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Benefits Products & Services
Long term care in focus
Frank talk needed as population ages
By Phil Zinkewicz
Over the past century, life expectancy has vaulted from 47 to 77, and it continues to rise. But the longer you live, the longer you’ll live. So, a 65-year-old today has an average life expectancy of nearly 85. For many, this is a terrific circumstance—more years to learn, work and play and enjoy time with those we love. However, with longer lives, there is also the increased possibility of health problems along the way. Nearly 70% of all people over 65 will need some long term care in the years ahead. And we’re talking about our parents and, soon, us.
Those observations were made by Ken Dychtwald, president and CEO of Age Wave, during a recent Webinar titled “Caregiver Crunch: The Importance of Proactive Long Term Care Planning.” Dychtwald, who is also a recognized psychologist, gerontologist and author, spent the hour not only addressing the aging process, which is very much on the minds of Baby Boomers today, but also giving a moving personal account of his own experience with his aging parents.
Observed Dychtwald: “Worries today for people over 55 include: Will I have insurance in the future to cover medical expenses? Will I outlive my money? Will I have enough personal savings for future years? Will there be Social Security? Will my pension (if there is one) be enough to get by?”
Dychtwald said that today 80% of caregiving is informal, usually performed by the spouse. “Out-of-pocket expenses can run $100,000 a year or more,” he said. “Medicare doesn’t pay for long term care and Medicaid is only for the poor. The financial strains could put stress on the marriage. The children of the caregivers might be neglected because Mom and Dad are taking care of their moms and dads. And it isn’t only the dollar questions, but the emotional ones as well. Do you as caregivers want to abandon your dreams?”
Today’s adult generation is in the midst of a caregiver crunch, according to Dychtwald. “Today’s generation has fewer children than years ago to provide care. Family members are living farther apart. There has been an escalation of singles as the result of rising divorce rates or widowhood. Today we are seeing the highest rate ever of middle-aged men and women in the workforce. The family has become multigenerational and multilayered.”
A personal glimpse
Dychtwald then turned to his personal experience with his parents. “I grew up in the 1950s and 1960s in a close-knit, hard-working family. My parents both worked full time to pay the bills and send my brother and me to college, while saving frugally for their own retirement nest egg. Still very much alive at 85 and 89, my mom and dad live in a retirement community in South Florida. I live 3,000 miles away with my wife and kids in California, while my older brother lives in New Jersey where we grew up.”
Continued Dychtwald: “Today, my dad has diabetes and heart disease and has been blind for a decade as the result of macular degeneration. While still sharp as a tack, and ready for a political argument any day, he can’t drive, read or handle any of the normal activities of daily living without a full-time aide.
“My mom—who remains the heart of our family—also requires ongoing assistance” he continues. “She has COPD, which means she must spend three hours a day on a nebulizer. In the past several years, she has had heart bypass surgery and a hip replacement and is grappling with memory loss.
“Around a decade ago, when it became obvious that living independently in their home was becoming difficult, my brother and I became concerned because we saw that age and chronic disease were starting to take a deep toll. I was very relieved when my dad told me that they were going to activate the benefits of the long term care insurance policies they had purchased five years before, to get the extra help they needed so that they could continue to live independently.”
The good news about his parents, Dychtwald says, is: “They are currently living surprisingly normal lives in their own home, thanks to the services of their living care coordinator as well as an aide who comes to their house six days a week, helps manage their household, does the grocery shopping, prepares meals, takes them to various doctor appointments, cares for them and generally has allowed them to stay together in their house, just like they always wanted.
“If not for their LTC policy, my folks, who recently celebrated their 67th wedding anniversary, would most likely be living in some sort of institution, probably a nursing home,” Dychtwald comments. “And, because of their different conditions, they might have been forced into separate facilities. My brother would probably have given up his life in New Jersey to look after them, and my wife and I would probably be paying for their care, which by now would have cost nearly $500,000—a small fortune.”
Personal assets at risk
The median cost for home care is $42,000 a year, Dychtwald says, and a private room in a nursing home costs an average of $74,000 a year. Some people have to sell all of their assets to cover the cost of long term care, and many others become impoverished while paying these expenses, he points out.
“I recently read how some social workers are advising elderly men and women to divorce their spouse should their partner’s health start to fail. By doing so, their can detach from the financial responsibilities of caring for their loved one and have Medicaid pick up the tab. This is a shameful state of affairs,” he asserts.
Long term care is a critical piece of any financial plan, says Dychtwald, but too few people talk about it. He cites three factors: fear, denial and confusion. “But there are strong reasons for talking about it and doing something about it,” he says. “In your later years, you want not to be a burden to your children. You want to be sure to get quality care in the setting of your choice. You want to protect your retirement assets and stay in control of your money and your life and protect your spouse’s lifestyle and financial security.”
According to the American Association for Long Term Care Insurance, the IRS has announced increased tax deductibility levels for LTC insurance. “For the first time, the maximum deductible limit for an individual exceeds $4,000,” says Jesse Slome, director of the association.
“The federal government and an increasing number of states are sending a clear signal that individuals need to plan for long term care, and tax deductibility and tax credits certainly make long term care insurance more attractive to millions. It is a positive sign to see limits for long term care insurance deductibility increase, especially when pension contribution limits for 2010 were not increased,” Slome remarks.
Concludes Dychtwald: “While I don’t think everyone needs LTC insurance, I do believe that everyone should have a plan for how they’re going to be looked after should they need extended care, and how they’re going to pay for it without burdening their family.”
The author
Phil Zinkewicz is an insurance journalist with some 30 years’ experience covering the international insurance and reinsurance arenas. He was the insurance editor of the Journal of Commerce for a number of years, handling all their domestic and international supplements. In addition, he regularly writes for a number of London publications.
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