Alzheimers
What We Don’t Know About Long Term Care – Is A Lot
Americans over 40 — in other words, us — are dangerously unaware of our likely need for long-term care when we age and woefully ignorant about the costs, according to a new poll of adults in midlife and beyond.
The telephone survey of 1,019 boomers over age 40 was conducted by the Associated Press-NORC Center for Public Affairs Research and financed by the non-profit SCAN Foundation, which supports research and other initiatives on aging and health care. It found that many older Americans had barely begun to think about their long-term care needs, nevermind put aside money to cover them. For example, nearly 31 percent of respondents said getting older was something they’d rather not think about.
Following are other highlights from the poll, along with advice available on Next Avenue to help you avoid falling short when the time comes.
Only 16 percent of those surveyed said they had done a great deal of planning for their long-term living assistance needs; two-thirds admitted they’d barely started preparing. Looking deeper, only 8 percent of respondents between age 40 and 54 — and just 30 percent of those over 65 — said they’d begun long-term care planning. In addition, just 47 percent said they had created an advance directive (or living will) to designate someone to make decisions for them in the event that they can’t.
The survey found that even many of us who have been caregivers for our own parents have taken no steps to prepare for the day our children may need to look after us. Fifty-three percent of people responding to the survey said they had provided care for a family member or close friend, yet only 24 percent said they thought it was very likely that they’d ever require ongoing living assistance themselves.
And while 77 percent said they were confident their spouse or partner would help them as they aged, if need be, only 46 percent said they were sure they could count on their children. Maybe that hesitancy reflects the fact that nearly 60 percent of respondents had not talked to loved ones about the possibility. That’s surprising, considering 95 percent who had been family caregivers say the role was fulfilling and 72 percent say it was stressful.
Almost half of respondents – 48 percent – said they thought “just about everyone” will need ongoing living assistance at some point, even if they never become seriously ill. The federal government estimates that 70 percent of American adults will require long-term care at some point after age 65, on average for at least three years.
In the survey, 58 percent of people over 40 guessed that living in a nursing home cost less than $6,000 a month, but nursing homes actually average $6,700 per month nationwide. Respondents’ estimates of assisted-living facility and home health aide costs were more encouraging: Only 31 percent underestimated the average monthly cost of the former ($3,000 to $4,000) and 14 percent underestimated the average monthly cost of the latter ($1,000 to $2,000).
Still, when it comes to long-term care savings, many of us have not faced reality. Only 33 percent of those surveyed said they doubted they’d have the financial resources to cover their care needs as they age, which makes sense when you consider that only about a third of respondents said they’d begun setting money aside. As for the rest of us, it’s time to take financial action.
Our knowledge of what’s covered by Medicare and Medicaid is also fairly remedial. For example, 44 percent thought Medicare, the national health insurance program for seniors, paid for care by home health aides; 37 percent thought the program covered nursing home fees. But Medicare does not cover nursing home costs and it covers home aides only in certain cases. As for Medicaid, the federal program for Americans with low or no income, only 39 percent of respondents thought they might ever need to rely on it to cover long-term living costs. The reality is that Medicaid pays the bulk of the nation’s long-term care costs, usually after people have spent their retirement savings. However, there is zero chance that Medicaid will have the funds to pay for the baby boomer’s LTC needs as they begin requesting assistance. For more information visit www.TheLongTermCareGuy.com
These Are The Good-Old-Days of Long Term Care
I heard this at a panel discussion featuring speakers from Wisconsin’s Health and Human Services department in Madison, the state capital, two weeks ago. We have the facilities, we have the staffing, we have the home care agencies to care for our older Americans – yet.
The baby boomers are turning 65 at a rate of 10,000 a day. Have been for a few years now and will continue to for 18-19 more years. In 12 more years those baby boomers will be hitting 80 in large numbers. Where will the caregivers come from to handle this tidal wave of elderly needing assistance with activities of daily living or cognitive impairments?We will look back on 2014 as being the good-old-days, when providers were available with room and staff to take care of whomever needed it.
Alzheimer’s alone will cause one out of seven to need care by 65 and nearly half of us by 85. In the past month I’ve been approached by several home care agencies asking me to inquire if my clients would be willing to work a few hours a week as they already have more clients seeking their services than they have staff to provide it.
This is a WORLD wide problem as the baby boomers were caused by WORLD war II. Germany’s “Medicaid” type program has a 10 year look-back for people who have divested assets. England limits the “at home” spouse to the equivalent of $38,000 of assets, not the $814,000 house, Mercedes, and $117,240 of cash the US allows – yet.
I suppose we could import third world workers to staff our facilities and provide care at home, but they have the same aging population problems we have. Cities and states are raising minimum wages, which will make LTC services more expensive. The New York Times tells us that professional caregiving will overtake retail as the number one occupation in America in 6 more years. Where will the staff come from to fill the need of facility care and home care providers?
I have a very healthy LTC insurance policy that I purchased 13 years ago. LTC insurance was less expensive then, they accepted health concerns that will cause declines today. They offered richer benefits back then. Now less companies offer shorter duration coverage, with tighter health qualifications to get it, at higher prices as they know they will be paying the bills.
How will you pay your bills when you cannot manage on your own anymore? Will your 401K and IRA accounts continue growing throughout your retirement as your Social Security check also gets larger each year? Is the premium on LTC insurance affordable now, or will it be easier to spend $200,000 per person per year 20 years from now? I didn’t ask if you want to buy a LTC insurance policy, I asked if it was affordable. Car insurance is expensive too, but it’s less expensive than replacing one out of pocket. Statistically, you are 120 times more likely to need LTC than have a car accident. 70% of us will need care per Health and Human Services in Washington DC. I’m covered, thank goodness!
For more information try the free LTC cost calculator at www.RetirementChoices.net/rraabeLTC1.html
Where Will The Workers Come From (and What Will The Price Be?)
Long Term Care is getting more and more expensive every year. LTC insurance is getting more and more expensive each year as well, it’s a direct correlation.
This morning’s Green Bay Press Gazette had a guest commentary about boomers becoming part of the labor solution. The article stated that in less than 30 years, the number of people ages 65 or older will rise from 14% of Wisconsin’s population to 24%. The working age population may remain flat during this same period.
Earlier this year the NYTimes reported that caregiving will overtake retail as the number one occupation in America. Where will the (minimum wage) workers come from to care for our aging population? Congress is attempting to raise the minimum wage by a third, further raising the cost of care.
While volunteering at a recent Alzheimer’s Association event, I was approached by two home care agencies. Both lamented that they have more clients seeking home care than they have staff to provide for. They requested I ask my clients if any of them would consider some part time employment as a caregiver.
The employment dilemma will be mitigated by retired workers returning to part time employment, or delaying retirement. But even with that, we do not have enough workers to provide the LTC services of the baby boomers as they age. We do not have the facilities or other infrastructure. Those with available cash flow to pay for care will always find providers. However, Medicaid, which many will have to rely on, pays so far below market costs of care that providers will have to shun that payment source.
Where will Medicaid eligible people find care? Many will have no choice but to move in with family. Many families already have joined the “sandwich generation” caring for parents and children at the same time.
Two states (New York and Pennsylvania) have already begun enforcing filial responsibility laws, holding adult children responsible for parents’ LTC costs. Ask your financial planner how that will impact your retirement! Or, perhaps ask your financial planner how he/she would suggest you fund an extra, unanticipated bill of $50,000 to $100,000 a year later in your retirement. These costs are in today’s dollars, and will double in 15 years, and quadruple in 30. See if they suggest investigating LTC insurance, or if they say your life savings will handle that easily.
For more information, visit www.TheLongTermCareGuy.com or try this free online LTC calculator at www.RetirementChoices.net/rraabeLTC1.html
Help! My LTC Insurance Premium Is Going Up
Inflation, you can’t live with it, and economists say we can’t live without it. But when you get a letter telling you that the cost of something you are paying for is going up, it’s not a pleasant experience.
There are several things you can do to mitigate a price increase on your LTC insurance policy, but lets first look at why it is going up. The early policies, from the 80’s and 90’s were offered while this industry was in its infancy. The insurance companies made several mistakes. One in your favor is that the companies have learned that couples (who love each other) will take care of each other longer before calling in the hired help. Thus couples discounts are larger now than they used to be.
One assumption that turned out to be incorrect was that over time, the insurance companies thought some percentage of people would simply drop their coverage. I for one, know that with each additional ache and pain that seems to come with age makes me want to keep my insurance as I may someday be using it. Most people felt this way resulting in the majority of insurreds keeping their coverage for life, not dropping it.
Medical research has uncovered problems that have only become evident in the past few years. Diabetics have a 65% greater chance of developing Alzheimer’s than non-diabetics. Things that used to kill us, now only “wing” us, resulting in longer lives with more chronic conditions. Lastly, the insurance industry, which invests premium dollars conservatively, is only earning 3.2% on their investments, while promising 5% compound growth on the LTC insurance benefits, and are thus falling behind. Nobody anticipated that interest rates would drop this low.
The states approve price increases, when justified after evaluation, as they want the insurance company to be able to pay claims in the future. The first thing for you to consider when a price increase letter arrives is to re-evaluate to be sure you have sufficient, but not too much coverage. Perhaps your investments have done well, an inheritance has arrived, or income is up significantly, meaning less coverage is required to make up the shortfall.
A price increase letter usually comes with an offer or two to mitigate the price increase. Often these options are the ones your insurance company hopes you will choose. Let’s look at what might be in your best interest.
It is better to have sufficient coverage for a shorter time, than insufficient coverage for a longer time. If the policy’s daily or monthly benefit is reduced, will the shortfall require you to use up savings and possibly end up on Medicaid? Consider reducing the length of benefit if need be, so that you have sufficient cash flow to pay for care for fewer years, instead of reducing the benefit amount so that you must immediately start using up savings.
The deductible, called the elimination period, might be lengthened to reduce costs. Just be sure you can easily pay out of pocket for the length of time before the insurance starts paying.
Often, the insurance company will suggest reducing the inflation percentage on the daily or monthly benefit. Unless care is imminent, this is a poor choice. Inflation on the costs of LTC services have been a bit less recently, due to the stagnant economy. The people who will take those difficult, minimum wage caregiving jobs are now looking for better paying, easier work. This is going to cause the costs of care to increase more in the future. Remember that you may not be using this coverage for 20-30-40 years or more.
More information is available at www.TheLongTermCareGuy.com
Qualifying To Purchase LTC Insurance Is Becoming Much More Difficult
Years ago the Long Term Care (LTC) insurance industry went through an education process which some say is continuing today. The industry learned that blood pressure and cholesterol led to death, not disablement, and thus insurers are not too concerned about those conditions. Cancer was not seen as a concern since once you needed assistance with day to day activities, your lifespan was likely short and you may not require substantial long term care.
Over time it was learned that diabetes leads not only to loss of limbs and blindness, but also to Alzheimer’s Disease. It has also been learned that if one family member has Alzheimer’s Disease, other family members are at significantly higher risk. Life expectancy continues to increase and the longer one lives, the more likely some care will be necessary.
Years ago many people could purchase LTC insurance in their 70’s. Today, few of us can qualify health-wise to purchase a policy at that age. A troubling knee, arthritis, a poor showing on a bone density test, blood sugar readings too high, the use of blood thinners like Warfarin, all can preclude us from purchasing such coverage today.
Many pundits still suggest it is silly to purchase LTC insurance before 65, but if you wait until that age many of us will find we are no longer eligible to purchase coverage. 40% of the people requiring LTC today are between 18 and 64 years of age. The Health and Human Services Department of our federal government claims that 70% of us will need LTC. www.LongTermCare.gov
Blood thinners like Warfarin are taken to prevent blood clots which lead to strokes. If you are at risk, you may not be able to purchase LTC insurance. Arthritis medications such as steroids almost always preclude obtaining coverage. Severely underweight or overweight applicants are also declined.
Basically, if you wish to purchase LTC insurance, you need to do so before health conditions that might someday lead to care are diagnosed. It is very much like car insurance, you must buy it before the accident, not after. If you decide to wait until you are 60 or 65 and find you are still in excellent health (using a walker or having diabetes is NOT excellent health) then you are lucky and can still purchase coverage. However, you may be well advised to consider it while in your 40’s or early 50’s, before chronic conditions become known.
I am often asked at what age should someone consider LTC insurance. It is not so much your age, but your financial situation that determines when is appropriate. If you are healthy, and have savings and income that you want to keep for retirement, then it might be time to investigate. If you decide the cost is more than you can afford right now, then purchase it later, at least you have an ide what you are dealing with. More information is available at www.TheLongTermCareGuy.com
“Senior Tsunami” To Come
A recent California study projects “an unprecedented senior tsunami” led by 65 – 84 year old baby boomers. This group will swell nursing home residency to more than double current levels in just over 15 years.
The findings by the UC-Berkley study paint a dire picture for California by 2030, when the state’s Medi-Cal Long Term Care (LTC) costs are expected to soar to $12.4 billion annually. This is an 88% increase from current government spending for institutional LTC.
It does not help that rising levels of obesity are expected to exacerbate seniors’ health problems. Obesity often leads to diabetes, and people with diabetes have a significantly higher incidence of Alzheimer’s disease.
Couple this with a recent Pew Research study that states people in the United States are much more likely to say that seniors should be responsible for their own care than people in other countries. I find that surprising when one considers the number of people who attempt to hide assets to collect Medicaid.
Others say they plan to move in with their children, but most have not conveyed that plan to those children. Ozzie and Harriet were a typical 50’s couple where the wife stayed home while dad went to work. In her dress, heels and pearl necklace she had the time, space, and energy to have parents move in when they needed care. Today most wives are working just as many hours as the husbands and have little resources to provide 24 hour care to elders.
The government itself is short on funds, you may have heard rumors of budget deficits in the news. 29 states and Puerto Rico have filial responsibility laws on the books. These laws can force children who are above the median income of their state to be held legally responsible for parents’ bills. They have not been enforced, until recent court case decisions in two states.
No one knows whether these recent court cases will encourage other states to enforce their filial support laws with greater vigor, but this is a development worth watching. However, as more of the Baby Boomer generation reaches their golden years, and as many nursing homes and local governments are faced with providing care to a growing number of indigent elderly patients, there’s a possibility that other states will look more closely at their filial support statutes in an attempt to find another way to fund mom’s or dad’s nursing home bill.
There are basically three ways to pay for care if you cannot move in with your children: pay for care until you are impoverished, apply for Medicaid when you are impoverished, or plan ahead and purchase LTC insurance while you are healthy enough to purchase it. Insurance is the least expensive option, but if you wait until your health changes or your doctor has handed you a diagnosis of a medical condition that precludes your qualifying to purchase it, you are left with no choice but to spend down a life’s savings. Have you even investigated this insurance? Perhaps it’s time.
What Americans Aging Means For Long Term Care
The population of America is growing at its slowest rate ever. Population increased last year at only 0.72%. Yet 10,000 Americans turn 65 every day. We are becoming an older population.
You may have read about legislation in many states to raise the minimum wage. The great majority of Long Term Care (LTC) is done by minimum wage workers. Every year there are less and less of them while the elder population continues to expand. The costs of LTC services have been increasing by an average of 5% to 6% each year over the last 20 years. The past couple of years have been a bit less than that due to the economy, but that is changing.
What happens in any industry when there are not enough workers applying for the jobs available? Wages go up until workers apply for those jobs. Compound that with the legislation to raise minimum wages, less and less young people willing to work for minimum wages, and the explosion of elders in America and what do you see for the future of LTC service costs?
Yesterday the PEW Research Center released a survey about aging and retirement in 21 countries. Many countries expect to face an increase in public pension and medical expenditures costs as people age. Public pension shortfalls are already bankrupting many U.S. cities. Their research showed that many countries will have more people over 65 than under 15. In 13 of the 21 countries surveyed, respondents said the government had a key responsibility in caring for the elderly. Does the U.S. have the money for all our elders?
The burden here is increasingly falling on family members. Americans are quite unprepared for their later years and particularly for the potential need for LTC services and support. When you are 85 will you depend on your 60 year old children to bathe and dress you? Can they handle the burden of Alzheimer’s care when you must be watched every minute? With less workers and higher minimum wages costs will soar. Can you handle an extra bill of $40,000 to $90,000 each year in your retirement? If costs only increase by 5%, that number will double in 15 years, and quadruple in 30.
I have a way to predict the future costs, a free online calculator that you can move the numbers around any way you want to. It will tell you how much money you need to set aside today, so that it will grow to enough to fund your LTC in the future. You can access it here at www.RetirementChoices.net/rraabeLTC1.html
Check it out. Play with the numbers. If you decide it might be worthwhile investigating LTC insurance, and you did not wait too long so that health makes it unavailable, call me. Or call a local LTC insurance expert. Check to be sure this is not a sideline, an also has product for them, but rather someone who is knowledgeable in this field. Or check out my website at www.TheLongTermCareGuy.com
Cholesterol and Alzheimer’s Disease Link Strengthens
The above link to a Los Angeles Times article published December 30, 2013 indicates that “well before signs of dementia trigger a diagnosis of Alzheimer’s disease, a person’s cholesterol levels may be a bellwether of amyloid plaque build-up in the brain, a new study finds. Long considered a reliable predictor of heart attacks and strokes, worrisome cholesterol levels may now raise concerns about dementia risk as well, prompting more aggressive use of drugs, including statins, that alter cholesterol levels.”
Seven years ago a correlation was found between diabetes and Alzheimer’s disease, and now cholesterol is implicated as well. We have always known that healthy living leads to longer life with less health concerns, but apparently it can also lead to better brain health as well.
Alzheimer’s is just one form of dementia, there are many. Mild cognitive impairment can leave a person able to (mostly) function independently, but may eventually need monitoring for financial, driving, or other issues.
Some statistics say that 10% of us have a cognitive impairment by age 65 and nearly 50% do by age 85. While not a normal part of aging, many do need help due to different degrees of dementia.
Have you prepared? Do you have a power of attorney for health care document? Does the appointed person (and your doctor) have a copy? How about durable power of attorney for financial matters? These can be “springing,” activated only when certain conditions are met. Some people keep their durable power of attorney at the bottom of their sock and underwear drawer. Nobody typically goes there, but if someone has to get you socks and/or underwear…….. I suggest my clients keep their LTC insurance policy there as well to be found when needed. However, it is an even better idea to have all loved ones who may be called upon to assist when you need care, to know what company your LTC insurance coverage is with – and have the toll-free number.
LTC insurance can make paying the bills for care much easier than using a power of attorney document to spend-down your savings, house, investments, etc., to Medicaid levels. Because your lifestyle will change when care is needed, you can redirect some of your income from cars, trips, toys, etc., to paying part of the costs of care. Thus less insurance than one might expect will often do the job. Learn more at https://thelongtermcareguy.com
Some Helpful Hints For Financial Planners Concerning Long Term Care
I realize LTC is not a topic you relish discussing. Hopefully your clients won’t need such care, and if they do perhaps they can pay for it out of cash flow (at possibly $100,000 a year). However, if the topic comes up, here are some ideas and strategies that might help.
Let’s say you have a client whose loved one suddenly needs LTC. This relative or loved one does not have much money and they wonder what, if anything you can do to help. Knowing that Medicaid requires spending down to impoverishment and cashing in life insurance, you might suggest they move some money into an irrevocable burial trust so that nobody needs to pay this bill for them. They can even set these trusts up and fund them for children, and if done correctly, is not a divestment. It will not disqualify them for Medicaid and they get to leave funds for family. I can help you with this.
If they have significant funds, but worry they won’t last, there is an immediate annuity that takes (poor) health into account. Someone needing LTC will probably not have the same life expectancy as a healthy person of the same age. By underwriting that poor health, a far better payout can sometimes be produced, allowing them to pay the bills for life and still leave funds for family.
If your client inquires about LTC insurance for themselves, and it’s not your main area of expertise, consider working with someone who does nothing but this. There still are some lifetime benefit policies available, with 5% compound inflation. There are even options with a single premium available. Prices vary drastically from one company to another and knowing which ones like which ages and don’t mind which health concerns can make a huge price difference. If someone is declined, it does not mean they can’t get coverage. Perhaps they did not apply with the most appropriate company for their age and health – there are still quite a number of insurers out there. Knowing which ones accept which health concerns lets you help most any client.
There is even a partial return of premium, single funded, so that if your client never needs care, a good part of that single premium is refunded at death. The best news is that numerous options exist. No matter the situation, there may be something that can be done to help. It’s never too late to inquire.
Keep up by reading this blog or go to www.TheLongTermCareGuy.com for more info.
You Need LTC, But Did Not Buy Insurance – What Can Be Done?
You thought (hoped, actually) that you would never need Long Term Care. If it did happen you figured perhaps your family would take care of you. Neither of those thoughts panned out and now you are facing a very expensive long term bill. What can you do?
Fortunately, there are strategies that can help in this situation. If you have a significant nest egg and are earning a good rate of interest on those investments, perhaps the interest and current income will cover the cost. Bear in mind that when care is needed, there may be less need for multiple vehicles, toys, entertainment, trips to Branson, etc.
If this is not your situation then perhaps there might be a way to make the funds you do have last longer or for life. One way to do this is with a medically underwritten immediate annuity. Typically, when a life income annuity is purchased, a large sum is exchanged for a monthly check that will come until the day you die. The older you are, the less years the annuity company predicts they will be making those payments and the larger the monthly check you receive from a fixed sum submitted. Thus older people (and men due to shorter life expectancies) receive a significantly larger payout from the same sum than a younger person (or female) would.
One annuity company takes health into consideration in their calculations. If you need Long Term Care, you are probably not as healthy as the “average: person of your chronological age. You probably have a much shorter life expectancy as well. By underwriting for health – taking a shorter life expectancy into consideration – this can be a solution to help you pay for Long Term Care and never run out of money. If you have $300,000 of non-qualified assets, and for about half of that I can get you the needed cash flow to pay for your Long Term Care needs for life, then the remainder is left for family. If your needs increase, and an expensive nursing home is necessary, you will be older and in worse health, making a second life income even less expensive than the initial one.
If you have no liquid, non-qualified funds for this strategy, but own a house, then a reverse mortgage may be used to produce the cash for this strategy. Imagine withdrawing cash from “bank of house” and converting those funds into a life income that keeps you at home instead of spending down, selling the home, and ending up on Medicaid in a nursing home.
If you own a life insurance policy, even a term policy, it is possible to sell it on the secondary market and receive a significant cash sum that can also be used to fund your Long Term Care.
If you are spending down to Medicaid impoverishment it is still possible to protect some of your funds. While Medicaid requires life insurance policies over about $1500 of death benefit to be cashed in, you can set aside up to $15,000 (varies by state) in an irrevocable burial trust. This money is not considered a divestment by Medicaid, and is immediately available at death (wire transfer) to pay for final expenses. Life insurance policies can take several weeks to collect on and often the funeral home requires a several thousand dollar deposit on somebody’s credit card. Family is in control and spends as much or as little as desired with the remainder being refunded to the estate of the deceased.
In many locales it is also possible for a parent to fund irrevocable burial trusts for children and spouses of – and still not be a divestment for Medicaid purposes. This can be done while in a Long Term Care facility, it is not too late until the money is all gone.
If you are an agent with elderly clients who may need such advice or assistance or are a consumer looking for solutions to a difficult situation, call me, Romeo Raabe TheLongTermCareGuy.com at (902) 884-3030 or (800) 219-9203 and lets see what can be done.