May 28, 2024

Demystifying Long Term Care

In this podcast we discuss a concerning new study that finds a good chunk of Americans are not achieving financial security in retirement. We dig into some of those numbers and talk about reasons behind the statistics. You will come away with ideas and tips to help ensure that you are becoming financially secure in retirement.
Seniors Enjoying A Bike Ride

Kevin Zywna, Wealthway Financial Advisors: Tonight, we are going to talk about long term care, demystifying a little bit of what long term care is. So you know, it’s one of the things that we always take a look at in our practice. It’s the last big potential expense that we all face. There’s no getting around it. It’s a potentially expensive proposition or time consuming proposition for someone in the family and so, for all our clients, we begin planning for the potential expenses of long term care, usually around age 60. If we start too soon, the numbers get a little wacky, and it doesn’t tend to make as much practical sense. So we start taking a look at it at 60, building that potential expense into all of our clients’ long term financial plans so that they can see what the potential expense might look like. And it is one of the hardest things that we, as professionals, have to plan for. Because literally, the expense could be zero, right? Or it could be hundreds of 1000s of dollars over a course of a person’s lifetime. So there is such a wide range of potential outcomes, it does make it very difficult to plan for effectively. And somewhat challenging to determine the best methods for potentially paying for long term care. Which we’ll get into a little bit later in the show. And I will say that usually, from our clients’ perspectives, most clients tend to want to try to self-fund the costs of long term care, if necessary, if they can. And when we have a long enough runway, if we have long enough, top planning time horizon, then that’s usually something that we can factor in and build into financial plans that we do for our clients. Because usually, self-funding gives you the most flexibility, the most options, the most opportunity, the most control when you’re the one in charge of the money and not some other entity or insurance company. So a little bit of an overview of what it looks like in our practice.

Long Term Care Facility Stigma

And I will say also, this is not normally a happy, fun topic to talk about. Most of our clientele don’t like to really delve into this too deeply. I think that’s somewhat of a holdover. You know, there’s still kind of a negative perception in the US about what long term care is, and what long term care facilities are like. Long term care facilities were essentially born out of the institutional hospital system, the institutional hospital model. So, you know, hospital is a good place to go get cured, fixed, operated on, and released, but not such a great place to spend extended amounts of time. And if you build your long term care facilities to look like and feel like a hospital, like some of our you know, some of our clients, parents or grandparents may have experience, then then it will cloud your judgment and cloud your opinion, color your opinion, on what you think long term care is, and why you might want nothing to do with a long term care facility. But I’ll try to give you some more insight and background as the show goes along that it’s become a lot better through the years.

The American Mentality Of Aging Care

And I do think another issue that kind of holds people back from taking a good, full positive look at long term care, is that we don’t accept the aging process very well here in the United States. I think a lot of other cultures do aging better than we do. It’s probably baked into our fiercely independent DNA, the idea that we can achieve anything. We can accomplish anything if we work hard enough, and we do the right things. Well maybe we can live forever. Maybe we’ll never need this thing called long term care? Well, that’s not a really practical way of thinking about the issue. I do think we could do better about helping with the aging process in the US. And there are more and better options becoming available. The, the baby boomers are really driving demand, they’re starting to migrate and enter into the age category when some form of long term care may be necessary. And so with that increased demand comes more facilities, better facilities, different types of facilities, different types of care delivery models, all of which have, I think, improved and enhanced, what long term care is starting to look like in the United States. We’re learning better aging and care methods slowly and gradually over time, so that we more humanely and with more dignity treat our elderly population. It’s a normal part of the life process. Certainly, we should treat it as such, and we should acknowledge it as such. And I think things are becoming coming better here. In the short to medium term, I would say.

What is Long Term Care?

Tonight we are talking about long term care – demystifying what it is. What are the options available? How much does it cost? How do you plan for it? So first off, let’s start with the standard definition of long term care. And this is from The National Institute on Aging, long term care involves a variety of services designed to meet a person’s health or personal care needs when they can no longer perform everyday activities on their own. And more specifically, long term care includes needing help, typically with two or more activities of daily living, such as eating, dressing, bathing, transferring and toileting, or severe cognitive impairment. So, long term care is not really health care or medical care, in the traditional sense. And that’s why medical health insurance does not pay for long term care. Long Term Care is more custodial care in nature, it’s for helping people with some of the basic tasks of everyday living.

When Is Long Term Care Needed?

The need for long term care can arise suddenly. It can come out of the blue such as after a heart attack or a stroke. But usually how we think about long term care is part of the natural aging process. And the need for long term care develops more gradually. People naturally require a little bit more care as they get older, and a little bit more frail or as serious ongoing illness or health conditions get worse.

How Likely Am I To Need Long Term Care?

So how likely is someone to need long term care? Well, if you are a male, then you have about a 64% chance of needing some level of long term care over the course of your lifetime. If you are female, then you have a 75% chance of needing some form of long term care over your lifetime. And that comports with what we kind of know traditionally happens in most marriages with most couples. Due to the fact that men do not have as long of a lifespan as women. Typically on average, men usually pre decease women. Men are usually cared for in the home by their spouse, by their wife. The wife, who may outlive the man, is the one that is then usually in more need of long term care because there’s no one on site to care for her, unless there’s some sort of family around. So it’s really women who are more likely to need some level of long term care. And to put a little bit finer point on some of the statistics, for people who get unpaid care (that comes from relatives, family, and friends), about 20 to 25% of people get their care from unpaid care. People who get in home paid health care, that’s about 28 to 30% of the population who if you need care. About 20 to 30% of the population gets paid in home care. Then in the nursing home, a wide range there – only about 20% of men get their care from a nursing home, 34% of women get their care from a nursing home. Again, typically, because the woman lives a little bit longer than the man and then needs some other outside care to help her.

And then those who get it through assisted living, which is like a hybrid model of long term care. And I’ll go into a little bit more detail on that in a few minutes. But not too many people get long term care from assisted living because they typically don’t need that much in assisted living. Most people go in relatively healthy, maybe they don’t have any friends or family around close to them that they can rely upon to help with care. So they make the mature adult decision to consciously move to assisted living facility so that if and when they do need some additional care, it’s kind of built into that living arrangement. So, that’s a kind of some statistics on where people get there. How likely they are to use long term care.

Types of Care Facilities – Nursing Home Model

Now on to the types of facilities, I’d like to dive into those a little bit deeper. Because I think there’s a lot of misconception about what we think of as long term care. Like I said at the outset, the nursing home model, people have this conception. And then the reality of what it was like for their parents or their grandparents. Somewhat of an institutional setting. Kind of stark, maybe not want as warm, and friendly hallways. Kind of like a hospital, right? Because it came out of that hospital model. And that’s when people think, I don’t want that for me. That’s putting me out to pasture. Before I get put in one of those places… well, again, we’re getting a lot better at delivering care in different and healthier types of settings.

Types of Care Facilities – Residential Facility Model

So anyway, assisted living, nursing homes, other types of residential type of facility, so a residential facility to give you a little bit more insight can provide some or all long term care services that older people need. And now, some facilities only offer housing and housekeeping. That might be it. Might be all you need. But many also have additional services that include personal care, some social and recreational activities, meal prep, meal services, and then some frontline medical services as well.

Types of Care Facilities – Specialty Residential Facility Model

And then there are of course, specialty types of facilities, that people maybe with Alzheimer’s or cognitive issues, where they require the help of specialists and special trained healthcare providers who are specially trained. There are facilities for people who have needs like that.

Types of Care Facilities – Board And Care Home Model

So, specifically, a board and care home is another type of model. I don’t see too many of those around here in the Hampton Roads region. They’re a little bit more common back in New England, where I grew up and where I’m from. These are small private facilities. They are like a group home – maybe usually have only 20 or fewer residents, that you probably have a private room or maybe just shared with one person, but it’s like a house. It’s like a big house. And residents receive personal care and meals, staff are available around the clock. Nursing and medical care usually are not provided in this type of home. If you were to require that type of care then going to a physician’s office or hospital would be where you got that type of care. So, you know, good first step for people who maybe don’t have, like I said, family or friends around to check in on them and to help them with groceries and meal prep and cleaning. Then the choice to go to a group home – to be around other likeminded people, a stimulating environment. You can learn a lot from other people. Those are those are important things that you need to do to keep the mind sharp as we age.

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Wealthway Financial Advisors

Types of Long Term Care – Home Based Care Services

Kevin Zywna, Wealthway Financial Advisors:  Tonight we’re talking about long term care. What is it? What are the types of care delivery and how to pay for it, among other things. So before the break, I was talking about some of the specific types of community and residential care. I really should backup one step. They are a subcategory. The two main categories of long term care are home based care and community or residential care. Most people given the option say, if I need long term care, then I would like it in my own home in my own comfortable surroundings. And I’d like somebody to come in two, three times a week to maybe help with some meal prep, some light cleaning, some grocery shopping that type of thing. Long term care can be provided at home by informal caregivers, and sometimes such as family members, friends, neighbors, but most home based care service involves personal care, so help with everyday activities. The activities of daily living which I mentioned earlier, bathing, dressing, eating, taking medications, and as well as supervision – somebody come in check, make sure that the house is safe that there are no footballs lying around on the floor or something that somebody can trip over. You know, fall being one of the most common ways that people end up in a long term care facility is that they fall in their own home and then need more intensive care to a facility. So home-based care services are becoming much more prevalent nowadays. Many more companies are able to deliver this. Again, we see that most people tend to prefer this type of care if they need it because it is delivered in their own home in a caring and compassion environment. And many people report when they get a good caregiver then that caregiver becomes very close, almost like friends and family as well to the senior that they’re providing care to. So, a great solution that really was hardly even available, I would say one or two generations ago. Anyone in home care a generation or two ago was delivered by family and that was it or we had we had mom come move in with adult children. And so grandma lived in the family home so that she could be cared for on site. But now there are professional services that provide this care as well. And it’s definitely a much more viable option than it was a long time ago.

Community Care Facilities – Long Term Care

All right, and then there’s community and residential care. Some aspects of long term care can be provided in a person’s community, such as adult daycare center, or a senior center. And then care in these settings may include meals, exercise, social activities, some personal care, and transportation. I know that’s one of the things that we have some clients that use senior care facilities, and they’re really great about bringing people together, having communal events, games, plays, stories, book reading, gardening clubs, and shuttle buses to go to plays or musical events. And they’re very vibrant, healthy places for people to get additional care and good networking, interaction with people their own age and their own experience level, where they have a lot of commonalities.

Residential Facility – Long Term Care

And then of course, long term care can also be given in a residential facility, such as an assisted living, or nursing home type of facility. And this is where you have to do some investigation. Some facilities offer only housing and housekeeping. But many will also provide personal care, social recreational activities, meals, and some frontline (I’d call them) medical services. So that’s one of the biggest issues when it comes to long term care is not so much does mom or dad need long term care, it’s where are mom and dad best suited to get their long term care.

Sorting Through Long Term Care Options

We have referral sources in through our company, we’d like to say, no matter where money touches your life, we’re there to help you make the best decision. So this is certainly one of the potential areas that money may touch your life, long term care. So there have been some specialists that have developed a niche where they can help guide the family, or the senior, in selecting the right type of care, option number one. And facility, number two, that is right for them. Because, as I mentioned at the outset, with the added demand from the baby boomers, there’s just become a whole menu of different types of locations and facilities that are available. And some just need communal living. And then on the other end of the spectrum, is much more intensive, bordering on some medical care, and you just want to make sure that you get to the right type of facility for you. And that you find a good happy place so that you can age in place gracefully and with dignity.

Make Long Term Care Plans Before You Need It

So some of the things that you have to do in planning for long term care, best time to think about long term care planning is well before you need it, right? Planning for the possibility of Long Term Care gives you and your family time to learn about the services available and make a proper thoughtful selection on what type of community you would like to be a part of. And also, it allows you do make important decisions while you are still able because it is a fact that cognitively we begin to decline as we age and you want to make these decisions purposefully and thoughtfully with forethought, instead of having them thrust upon you. That’s a hard one for a lot of people. We see that in our practice a wide range of potential philosophies I guess I would call it you know, as I march towards the age of long term care, I’ve always worked in the demographic says in my early 30s I always kind of worked with people in their 60s 70s and 80s. And so you see different thoughts and philosophies about the aging process and how it manifests itself in a decision or with a family. And it’s true that some people just have a healthier, more mature outlook on the aging process. And they willingly look to find a good long term care solution before they even need it. Because that’s the best time to do it. And we have multiple clients in long term care facilities now that are thriving and are enjoying it and enjoy the vibrancy of the personnel and the people that they see on a daily basis. So they can definitely be very happy, growth oriented places, they don’t have to be that old, stodgy institutional type of nursing home that you might thought of a generation or two ago.

Then there is the other side of the coin. And there are people who resist any type of planning any meaningful planning beyond the financial on what long term care might look like for them. And I’ll often get the comment while I’m going out of this house feet first. That’s the only way you’re going to get me out of my home. Okay, okay. Understood. And again, most people try to prefer any in home health care. But sometimes this decision is not your own. And sometimes it is thrust upon you, or more appropriately thrust upon your family. And if it is, then we have seen circumstances and instances when waiting too long, has led to sub optimal outcomes. And then grandma, grandpa or mom or dad ends up going to a care facility that they didn’t want to be in or they didn’t select appropriately, and they had to go to because of need or necessity. And then as you can imagine, it causes a fair amount of turmoil and strife within the family at a very sensitive time. So, if there’s any wisdom I can impart around this segment, it’s that the earlier one can plan and the more thoughtfully one can plan for him or herself, then the happier the arrangement is, certainly for everyone.

Nursing Homes or Skilled Nursing Facilities – Long Term Care

Kevin Zywna, Wealthway Financial Advisors: I want to jump into some of the different types of facilities earlier. I mentioned board and care homes, which are like small houses where people live communally together, and then I got sidetracked. So I want to come back to that. On nursing homes. We’re all pretty much familiar with what nursing homes are also called skilled nursing facilities. They provide a wide range of health personal care services. They focus a little bit more on medical care than most assisted living facilities, or the board and care homes. Services offered in a nursing home typically include nursing care, 24 hour supervision, three meals a day, assistance with the general everyday activity, then you have some rehabilitation services, such as physical, occupational and speech therapy that you can usually find in nursing homes. So a more intensive form of long term care facility.

Assisted Living Facilities – Long Term Care

And then assisted living, which is becoming more common and more prevalent is sort of a step between a boarding care home and a nursing home. Assisted Living is for people who some help with daily care, but not as much help as say a nursing home provides. So assisted living facilities range in size from as few as 25 residents to sometimes over 100. And typically, there’s a few levels of care that are offered. Residents pay more if they need extra services or special care, you pay less if you don’t need the services, or special care. A lot of times assisted living residents live in their own apartment, or rooms. And then they share common areas, they probably have access to services, including meals, assistance with personal care, help with medications, housekeeping, laundry, 24 hour supervision security, on site staff, and then have some built in social and recreational activities as well. And you might find that sometimes assisted living facilities are part of a larger organization that offers other levels of care.

Continuous Care Community – Long Term Care

So, the next level would be a continuous care community, which is its own unique sort of version of long term care. So assisted living, think of it around here, Atlantic Shores is one that we commonly come across. You might not need any assistance whatsoever when you move in, but there’s an infrastructure around your living facility if and when you need it. And then the continuous care retirement community, those are sort of the cream of the crop, Westminster Canterbury in Virginia Beach and Harbors Edge in Norfolk are two of the more prominent ones. These facilities, also called Life Care Communities offer different levels of care in one location. Many of them have independent housing, assisted living, and then skilled nursing care all on one site. And typically you go in healthy, able to live, relatively speaking. But you’re able to live independently, that’s for sure. And then healthcare services and recreational programs are provided as necessary, as you are able to age in place. And, you know, people who can no longer live independently in a continuous care community would then usually move to an assisted living facility, or sometimes they have staff on site that receive provide the care in a person’s residential unit with an apartment or condo. So you have a lot of flexibility, and you have a lot of options. Most continuous care retirement communities, charge a one-time buy in entrance fee, which for most people is usually relatively expensive, somewhere between 100 to sometimes over $500,000 buy in fee. And then a monthly fee after that, and most people have to pay for this care out of pocket. If you have long term care insurance, that typically does not pay for any of this care until or unless it becomes much more intensive later on.

Medicare Medicaid And Long Term Care

And I need to say that, you know, Medicare for all intents and purposes does not pay for Medicare for long term care services. Medicare pays for medical services. Remember, long term care are custodial type of services. So Medicare does not pay, practically speaking except in some very limited cases, and for a short time. And then what does pay is our safety net of last resort is Medicaid, which is a state run health care program. And so if you qualify for Medicaid, which you have to qualify by having very few assets and savings, then the state will step in and provide you a Medicaid bed at some health care facility. But you typically don’t get a lot of choice and a lot of option on where you go if you qualify for Medicaid.

Long Term Care Wrap-Up

Alright, so that’s a kind of a broad overview of long term care, I think, you know, it’s becoming better, there’s a lot more options, we’re getting smarter and better at how we deliver long term care facilities for our aging population. You know, one of the things that you have to do if you want to stay active and vibrant for as long as you can, you’ve got to have a purpose. To get out of bed in the morning, you have to use your time wisely, throughout the course of the day, have somewhat of a schedule, have appointments to go to appointments with friends, socialize activities, with friends and family, card playing groups. hobby, it’s type of groups, and then you have to practice healthy behaviors too so exercise, you’ve got to stay active, you’ve got to move. You should not be smoking cigarettes. And use alcohol in moderation. If you look after yourself physically and mentally, your likelihood of needing intensive long term care services decreases.

I wanted to throw in there this anecdote about my aunt. My aunt lived by herself in a home alone. She was divorced a long time ago, never had any kids. She has family close by, but they’re not able to really give her constant ongoing care. And so she was living by herself independently. But she was becoming very grouchy, irritable, complaining of her neighbors, the town, government. You can imagine it, right? A big black cloud hung over until she moved to an assisted care facility. And I have never seen my aunt happier in the last 20 years than when she moved to the assisted care facility. She’s got activities, she doesn’t need any care right now. She’s living completely independent, in her own apartment. But she’s one of the social directors and she started writing a book that she’s always wanted to do. She’s in the gardening club. She helps give care to other people who need it. It’s been fabulous, so I wanted to leave with that anecdote.

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