Planning for long-term care (LTC) has become an increasingly important topic as the population ages and people are living longer. While the effects of a life-changing health event could impact the entire family, research released by Lincoln Financial Group during Long-Term Care Awareness Month currently under way shows that consumers don’t know the entire truth about LTC needs and planning. Lincoln is helping to dispel some common misconceptions.
“Proper planning for potential long-term care needs in the future has never been more important” said Heather Deichler, senior vice president of MoneyGuard Product Management, Lincoln Financial Group. “While it can be a challenging and emotional topic to think about and discuss, tackling it head-on and before care is needed can make a big difference in the care one receives, the impact on loved ones and a family’s financial security. Unfortunately, the realities of long-term care are often misunderstood. Long-Term Care Awareness Month is a perfect time to bring clarity to the topic and spark meaningful conversations between families and financial professionals.”
The following are a few of these misconceptions--and suggestions on how to address them:
* Planning can wait. Financial professionals believe age 50 is the ideal age to plan for long-term care, but clients typically wait until age 651. With more than half of Americans turning 65 projected to need some type of long-term care in the future2, planning early can help avoid rushed and potentially expensive decisions. Rates for long-term care services vary greatly depending on the type of care and location with national annual averages ranging from $49,920 for a full-time home health aide to $105,485 for a private room in a nursing home3.
Planning early while still healthy can also increase the likelihood of being approved for an underwritten long-term care funding solution, and potentially make the policy more affordable with greater care benefits and options.
*You only need to talk with family to plan for long-term care. The research finds that 60 percent of people have discussed LTC with their spouse, children, parents or friends4. That is good news, considering the fact that most LTC events begin in the home with family or friends providing the initial care. However, only 5 percent have consulted with a financial professional about long-term care. The research also finds that 63 percent do not have any type of long-term care plan — informal or written4.
A thorough long-term care plan should include conversations with both family and a financial professional together and cover key elements, including:
- Preferences for how and where care is received
- The role of family in caregiving and decision making
- The potential cost of care services and how they would be paid for
- How long-term care funding solutions may fit into the plan
*There are few insurance options to help fund LTC needs. Despite an expanding private insurance market, which now includes different types of solutions, there is relatively low familiarity of any of the options among consumers. With the low level of familiarity, it’s not surprising that 57 percent of those surveyed believe a long-term care solution is only beneficial if you use it4 even though hybrid solutions, which are life insurance or annuity products with long-term care riders, are designed to meet multiple needs. When presented with different options, survey respondents were significantly more likely to find hybrid life insurance products that combine long-term care coverage if you need it, and a death benefit if care is not needed, the most appealing.
“When it comes to long-term care planning, there are a lot of decisions to consider. It is essential to start planning early and have the right people in the discussion,” said Bill Nash, senior vice president and head of distribution for MoneyGuard solutions, Lincoln Financial Distributors. “Financial professionals can bring expertise to the conversation and help families plan for aspects they may not have considered or truly understood, such as the potential costs of long-term care and their impact on retirement plans, what’s covered by Medicare and Medicaid, or private insurance options. With understanding of these types of topics, families and their loved ones can develop thorough plans to help individuals age with dignity and independence.”
To help families and their financial professionals start the conversation and develop a plan for potential LTC needs and expenses, Lincoln provides the following tools and resources:
- www.whatcarecosts.com/Lincoln - a searchable database of long-term-care costs for in-home services, skilled nursing homes and assisted living facilities for states and metropolitan areas nationwide. Enter the code ‘Lincoln’ in the upper right corner
- Long-term care videos, key planning considerations and information on funding options (for use only in AZ, CA, CT, DC, DE, FL, HI, IN, MT, NJ, NY, ND, SD, VI)
- Long-term care videos, key planning considerations and information on funding options (for use in all other states)
- Versta Research and Lincoln Financial, “2017 LTC Marketing and Thought Leadership Research, Findings from Surveys of Advisors and Consumers,” February 2018.
- Department of Health and Human Services, “Long-Term Services and Supports for Older Americans: Risk and Financing,” February 2016
- LTCG and Lincoln Financial, “What Care Costs”, 2019
- Lincoln Financial, “The Importance of Planning for Long Term Care,” April 2019
- Forbes, America's Best Large Employers, April 17, 2019