Have you ever thought much about your morning routine? Probably not. Most of us are on automatic pilot at wakening.
Some mornings my little seven-pound Shih Tzu wakes me with a toy in her mouth ready for playtime. But most mornings I get out of bed and walk to the bathroom to empty my bladder. Then I splash a handful of warm water on my face and wash away sleepy seeds.
Next, I head to the kitchen to brew a pot of coffee. Steaming java in hand it’s back to the bathroom to shower, decide what to wear and get dressed. Lastly, I walk back to the kitchen to eat a quick bite of breakfast and then I’m off to the office.
Seems simple, right? It is if you don’t need assistance. Those simple tasks of a typical morning routine account for the six activities of daily living (ADLs): bathing, dressing, eating, toileting, continence and transferring.
How would your morning change if you needed help doing one or more of these activities? What if you were unable to walk from your bed to the bathroom on your own or bathe and dress yourself without assistance?
These ADLs are one of the two triggers to long-term care insurance benefit eligibility.
The other trigger is cognitive impairment which encompasses many forms of dementia including Alzheimer’s.
For the purposes of long-term care, cognitive impairment is defined as a loss of short- or long-term memory; difficulty knowing people, places or the time or season; loss of the ability to make good decisions; or loss of safety awareness.
Cognitive impairment is the primary cause of long-term care insurance claims today and comprises about 35% of claims. These claims can last for a very long time.
If family is not available to provide caregiving, how would you pay for assistance provided by a formal (paid) caregiver?
Just three funding options for most Americans
Many are in denial that they will ever need long-term care. Consider the government projections on the risk of needing care. It is estimated that 70% of people aged 65 and older will experience a long-term care event in their remaining years.
If you’re part of the 70%, how will you pay for care? Many people assume Original Medicare is the answer but it’s not.
Original Medicare may cover costs up to 100 days providing certain requirements are met which include being admitted and hospitalized for three days and needing skilled care on a daily basis.
The Centers for Medicare and Medicaid recently allowed insurers offering Medicare Advantage plans to include some benefits to assist beneficiaries needing custodial care to remain in their homes.
That leaves most Americans with three funding options to consider:
1. Self-fund: Use your income, savings and potentially liquidate your retirement portfolio to pay for care.
2. Medicaid: Qualify for government assistance. Income and assets must meet government requirements.
3. Long-Term Care Insurance: Transfer the risk to an insurance company. There are several products available today. The right one will depend on your health history, affordability and financial goals.
A bigger problem is the magnitude is not recognized
While founder and CEO of the SCAN Foundation, a nonprofit focused on improving the quality of health and life for seniors, Dr. Bruce Chernof stated that a more troubling issue than the cost of long-term care is that the magnitude of the problem is not recognized.
He cited the “70-70-70” long-term care problem:
· 70% of people over 65 will need some level of care (true)
· 70% of people don’t think they will ever need long-term care (false)
· 70% of people think Medicare will pay for long-term care (false)
Can you maintain your family’s standard of living, the financial obligations you’ve made and afford the additional cost of long-term care? That’s really the key question and why having a plan for long-term care is so important.