care Need
- Age 65-74
- In Community 11
- In Institution 1
- Age 75-84
- In Community 22
- In Institution 5
- Age 85
- In Community 49
- In Institution 21
14What are the risks?
- After age 65, almost 3/4ths will need some home
care and almost half will spend some time in a
nursing home. - Average lifetime home care use is just over 200
visits. - Average lifetime nursing home use per person is
one year.
15Potential Costs Underestimated
- In-home care
- Degree of need and health status
- Type of service used
- Home health aide e.g.80/hour
- Community services
- Adult day care e.g. 60/day
- Assisted living
- Skilled Nursing Facilities
- One month average in U.S.-- 5000 (60,000/year)
- Northeast and West highest
- CT-223/day CO--133/day Arkansas--79/day
16Sort out Later Life Financial Goals and
Expectations
- What are you really trying to accomplish
financially? Whats most important to you? - Multiple and competing goals are behind later
life financial decisions - Make unwritten and unspoken goals explicit!
- Goals provide direction for selecting financing
alternatives - Goals can be prioritized
17If I would need long term care, I would expect to
- Remain financially independent
- Maintain control of my finances
- Keep my financial affairs private
- Involve family members (care/financially)
- Utilize government services
- Leave an inheritance
18Can we talk?
- Goals can be a common source of conflict
- Between spouses/partners
- Across the generations
- Who needs to be involved?
- Spouse or partner?
- Adult children?
- Find out where you agree or disagree
- On the meaning of goals, priorities, concerns
19Understand Financing Alternatives and Consequences
- There is no one financial answer or solution
- Later life financial goals should influence which
alternatives are most appropriate - Consider a combination of alternatives
- Personal resources
- Insurance
- Government options
20Who does pay for long term care?
- Income and life savings of elders and family
members - Sell home and use equity
- Unpaid family caregivers provide majority of long
term care (3/4ths) - Working caregivers spend an average of 22 hours a
week providing elder care - Caregiving responsibilities can last 8-10 years
- Working caregivers lose an average of 650,000 in
lost wages, lost Social Security benefits, and
lost pension contributions.
21Who pays for long term care?
- Medical Assistance is a critical safety net
- A need-based state/federally funded program which
does pay for home, community, and skilled nursing
care - Critical to understand income and asset rules
- Healthy spouses are protected from poverty
22Who pays for long term care?
- NOT existing health insurance policies
- NOT Medicare except for some limited home health
care coverage - NOT Medicare supplement insurance
23Who pays for long term care?
- Long-term Care Insurance
- Currently no more than 10 of population has
purchased long term care insurance - As an individual
- As part of a group--more employers are offering
as workplace benefit - Federal government offering in 2002 is largest
ever! - Few who have purchased have started to actually
use their policies
24Long term care insurance
- A new decision-making experience for most
consumers - Long term care insurance is not the same as
disability insurance (replacing income versus
paying for care expenses) - Ask a lot of questions and compare!
- Use state-specific resources to make informed
decisions
25Long term care insurance
- Is not for everyone
- Can you afford the premiums today and in the
future? - Do you have assets you want to protect?
- No policy will protect against all costs
- Policy costs increase with age
- Too many wait until unaffordable or uninsurable
26Factors affecting financing alternatives
- Health status
- Financial status
- Current and future income
- Current and future assets
- Calculate your ability to self-insure for all
family members - Community long-term care options
- What options will be available?
- What are local costs?
27Understand Financing Alternatives and Consequences
- There is no one financial answer or solution
- Options and choices typically decrease with age
and increased risk - What was may not longer be . . .change is a
given. - Consider the consequences of doing nothing
28Why plan now?
- Peace of mind--reduces fear and worry
- More choices and options are likely
- Increases likelihood your goals and wishes will
be known and followed - Reduces burden for others who will need to
carry-on - Reduces potential for misunderstandings and
conflict
29Critical Conversations About Financing Long-term
Care
- Recognize your risk of long term care
- Understand possible costs and potential financial
implications - Sort out expectations and goals
- Understand financing alternatives and
consequences - Take action now, before a crisis
30- Plan for changing health and independence
- --including long term care
- Act
- Identify how you will manage the
- risk of long-term care
- Evaluate
- Make changes as needed
31Make Critical Conversations About Financing
Long-Term Care a Priority Today!
- This curriculum was developed by Marlene S. Stum,
PhD., a National Initiative Development Team
Member, from the University of Minnesota. 2002