What Are Your Options for Long-Term Care?

This is the first of a 2-part series on long-term healthcare with guest writer and national long-term care specialist Chris Sitek, CLTC, CASL, CLU, ChFC, RHU, REBC

For many of us, long-term care is somewhat of an enigma. We know it’s out there; we know it affects people and can be burdensome, even severely so. But since we have haven’t dealt with it personally or had the responsibility thrust upon us with a parent or spouse’s illness, it remains too vague (or possibly too morbid) to dedicate much thought let alone time or energy to prepare for it.

Nevertheless, long-term care is unique in its potential to devastate nearly every aspect of a family’s well-being. There is no better evidence of this than the urgency of people who rush to plan after recently dealing with a parent or loved one who needed extended custodial care. Their sentiment is near universal: I’m not putting my family through that.

What is it about long-term healthcare that is so costly, and why do so many families have harsh physical, financial, and emotional consequences when a loved one needs care?

Long-term care is not covered by health insurance or Medicare

If you or a loved one is chronically ill, cognitively impaired, or frail and in need of custodial care, forget about any help from your health insurance policy or Medicare—they are meant to pay for skilled care that is provided by a doctor or nurse. Non-skilled or custodial is specifically excluded, which means you pay out of pocket for hired help or family members become caregivers. Either option can be very costly, though in different ways.

If hiring help, count on $20 to $25 an hour for a home health aide or $160 to $200 a day per 8-hour shift. Round the clock home healthcare is more expensive than any nursing home. Assisted Living Facilities run an average of $3,500 a month nationally and those costs are growing roughly 4% per year.

Nursing homes tend to be the last resort. They average $6,400 a month if you have a roommate, but jump to $7,200 if opting for a private room. These rates have also risen roughly 4% per year.

Needless to say, it can be very difficult for families to absorb costs of this magnitude. Retirement nest eggs often get raided and the financial well-being of a healthy spouse is put at risk. Especially frightening is not knowing how long care might be needed and how long these costs will last.

Family caregivers face different costs

Faced with thousands of dollars per month of expenses, often a spouse or other family member will shoulder primary caregiving responsibilities. This can affect the career of the caregiver if still working—65% of caregivers have missed some work and 53% have lost income.

The physical demands of caregiving are also a factor. Helping people with daily activities often requires lifting, balancing, etc. Strained backs, necks, knees, and shoulders are common and 46% of caregivers’ personal health and wellbeing are affected.

Additionally, the emotional strain of caregiving can’t be ignored. Caregivers report much higher incidents of anxiety, depression, and stress-related illnesses. This impacts not only health, but also relationships. Nearly 40% report strained relationships with spouses. The short of it is that caregivers lose themselves and stop doing things that keep them healthy and sane, such as exercising, eating right, and spending leisure time with friends and family.

Often the biggest challenge families face is getting everyone to agree on the best plan of care for their loved one. Money often adds to challenging family dynamics/dysfunctions. One child may want all of the parent’s estate available to pay for the best possible care while another may want to be more frugal, suggesting they should split time and provide “free” care themselves. If not careful, these disagreements can drive a wedge between siblings for years. Some relationships never recover.

Planning for long-term care

The good news is that there are several ways to plan for long-term healthcare where we won’t need to burden our families or blow through significant assets. Some of the basics include putting a meaningful healthcare directive together as part of an overall conversation between parents and children. Simple healthcare directives can be done using tools online for free or cheap. Knowing the parents’ wishes ahead of time lessens or removes the potential for sibling squabbles over how best to care for mom or dad.

In our next article in this series, we’ll talk about how to broach the subject with family members (often the hardest part) and discuss some of the financial tools available to help allay the risk. Can our life insurance provide “living benefits” for long-term care? Could we successfully “save up” for this risk? Is long-term care insurance worth it? Each family’s situation is a little different, but we’ll discuss how to determine what is best for yours.

Jon C. Ylinen is a Financial Advisor with North Star Resource Group and offers securities and investment advisory services through CRI Securities, LLC. and Securian Financial Services, Inc., Members FINRA/SIPC. CRI Securities, LLC. is affiliated with Securian Financial Services, Inc. and North Star Resource Group. North Star Resource Group is not affiliated with Securian Financial Services, Inc. but is independently owned and operated.

Please consult a financial professional for specific advice in relation to your individual circumstances. This should not be considered as tax, specific loan repayment for an individual or legal advice. This is not a recommendation of any strategy or product in particular. 950772/ DOFU 06-2014.