Managing financial burdens in LTC
The costs of long-term care needs are skyrocketing and threaten the retirement and quality of life of millions of Americans, particularly during what is meant to be their “golden years.”
It makes sense high-quality care should cost money. Having counseled hundreds of families through the financial pitfalls of paying for care, I've learned that few families are inclined to comparison shop based on price when it comes to the health of a loved one. Families simply want the best care available and, with proper planning and advice, this can be a reality.
To do this, however, I believe that long-term care providers and financial advisors have a duty to work in tandem to protect our clients' access to that care.
Even though financial advice falls (way) outside the traditional spectrum of caregiving, healthcare professionals are in a unique position to help guide an individual and their family through what is the most difficult period of their life. They also possess a unique skill-set and can apply their keen behavioral instincts to orient patients and families to better understand and act to maximize the length and quality of their care.
Caregivers don't have to be financial experts to help their clients with their financial situation! By merely asking the following five questions, they can enable families by giving them a better understanding of the importance of coming up with a plan for how they're going to pay for the assistance that they require. This understanding can go a long way in improving the overall quality of your patients' financial well-being which, in turn, helps improve their physical well-being.
- Do you have a good understanding of how much long-term care is probably going to cost you? Make sure that patient families aren't deluding themselves by severely underestimating the average costs associated with long-term care, or the average length of typical long-term care needs.
- Are you aware of what expenses Medicare and Medicaid do and don't cover? Too many clients assume that Medicare will cover the lion's share of any long-term care expenses. Medicare only covers a small portion of short-term rehabilitation costs, and that's it. Medicaid, on the other hand, will cover the cost of long-term care, but in order to be eligible the patient would have to spend down almost all of his or her personal assets, which isn't what most of us would choose to do with our savings.
- Given the minimal coverage of Medicare/Medicaid, what are you most hopeful for during this period of care? Given this new situation, it's only natural to be constantly focused on fears and concerns. Caregivers need to try and focus on what things the individual and family can hope for. The priority in this question is to try and seek out some positive experiences in what might otherwise seem like a sea of negativity. These positive experiences can eventually pull a client into action.
- Have you sat down and focused on your projected income and expenses to determine how you'll manage to pay for the costs of your long-term care needs? Sometimes families are so focused on the immediate need that they lose sight of the big picture – that these are not typically “one and done” expenses but longer-term costs that require income planning.
- Will your assets need to cover living expenses and long-term care costs for just the patients or also for a spouse? Again, it's just human nature to focus on the immediacy of the crisis at hand. Married couples often throw all their resources towards the long-term care needs of one spouse, only to leave the other unable to afford essential living expenses or without any assets earmarked to cover the cost of long-term care for them if they should ever need it.
- When families answer any of these questions with a "No" or "I don't know," the caregiver needs to identify that uncertainty as an area of risk and prompt their patient's families to seek advice and solutions. Otherwise, the financial mistakes that families could make due to denial, procrastination, inertia or any host of other reasons could threaten their ability to pay for quality care and their standard of living.
Professional caregivers are quite possibly the most important advisers that their patient's families will ever work with. Remember, by simply broaching a few key questions and counselling a family to seek out financial guidance, caregivers can literally make the difference as to whether that family is able to sustain appropriate care throughout the individual's life or, instead, runs unnecessarily short of funds and is forced to provide sub-optimal care.Thomas West is a Senior Associate with SEIA.