Long-Term Care in Strange Times
While it would be wise to consider long-term care in normal situations, the recent pandemic and quarantine around the world have given a whole new meaning to the importance of this subject.
According to most health experts and the CDC, older adults and people who have severe underlying medical conditions like heart or lung disease, or diabetes seem to be at higher risk for developing more serious complications from COVID-19.
Researchers have announced the most comprehensive estimates to date of elderly people’s elevated risk of serious illness and death from the coronavirus: COVID-19 kills an estimated 13 percent of patients 80 and older, compared to 1.25 percent of those in their 50s and 0.3 percent of those in their 40s. The sharpest divide is at age 70. Although 4 percent of patients in their 60s died, more than twice that, or 8.6 percent, of those in their 70s did.
Putting that into perspective, one must consider the demographics of Americans today. Baby Boomers started turning 65 in 2011, and the number of older people will increase dramatically until 2030. The older population in 2030 is projected to be twice as large as in 2000, growing from 35 million to 71.5 million.
Now, given that nearly 70 percent of Americans 65 and older need long-term care at some point under normal circumstances, according to the U.S. Department of Health and Human Services, it would not be a reach to think that number might see a spike soon.
There are many causes for needing long-term care, and the leading one is Alzheimer’s disease (about one in four LTC claims are attributed to Alzheimer’s) according to the Society of Actuaries. Other claims are attributed to physical issues, ranging from chronic illnesses to injuries and disabilities.
During this trying time and given the high risk of spread once COVID-19 enters a long-term care facility, the CDC has issued warnings that facilities must act immediately to protect residents, families, and staff from a serious illness, complications, and death. In addition to the current infection prevention and control guidance for long-term care facilities, nursing homes, and assisted living facilities, the memory care considerations provide healthcare personnel working in memory care units, specifically designed to help Alzheimer’s patients, with new supplemental guidance.
According to one study, 74 percent of American couples are concerned about unexpected health-care costs in retirement. However, less than 40 percent have considered the impact of potential healthcare costs on their retirement savings, and an even smaller percentage have factored it into their retirement plan. Now more than ever, this should be considered.
Long-term care insurance is one of the most complex types of insurance you may consider purchasing. Part of the problem is that people aren’t always aware of the options available to them. It is important to research the options and educate yourself and plan accordingly.
Here are some vital basics for you to consider:
What is the benefit amount?
Policies normally pay benefits by the day, week, or month. You may want to evaluate what long-term care facilities in your area are charging before committing to a policy. You may also want to look into what preventative measures are being taken to maintain the safety and health of residents during this pandemic.
What is the maximum benefit amount?
Some policies limit the total benefit they’ll pay over the life of the policy. This may be stated in years or the total dollar amount.
How are benefits triggered?
Insurance companies use certain criteria to start benefits. Commonly, this is an inability to do a certain number of activities of daily living without assistance.
Many policies have benefits for Alzheimer’s disease as well.
More questions should be asked of your considered provider so that you can get a full picture of the available benefits.
Another important thing to consider is that having an alternative safety net at your disposal (investments for example) will offset the potential costs of long-term care. Think of it as a savings account for the out-of-pocket costs that may be incurred during a scenario where long-term care is required.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
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Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.