Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Archive for the ‘Long-term Care’ Category

When Your Long-term Care Insurance Rates Rise

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Over the past several months, many long-term care insurance policy holders have received unwanted news from their LTC insurance company:  your rate is going up.

There are a number of reasons prices on policies issued years ago are going up now.  The current low-interest rate environment; more people are holding onto their policies rather than lapsing (stop paying); and people are living longer so more are expected to use their benefits than originally projected. 

But raising rates?  Can they do that?  You probably don’t remember it, but your policy includes language that the rate can be increased in the future.  And many companies have held off on increases.  But to maintain a financially stable program, the rates have to support potential claims.  Those insurance through the Federal government employees long-term care insurance program found that out last year when some rates increased as much as 25%.

It’s also important to recognize that the increase does not reflect anything about you as an individual.  When companies make these changes they do so for an entire class of policy owners, i.e. people who bought a certain policy during a certain period of time.  So you aren’t being singled out. 

You’ll receive a letter from the insurance company telling you when the rate is going to increase and the options you have if you don’t’ want to pay more.  

So, what are your options?  

Cancelling should be the last resort.  Unless you have a provision in your contract that lets you stop the policy and receive the benefits you’ve accrued to date, you will lose all the money you have paid in for the insurance.  Work with the insurer to find a benefit level that you can afford. 

Buying a new policy at a lower cost usually isn’t an option.  LTC insurance is priced by the age at the time you apply – the older you are, the more it costs.  So switching probably won’t save you money if you’ve had your policy more than a few years. 

If you are happy with the policy and you can afford the rate increase that solves the problem. 

But, if you can’t afford the increase, you can change the benefits.  The letter will outline what you can change and the impact it will have on your price. 

A good place to start can be the additional “riders” you purchased.  See if they are still as important to you as they were when you bought the policy.  Be careful about cutting inflation protection if you have it (the percentage at which the daily benefit increases each year — for example, 5% compound growth.  That’s what keeps your pool of money growing to keep pace with the costs of care when you need it in the future. 

Then take a look at the core benefits: daily benefit, policy years, and elimination period (deductible).  Your agent or the company can help you work through the tradeoffs.  Ask about the average costs of care in your area.  That can help you determine how far your coverage will go.

For those in the sandwich generation, if your parent is finding it difficult to pay the higher amount you might want to consider chipping in and paying the difference.  Continuing the level of coverage may be a huge financial relief in the future for all of you.

Don’t wait until the last minute to make the decision.  Give yourself time to review and consider the financial tradeoffs.

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Written by Laura Rossman

August 13, 2010 at 3:28 pm

Long-term care crisis looming-time to talk

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5 Generations

If we needed long-term care tomorrow, most of us are not financially prepared. 

If our parents needed long-term care tomorrow, most of us have no idea what financial resources they have or their expectations and desires for where to live, who will care for them.

Statistically, 72% of Americans will need some level of care later in life. 

The crisis in long-term care is coming.  For many of us, it is already here.  So what do we do about it? 

I attended a session on Women and Aging 2010:  America’s Emerging Crisis last week in Washington sponsored by the Volunteers of America.  They have a robust senior housing program including a program that helps those who want to stay in their home or community (Aging with Options program at Volunteers of America). 

Good research, good discussion by a good panel – but no answer to the question of how do we even begin to have the family conversation about long-term care and finances.  Parents – especially the GI Generation _ don’t want to talk about money.  Baby boomers are generally in denial that they will ever need care.

Everyone agreed we need to have family discussions about this topic.  But, no one had an answer on how to have that conversation before crisis mandates it. and that, of course, is the worse time to try to make any decisions about money or long-term care.

Michelle Singletary, a finance columnist from the Washington Post (her column on the panel)  recommended starting the conversation with children now – hopefully once you need care, they’ll know what you have and what you want.  She also joked that her long-term care plan is that she has 3 daughters (and long-tem care insurance.)

But what do you do if you are caring for a parent now?  As a friend said to me today after her 92-year old mother went to the hospital with a hip fracture – “If I just knew what to plan for now –how long, what resources, what’s next. ”  But as those of us who have found ourselves in caregiving mode, planning need to happen a long time ago.  We just bump from crisis to crisis now – juggling life and catching our breath when we can.

This is a particularly important topic for women because we live longer and generally have lower incomes to support ourselves as we age.  The Volunteers of America survey said that among women caregivers, almost half (48%) say the recent economic downturn has made it harder for them to care for older loved ones.

And this is a middle class problem. As panel members noted — lots of money and you can pay for care, no money and you’ll qualify for government programs.  But a pension, Social Security and some savings and you’ll be figuring out how to pay for this care on your own.

 It’s not just the conversations at home – it’s flexibility in the workplace.  Almost half of the women surveyed (ages 45-65) expect to be called on to provide care to an older family member at some point in the future.  Yet elder-care doesn’t get the same flexibility in the workplace.  And the nature of eldercare giving is different – lots of doctor’s appointments and crisis events.

Volunteers of America says this is the beginning of a year-long discussion about women and aging.  That’s a good thing.  Because we’ve got a lot to talk about – and hopefully it can begin at home with a conversation today – or around Father’s Day if you need an event – to begin to talk about long-term care before the crisis hits.  It’s not just about money (though it’s an important part of the conversation)  it’s gaining the emotional intelligence so when the time comes you feel like you are on the preferred path.

 Michelle Singletary begins her column:  “The time has come.” 

Yes, it has.

America’s Caregiving and Aging Challenges, Volunteers of America research

video of Women and Aging panel discussion

Aging with Options program

Written by Laura Rossman

May 18, 2010 at 7:08 pm

3 Tips for Mothers Caregiving Mothers

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As we approach Mother’s Day, many of us find ourselves providing care or assistance for our mother. 

It might be every day in our home, or weekly check in calls from afar; or providing financial support or just more frequent check-in visits.   If the research is right, most of us didn’t see it coming, there was a crisis involved –and we still may be moving through periods of calm and crisis. 

As caregivers – or whatever word we use to describe our new duties – we’re juggling our own life at the same time which could include the demands of work, kids, and partner/spouse.  Sandwich generation.

 It’s exhilarating – sometimes – and exhausting– most times. 

But one thing I know to be true, most of us are wondering (out loud or to ourselves) how do I keep this from happening to me as I age?  Will my children face the same burden in caring for me?  

And while I am blessed with a very healthy mother that was not true with my father and that round of caregiving took its toll – and taught me a couple of lessons.  And now my mother and I are blazing a new relationship as we live in the same area for the first time in 35 years.  

There’s a very poignant article in the New York Times about the growing number of Alzheimer’s patients and the challenges wandering brings.

 So here are three suggestions for what you can do today to better prepare for tomorrow. 

1.  If you are a mother, caring for a mother, get some help and take a break on Mother’s Day– for yourself and for your family.  I know that can be challenging financially, but breaking for even a bit from the rigor of caregiving is essential.  You may even want to spend the day with Mom, but for once let someone else take on the caregiving and worrying. 

2.  Plan for your own long-term care needs.  No matter how scary it might be, sit down and start working on a plan.  How you want to receive care, where, from whom, how will it be paid for?

 3.  Talk to your children about your long-term care plans. If they are in their teens or 20s or 30s–they see what is going on, what you are going through and are wondering what’s in store for them.  As a society we tend to shy away from talking about money and about such things as long-term care and death.  Yet, what a gift it is to your children to know that you have thought about this and have plans and resources.

The fact is that women live longer than men.  They need more financial resources to make it through a longer life.  And they are likely to need some assistance as they age.  We’re still all trying to figure out what longevity means to us as caregivers or as one being cared for. 

So if you are a mother caring for a mother, remember to take some time for yourself this Mother’s Day. As they tell you on the airplane, put your mask on first so that you are able to help those around you.

Happy Mother’s Day.

Written by Laura Rossman

May 5, 2010 at 8:40 pm

A New Plan for Long-term Care

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Nothing like gathering around the holiday dinner table to remind ourselves we’re getting older – as in aging.

 And the older generations is, well, older too.  And caregiving, for Gen X and baby boomers,  is a huge stressor…financially and emotionally..

 So the prospect of a government sponsored long-term care program should come as good news.  And it is, sort of.  Because the fact is that so many of the facts about the program are still unknown that it is hard to tell what kind of benefit it will be for the future.

 I’m referring to the CLASS Act program in the Health Care Reform bill.  It hasn’t gotten much notice yet.  It is the first time a widely available-long term care program will be in place to help older and disable individuals who can care completely for themselves.  The timing couldn’t be better with the first of the baby boomers turning 65 next year. 

CLASS stands for Community Living Assistance Services and Supporters Act.  It sets up a new voluntary national program which you will be able to sign up for, pay a monthly premium and receive benefits after five (5) years. The benefit is expected to be $50-$75 per day.   It will generally be offered through employers and workers will have to opt out of the program.  For those working but self-employed or their employer does not offer the program, consumers will be able to sign up directly. 

The benefits of the program, the cost to consumers and how it will work are details yet to be determined.  The government has until October, 2012 to issue rules.  Detractors fear only those who need the benefits will sign up, sending premiums high and bringing the viability of the program into question.  Of course, in any insurance program like this, it only works if both the healthy and not-so-healthy sign up.  

 So, what do you do now? That all depends on your situation, your health and health history and your appetite for risk.

 1. If you have long-term care insurance, hold onto it. 

2. If you are in your 50s or older, waiting for the government program might be a pretty high risk plan, since the details are incomplete right now.  But it is clear that you’ll need to pay in for five years before you can receive benefits.So waiting might not be realistic.  Or, you could consider a long-term care insurance benefit level that covers some of the potential costs and leave yourself room to add the government program.  Or you could look at a higher level of premium that you could reduce later if you wanted to add the government program.  Or proceed with a long-term care plan from a private company and know that you’ll probably opt out of the government program. 

If you are younger, you need to weigh the risk, your own personal financial situation and your potential need for long-term care.

Sorry, no quick and easy answer.  Your personal circumstances should dictate your decision.  Get help from an expert who can look at your circumstances and help you think through different financial scenarios. 

3. If you can’t qualify for long-term care insurance, the CLASS Act could be a great benefit for helping to pay for care in the future. Watch for details over the next year.

 So, we’ll keep watching for details on the CLASS Act. 

And while it might not help you with today’s long-term care needs, for millions of baby boomers and those in the sandwich generation, it’s a ray of hope for how we might finance our own long-term care.

 Because if there is one thing the bill makes clear, long-term care costs will continue to be a personal responsibility. 

Some links about the CLASS Act

 Kaiser Health News   

American Association for Long-term Care Insurance

Written by Laura Rossman

April 5, 2010 at 8:27 pm

Cost of Long-term Care Continues to Climb

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Long-term care costs continue to rise whether care is for a nursing home, assisted living facility, home care or adult day care. The increase in costs reinforce the need for long-term care planning:  how you want to receive care and how you’ll pay for it. If you are a member of the sandwich generation this is an important issue for your future and your aging parents.

 According to the 2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs.

  • Private room nursing home rates rose 3.3% to $219 per day or $79,935 per year.
  • Assisted living costs also rose 3.3% on average to $3,131 per month.
  • Home health care aides now cost an average of $21 per hour, a 5% increase;
  • Adult day services run $67 per day, a 4.7% increase.

 Many of us think that we’ll just get care at home which will be less expensive.  It all depends.  If you need assistance most of the day and night, then it is not less expensive than other alternatives.  But, home care is what most of us want, so at least use these hourly figures to help map out realistic potential costs for long-term care.

 If you think you are going to need to assist an aging parent with their care, these figures can help you better plan for financial assistance you might want to provide.

 When it comes to paying for long-term care, there are basically three choices:

You can purchase long-term care insurance to cover those costs, you can look at self-funding and wall off some of your assets into very safe investments so the money will be available when you need it, or you can hope you don’t need it and if you do deplete your retirement savings and then count on government programs.

Remember, this is custodial care not medical care.  So don’t count on Medicare or your health insurance to pay the costs of care.

Rates for care vary dramatically in different parts of the country, and even different parts of the state.  For example, in Maryland where I live, the average rate for a private room in a nursing home is $258; assisted living averages $3,873, a home health aide averages $20 per hour; a homemaker aide $18 per hour; and adult day services $75 per day.

Head up to Maine or Massachusetts and the daily rate of nursing care can hit $300. The MetLife survey provides rates for all states.

So it is very important to plan based not only on where you live now, but the costs of the area you might be moving to in retirement. 

If you are working, your employer may offer long-term care insurance as a voluntary benefit which means you pay the costs, but the policy may have some additional benefits such as less stringent underwriting.

If you are retired and interested in long-term care insurance, check out individual policies through a local agent or membership groups which may offer a discount.  Just make sure you compare a couple different policies since rates can vary dramatically.

Resources:

2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services and Home Care Costs.  

Long-term care insurance quotes in Maryland.

Written by Laura Rossman

October 29, 2009 at 2:26 pm

How much does long-term care cost? It all depends.

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As part of the sandwich generation you need to plan for your future long-term care costs as well as the long-term care costs you might have to help pay for an older family member now. And these costs are big!

 If you are planning on moving in retirement or moving a loved one closer to you for long-term care, data just released by Genworth Financial can help you in the planning process.

 How different are prices for long-term care?  Here’s a comparison for a year in a private room in a nursing home:

  • Illinois – $56,028
  • Arizona – $70,263
  • New York – $104,062
  • Florida – $71,175

 No wonder more of us are seeking to stay at home for care.  But the cost can still be significant.  And with more of us planning to work longer to shore up our own cracked nest-egg, taking off work to provide care for a family member isn’t necessarily a choice.

 The top 10 states for nursing home care affordability and choice are:

Iowa, South Dakota, Kansas, Nebraska, North Dakota, Oklahoma, Missouri, Arkansas, Wyoming and Louisiana.

 Generally, the east and west coast have higher costs for care than the Midwest.  Availability of care is another issue.  Some areas with a high concentration of people 65 plus offer less choice and result in higher prices because the demand exceeds the care that is available.

 An interactive map that shows how much the average cost of care is in each state. And  there is a nifty tool that lets you compare costs of care across four areas.

 The average cost for a private nursing home room is $74,208 or $203 per day.  An assisted living facility runs about $33,903.  Home health care runs $53.59 nationally, or $12,862 per year (assuming 5 days of care per week).

 More shocking are the projections of what it could cost in 30 years $270,00 per year for a nursing home stay  and $220,000 for assisted living facility in 40 years..  

 The report also noted that more people are choosing to receive care at home initially.  Genworth said 74% of its initial claims are for long term care service received at home

The average cost for a non-Medicare certified, state licensed home health aid is $18.50.

 These costs demonstrate why long-term care planning is an important part of any financial plan.  Estimates are that two-thirds of people 65 and older will need some long-term care during their lifetime.  Long-term care is generally not covered by Medicare, so you are left to pay for it yourself, qualify (spend down your assets) to receive Medicaid or look to a long-term care insurance policy to pay the costs.

Written by Laura Rossman

May 1, 2009 at 2:42 pm