Help your clients prepare today for the care they may need tomorrow
As Americans live longer, about 70% of them turning 65 will likely need some form of long-term care in later years,1 according to the U.S. Department of Health and Human Services (HHS). Yet fewer than 30% have given it much thought.2
“The pandemic was а reality check. It brought the importance of health and planning to the forefront, highlighting the fragility of life and the unpredictability of care needs,” says Dennis Shirshkov, Head of Growth at Awning.com and a finance professor at the City University of New York. “People are more receptive now, but there’s still а gap between аwаrеness and аctiоn.”
Planning often takes a back seat for a variety of reasons such as perceived complexities, a belief that “it won’t happen to me,” or limited resources. But delays in planning for long-term care could be costly, leading to difficult decisions down the road and impacting the ability to comfortably retire. November is National Long-term Care Awareness Month, a perfect time to help customers navigate planning for this critical need.
Help clients take control
Some clients may be hesitant to start the long-term care discussion. After all, it can sometimes be a weighty subject. However, if you frame the conversations the right way — in a way that frames it as a positive and proactive step — it may cause some of that apprehension to slip away.
"...delays in planning for long-term care could be costly..."
“People perceive long-term care differently, and those perceptions may not be entirely accurate,” says Patrick Scanlon, Vice President, Global Atlantic Consulting. “The key is to initiate conversations with clients so they truly understand the challenges and can plan for them to keep their options open for the future.”
Make it personal
Scanlon suggests starting the conversation by asking clients about any experiences they have had with long-term care. Perhaps they had grandparents who were able to stay at home throughout their care, or a relative who required care in a nursing home. Next, he says, financial professionals should ask clients how these experiences—positive or negative—affect their goals for how they want their own care to play out.
“Framing the conversation around their vision of the future makes it more tangible,” agrees Jennifer Kropf, Certified Financial Education InstructorSM and founder of WealthyWomanFinance.com. “It’s not about impending doom of illness or old age, but about ensuring their future aligns with their dreams.”
Get clear on the costs
The costs of long-term care can be eye-opening to many clients, and that can have a negative effect on their financial future. For example, the average median annual cost for full-time at-home care is $60,000, according to the Genworth Financial Cost of Care Survey. Clients should understand that this cost is above and beyond the general costs of owning a home, notes Scanlon. Genworth data also reveals the costs of nursing home care range from $95,000 to nearly $110,000 annually.
Sharing the true costs of these options empowers clients to estimate what their cost of care will be and encourages them to focus on planning now to avoid difficult decisions in later years.
Explore ways to fund it
It’s helpful to review what is available through various programs to correct any misconceptions your clients may have. For example, 46% of people incorrectly believe Medicare covers nursing home care or in-home care from a home health aide.3 And although Medicaid does cover nursing home care, clients may not realize they must meet stringent asset limits or first spend down assets to qualify.
"...46% of people incorrectly believe Medicare covers nursing home care or in-home care from a home health aide."
Traditional long-term care insurance continues to be an option but has experienced challenges in the past 20-to-30 years as claims have far exceeded expectations. Many carriers exited the market, with just 15 doing business in 2019 compared to 125 in 2000.4 Some carriers have had to significantly raise premiums on existing policies as well.
Family as caregivers may seem like a cost-effective option for some clients, but Scanlon cautions that there is a cost to unpaid care. “Caregiving is physically and emotionally straining,” he notes. “An aging spouse may not be physically able to bathe or move a loved one.” Caregiving can take a toll in other ways. About 70% of family caregivers report suffering work-related difficulties due to their caregiving duties,5 while eight out of 10 caregivers report having routine out-of-pocket expenses related to looking after their loved ones.5
“At this point in the discussion,” notes Scanlon, “many clients begin to realize they may need to look at self-funding alternatives to pay for long-term care costs out of pocket. And that’s where financial professionals can add considerable value.”
Help clients choose their path
First, you’ll need to determine whether clients have any assets already allocated to long-term care. Next, look across their portfolios and discuss which accounts can be reallocated to pay for long-term care and run scenarios to show the implications for each choice. Be sure to explore any gaps and potential ways to accumulate more to close them. Fortunately, there are a variety of resources available to help you guide the conversation, including information on how certain annuity products can be tailored to help address your clients’ specific needs.