It’s a conversation most people avoid: what to do if the unthinkable happens and you or a loved one needs long-term care.
But with COVID-19 spreading unchecked across the globe and millions of baby boomers growing older every year, experts say they wish more people would plan for the possibility of needing care in their advanced years.
“The rapid spread of COVID-19 has brought conversations about serious illness and end-of-life issues back to the dinner table as we discuss those we know who have fallen to the illness and our own concerns and fears,” says Monica Williams, a leading advocate for advanced planning and a guide for patients and families facing chronic and terminal illnesses with an emphasis on designing optimal end-of-life care. An emergency room doctor, Williams is the author of It’s OK To Die and speaks frequently about long-term care planning.
“Never in my career as an emergency physician have I witnessed a more crucial time for individuals to think about their healthcare wishes and express them to families and physicians,” she says.
Long-term care should be an important part of that conversation.
Tracey Edgar, vice president of sales, Care Solutions at OneAmerica, one of the top three providers of asset-based long-term care protection, says long-term care insurance can provide alternatives to people considering care choices by providing money for options such as home healthcare.
“This virus attacks all people,” says Edgar, “but the ones who have experienced the biggest impact are the elderly, with multiple levels of emotional and health-related consequences. We are seeing nursing home residents who are being isolated from the people they love. They are dying alone and in many cases having a funeral where no one can be in attendance because of the COVID-19 restrictions.
“I can’t help but wonder how many of these situations could have been avoided if there had been a long-term care plan put in place that allowed other options as to where to receive care. The long-term care products are not the plan, however; they create the income to fund the plan. Having a plan in place before there is an event allows for choices that are not always available without the additional funding. Long-term care coverage may allow a person to stay home and receive care by one care provider instead of being in a nursing home, where many providers are coming and going. This is a valuable benefit, particularly during a pandemic.”
The Growing Market
The pandemic comes at a time when millions of Americans are getting older and already increasingly likely to need long-term care at some point. Morningstar’s Must-Know Statistics About Long-Term Care: 2019 Edition says there were 47.8 million Americans over age 65 in 2015. That number is expected to jump to 87.9 million in the year 2050. Some 6.3 million Americans were over age 85 in 2015, but that number is expected to reach 18.9 million in 2050.
Those statistics don’t factor in the COVID-19 pandemic and its effect on health and aging. The pandemic has forced thousands of Americans into the unexpected position of being a caregiver, and that impacts the person physically, financially and emotionally.
A recent survey found the coronavirus pandemic resulted in one in three Americans unexpectedly becoming a caregiver overnight. On average, they spent about nine hours a week providing care for their children, older family members, or the dependents of front-line workers.
The survey found nearly one in three respondents saying they have started thinking, researching, or talking to loved ones and/or financial professionals about how they would pay for long-term care services they might need.
There’s an opportunity here for financial advisors and insurance sales professionals alike.
Only about 11% of Americans age 65 and older have long-term care insurance, according to Morningstar. According to data from the U.S. Department of Health and Human Services, nearly 70% of people turning 65 will need some type of long-term care service in their lifetime.
Most of the traditional long-term care lines originally written in the 1990s have fallen out of favor with consumers because the benefits are lost if not used. That is, a consumer who never needed long-term care would have paid the premiums for nothing. In their place, newer hybrid policies combine life insurance coverage with long-term care coverage, providing the consumer a benefit regardless. If long-term care is needed, the life insurance death benefit can be used to pay for care. If no long-term care is ever needed, the life insurance death benefit remains, and one can purchase additional benefit continuation so the policy never runs out while a person may still need care.
Edgar says that life and asset-based LTC carriers had to raise premiums in 2020 to comply with the implementation of the 2017 Commissioners Standard Ordinary (CSO) mortality tables. Additionally, the continued low-interest-rate environment puts pressure on insurance product pricing.
“In order to be compliant with the CSO table requirements, all life and long-term care insurance companies had to do a reprice of their products,” says Edgar. “That reprice has caused constriction of the long-term care insurance market.”
Regardless of the pricing activity in the marketplace, she says, the need for long-term care protection is still there.
“Producers, insurance professionals and financial advisors look at long-term care insurance, and they know it is more expensive today than it was a year ago,” Edgar says. “There is a misconception that long-term care is not as good a value as it used to be.
“Even though buying long-term care insurance today is more expensive than it was a year ago, the need for and impact of having the protection hasn’t changed. The exposure of a client’s portfolio is still very real. The cost of healthcare, assisted living, nursing home care and the familial damage that happens as a result of not having a long-term care plan is still prevalent.”
Jesse Slome, director of the American Association for Long-Term Care Insurance, says brokers should stress to clients that long-term care insurance can help clients stay out of assisted living facilities. He says brokers should stress that long-term care insurance enables individuals to receive care in their own home and says brokers should call it nursing home avoidance insurance.
According to the U.S. Centers for Disease Control and Prevention, there were 231,957 confirmed cases of COVID-19 in U.S. nursing homes through mid-September and another 136,259 suspected cases. There were 55,845 confirmed COVID-19 deaths in U.S. nursing homes through mid-September.
Slome says the latest data gathered by AALTCI show 51% of newly opened long-term care insurance claims begin by paying for home care.
“I believe the current health crisis is an important time to educate more people about affordable traditional long-term care insurance policies,” he adds.
However, Denise Cochran, OneAmerica long-term care claims manager, says not all claimants want to avoid assisted living.
“We had a daughter contact us who was already on claim,” says Cochran. “Her mother was receiving benefits for home healthcare, and her mother was living with her. Once COVID hit, it became a big concern for her because she is an ER nurse and her concern was exposing her mother to things that she may be exposed to in the ER. She opted that she needed to move her mother into assisted living and out of the home during this event.”
Amy Chinn, OneAmerica vice president of claims operations, says OneAmerica products give consumers flexibility and options. She says the company is proud of its concierge claims service, which she says allows OneAmerica to assign an individual claims manager to a specific claim.
“We have such a strength here because we give flexibility as someone’s diagnosis changes,” she says, “whether that diagnosis improves or in the sad event that the diagnosis changes and they continue to lose functionality and there’s different needs.
“With our product, to give you an example, a family says, ‘We really want to do home healthcare.’ Together as a family they come to that, and we work to help them with their healthcare for as long as possible. But when it becomes clear that home healthcare is no longer the best solution for everyone, our products allow that because we as a partner start talking about ‘this is what your policy allows, this is what this looks like,’ and you transition to different care.”
Have the Conversation
A Stanford School of Medicine study shows that about 80% of Americans prefer to die at home, if possible, but 60% of Americans die in acute care hospitals, 20% in nursing homes and only 20% at home.
“There are just not enough people who talk about the need for long-term care,” says Cochran. “Luckily the folks who we talk to do have this protection. You can hear the relief in the son or daughter’s voice when they say, ‘We just found out dad had this policy. Tell me what it does.’ A lot of times you’ll hear background noise where you know the son or daughter is either at work or they’ve got a young one in the car. It’s that sandwich generation. They’re taking care of their own children and families and then they want to do the best that they can for their parents.”
Edgar urges families not to avoid the conversation.
“That conversation is everything,” says Edgar. “It is the path to long-term-care with dignity and dying in peace, knowing the people you love will be able to move forward without you.”