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Critical Conversations About Financing LongTerm Care

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Title: Critical Conversations About Financing LongTerm Care


1
Critical 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

3
We 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.
4
Financing 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

5
Financing 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!

6
Reasons 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

7
Critical 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

8
Long-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

9
Most 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

10
Whos 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

11
Whos 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

12
Whos most at risk?
  • Women
  • Longer life expectancies
  • Outlive unpaid caregivers

13
Prevalence 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

14
What 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.

15
Potential 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

16
Sort 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

17
If 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

18
Can 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

19
Understand 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

20
Who 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.

21
Who 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

22
Who pays for long term care?
  • NOT existing health insurance policies
  • NOT Medicare except for some limited home health
    care coverage
  • NOT Medicare supplement insurance

23
Who 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

24
Long 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

25
Long 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

26
Factors 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?

27
Understand 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

28
Why 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

29
Critical 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

31
Make 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
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