Long Term Care Costs
How Care for Elders, Not Children, Denies Women a Paycheck
About a quarter of women 45 to 64 years old and one in seven of those 35 to 44 are caring for an older relative.
Why did women’s rush into the work force stop? Policymakers have been vexed by the question for years. Social scientists have discussed the sudden stop for over a decade, in conferences and academic papers. Almost 12 years ago, I gave the topic a shot in the pages of The Times: why, after a five-decade rise, did the labor-force participation of women in the prime working years stall around the turn of the century?
After years of sometimes scorching debates, over whether highly educated women were “opting out”; whether the stop was merely temporary; and whether it responded to gender roles at home or labor-market conditions, the analysis seems to have converged on a sort of rough consensus: caring for children — overwhelmingly a woman’s task — ultimately took its toll.
Caring for children is, to be sure, a formidable barrier to women’s work. In developed countries where parental leave is guaranteed by law and governments ensure free child care, women work at a much higher rate than in the United States.
Still, the consensus is incomplete. It misses perhaps the most significant impediment to women’s continued engagement in the labor market, one that is getting tougher with each passing year: aging. Focused laserlike on child care, we haven’t noticed that the United States is walking into an elder-care crisis.
Today almost 15 percent of the American population has reached the official retirement age, according to figures from the United Nations. That is about two percentage points higher than at its previous peak in 1995, just a few years before the labor supply of women in the prime working years — 25 to 54 years old — reached a plateau. It means that for every four Americans of working age, there is one of retirement age, the World Bank says.
Lots of these older Americans — 14 million, according to Paul Osterman of the Massachusetts Institute of Technology’s Sloan School of Management — can’t live independently and care for themselves.
The burden of care weighs predominantly on their wives and the daughters. About a quarter of women 45 to 64 years old and one in seven of those 35 to 44 are caring for an older relative, according to the American Time Use Survey.
It takes a toll. Ten percent of caregivers have to cut back on their hours at work; 6 percent leave their jobs entirely, according to a report last year by the National Association of Insurance Commissioners.
A 2015 survey by the insurer Genworth Financial found that caregivers spend about 20 hours a week providing care — about half what a full-time worker would spend at work. Almost four in five said they had missed work, and about one in 10 lost a job. One in six reported losing around one-third of income because of caring responsibilities.
Sean Fahle of the State University of New York at Buffalo and Kathleen McGarry of the University of California, Los Angeles, tracked women in their early 50s to their early 60s for 20 years. Those who provided care, they found, were 8 percent less likely to work. Those at work cut their hours and had lower wage growth. Over time, Professor McGarry told me, caregivers risked lower incomes and a higher risk of poverty in old age.
The Burden of Care
After rising for half a century, the labor force participation rate among prime-age women began to decline in the early 2000s — around the time the elderly share of the population began to rise sharply. Part of the explanation for women’s declining share of the work force may be that women have generally had to assume most of the responsibility for caregiving to the elderly.
The stress is getting no lighter. By 2030, more than one in five Americans will have reached retirement age. That will call for a lot of caregiving. One study found that retired members of the baby boom generation will need, on average, three years of long-term care. One in five will need more than five years of care.
This is expensive. Older Americans may be healthier than ever. Still, as they age, they will inevitably develop disabilities and chronic conditions like dementia. “If you are superwealthy and can afford all sorts of things, this is not an issue,” noted Lawrence F. Katz, a professor of economics at Harvard. “But if you are middle class, this tends to end with your relatives’ losing all of their assets and relying on Medicaid or family care.”
These pressures may draw more men to take responsibility for care. So far, though, experience suggests the burden will fall mainly on women.
Unlike the boomers now taking care of their parents, their millennial children will not have as many siblings to help care for their parents. Higher divorce rates imply that many aging boomers will have no spouse to care for them, putting additional demands on their children. And the elderly of the future are going to live longer, which suggests there will be a lot of caregivers well into their 50s juggling work with care for their children and their parents.
Much has been made of the fast growth of the caring occupations. The Department of Labor projects that the economy will add roughly 1.2 million home health aides and personal-care aides over the next decade.
One critical challenge is how to turn these minimum-wage, direct-care jobs with few skills into higher-quality and better-paid employment that can attract the millions of new workers who will be in demand.
But there is a broader societal challenge: how to fit a social safety net built in the 1930s, when wives stayed at home and life expectancy was 20 years shorter, into a world in which husbands and wives must juggle work with the demand for care from their elders and their children.
It is probably naïve to harbor these thoughts just as Republicans in Congress and the White House are engineering a tax cut for corporations and wealthy Americans that will reduce government revenue by $1 trillion over a decade. It may sound crazy to say this just as Republican leaders are turning their sights on the next step of the strategy: cutting spending on programs like Medicaid and Medicare to pay for the tax effort. But perhaps this is time to beef up the safety net to incorporate the rising demand for care.
In his book “Who Will Care for Us?,” published this year, Professor Osterman estimates that there are about 21 million family members caring for an adult relative for no pay. By 2040, he predicts demand for such care will rise to 34 million.
Ai-Jen Poo, co-director of Caring Across Generations, a coalition of advocacy groups pushing for an expansion of public insurance to incorporate universal care, notes that private insurers are not the solution: They can’t cobble together a big enough risk pool to cover the enormous cost of care for everyone. “All the insurance companies are trying to get out of that market,” she said. “This is a problem that the market can’t solve.”
With little hope for action at the federal level, Ms. Poo is putting her hope on states. A bill providing for universal long-term care has been introduced in the Washington Legislature. Caring Across Generations has had some success in pushing for adding government subsidies to care in Hawaii. It is backing a referendum on a universal care program in Maine. But without some public intervention, she said, “there will be a humanitarian crisis, both for the aging and the workers that care for them.”
And if prime-age women start leaving the work force in even higher numbers to care for their aging parents, this will also be a problem for the American economy.
Eduardo Porter – ECONOMIC SCENE DEC. 19, 2017
Perhaps it is time for you to investigate Long-Term Care insurance.
Let experts guide you through the process, not your car insurance agent or financial planner who dabbles in it occasionally.
Check us out online at www.TheLongTermCareGuy.com and then call The Long Term Care Guy at (920) 884 3030 to schedule a time to investigate solutions.
Will Your Children be Paying Your Bills?
Will Your Children be Paying Your Bills?
A recent survey by TD Ameritrade found that 13% of American adults are financially supporting their parents. It appears to be a growing issue. According to their survey, 19% of millennials are helping pay their parents’ bills, compared to 13% of Generation Xers and 8% of baby boomers. How do you help your parents through their retirement end of their lives, while still preparing for your own?
Their suggestion given was to purchase long-term care insurance for them, and for you. This may not be affordable for many adult children of any generation. The problem, however, is real and needs to be discussed and options sought sooner rather than later when funds may be already gone.
Purchasing LTC insurance for parents may be less expensive than attempting to pay for their care, but it will be a burden for many and often times not available anymore due to their health. Like the airlines say, put on your oxygen mask before helping others. Do you have your LTC insurance in place yet?
There are other strategies that can assist you in helping your parents. Many of them involve nothing more than advice and being aware of rules and restrictions that are often overlooked.
You don’t know what you don’t know.
By discussing the situation and learning how to best help them without causing future difficulties, you might find that it is not necessary for you to simply give them money. Some assets can be protected, if you know how to do this. We help families do this every day. Other times we prevent problems – many people are not aware that if parents pay a caregiver directly, without a simple employment contract signed and notarized first, all payments will be considered gifts by Medicaid thus disqualifying you from that program.
Family meetings are our specialty. Bring a list of questions and we can help you navigate through the rules that you want to learn before problems are created.
Whatever your situation regarding long-term care, there are strategies you can take advantage of that save you and your parents money. So call TheLongTermCareGuy.com at (920) 884-3030 and schedule a time to learn what you need to know.
Please CONTACT US today so we can help you!
Long-Term Care’s Terrible Cost to Families
Long-Term Care’s Terrible Cost to Families!
Two recent articles (links below) describe the terrible cost to families when they provide care for a loved one, and even worse when it is dementia.
Currently, 40 million Americans are caregivers, and the cost is far more than money. It involves loss of time with other family members, cancelled trips, lost promotions, time away from work, loss of job, loss of sleep, loss of keeping up with a career, and yes, loss of money as well.
Some people simply cannot do this, they cannot abandon their children who need them. They cannot live with criticism from siblings who will not or cannot help out, or worse yet, refuse to accept the fact that their parents are failing.
Dementia is the worst, with 57% of caregivers going to work late, leaving early, or taking time off. For physical care it is only 47% but this still takes a toll on career and the workplace loses as well. 9% give up their careers entirely – can your children afford to do this?
Then come the legal and financial woes, do your parents have durable power of attorney established? With whom? How long ago was this set up? How about power of attorney for health care? Can anyone find the documents and how old are they? Without these documents, thousands of dollars may be spent getting a guardianship which then requires reporting to a judge about what you have done with their money each year.
If you have not discussed this with your children, do you plan to drop this burden on them by surprise? With no planning and a sudden realization that complex care is required, often the solution of care at home is already gone and an institution is the only answer.
Institutions are very expensive and if family helps pay for care, will they be also able to contribute to their own retirement savings?
The early baby boomers are starting to hit 70. Their children are in the most demanding parts of their careers. By age 65, one in eight has Alzheimer’s. By 75 it is one in four and at 85 it affects half of us. Over half of all long-term care is for dementia and Alzheimer’s is only one type of dementia.
Fortunately there are solutions for some. Even when care is already needed, there are ways to stretch the funds available or protect some.
For those who plan in advance to not become a burden on family, the choices are much better and much less expensive as well. You do not want to end up on Medicaid in a Medicaid underfunded institution if at all possible. But the discussion needs to start now while you are still healthy and have more options.
We host many family meetings where ideas can be discussed on how to handle care when and if it becomes necessary. Guidance from experts in handling this is invaluable. Let the experts at www.TheLongTermCareGuy.com help you explore options. Call to schedule a meeting today at (920) 884 3030. We’ve been through this many times before. Here are links to the two recent articles I mentioned:
https://www.wsj.com/articles/how-to-reduce-dementias-tragic-toll-on-families-1510542660
Using Home Equity to Fund Long-Term Care
Using Home Equity to Fund Long-Term Care
You can use your home to stay at home, or to pay for care so you can go to the facility YOU prefer.
But first, why might you not be allowed to go to the facility you prefer? Long-term care (LTC) facilities need to charge for the care they provide. Their staff costs are significant and many areas of the country are doubling minimum wage, which doubles their staff costs.
The problem is, many people run out of money paying for their care and need to apply for Medicaid. Medicaid is a government welfare program that will pay for LTC once your money is completely gone. Well, not completely, you can keep just under $2000 but you have to cash in your life insurance (over $1,500) and you can only keep $45/month from your income, so you are pretty much broke. Even that $2000 goes back to Medicaid at your death meaning your children may be passing the hat to pay for final expenses.
Medicaid pays less than what it costs for your care. LTC facilities cannot lose money on every customer and make it up in volume. Thus they must limit the number of Medicaid recipients they allow in, so they can keep their doors open.
That is where you home comes in. Most people sell the home and spend the money paying for care until they are poor enough to qualify for Medicaid, not a good scenario. Most people want to stay home and get care there, so let’s look at that first.
If you are among the many who cannot afford $1200 to $5000 a month for home care, rather than sell the house, why not use the home equity to pay for care there? How, you ask? By using a reverse mortgage to withdraw money from the home.
Many people are dead set against a mortgage and would rather sell the home and lose the money to LTC bills. Does that really make sense when by using the money you withdraw from the home, you can pay for care in your home?
No sign is placed in your front yard stating that you have a reverse mortgage. You cannot borrow all the equity in the home, so there may be a remainder left for your heirs at the end. There are no payments to make on a reverse mortgage and you can do what you want with the money you withdraw.
You might spend this money down, staying at home for a year or two longer, and perhaps that is all the care you may need. Even if you later do move to a LTC facility, wouldn’t you rather stay at home longer if the home pays for it?
There is one more way to stretch that home money, or any money, longer paying for care. This only works when LTC is needed and your health indicates that you have less years left to live than a healthy person of your chronological age. You can convert some of this money into an income for life.
Most companies that do this (annuity companies) do not inquire about your health, and simply assume you will have the “average” life expectancy of someone your age. But two annuity companies take your (poor) health and thus shortened life expectancy into account. By doing so they can give you a significantly large monthly check every month for life from the amount of money you have to work with. You might even have money left over at the end for heirs, which is a lot better than leaving your funeral bills to them!
We can also protect some of your money for those funeral bills through the one remaining Medicaid allowed strategy. Call us at (920) 884-3030 and let’s schedule a family meeting to investigate your options.
Inexpensive Insurance That Pays For Care in Your Own Home
Inexpensive Insurance That Pays For Care in Your Own Home.
Home care insurance that almost anyone can get. You’ve surely heard how expensive and difficult to get long-term care insurance can be.
Now we have something new.
It pays for care in your own home (where you want to be anyway). It has only one health question – if your family were to all go on a one month vacation and left you alone at home, could you manage on your own for this time?
If your answer is yes, then you can get this coverage for home care.
If you are already receiving home care it is too late. If you wait, and your health changes, you waited too long. Besides, each year you have this before care is needed, the price drops 10% per year for a total of 40% discount.
So, if you need kidney dialysis but can function on your own, you are eligible.
If you have arthritis, disabling or not, but can function on your own, you can get this.
If you have cancer, Parkinson’s, the start of Alzheimer’s, had a stroke or several strokes, need joints replaced, walk with a cane or walker, Have diabetes, even if you’ve had amputations, you are too short (for your weight), have macular degeneration, emphysema, fibromyalgia, or have had organs replaced, if you can function on your own yet, you can get this.
You choose the amount of hours per year of care you want. You pay an annual premium (that gets cheaper each year before you need care). When care is needed this will pay for either a home care agency to come in and provide care, or it will pay a friend or neighbor.
If you use up the hours per year that you chose, you simply go without benefits for 90 days and you can renew this coverage up to 10 times!
This is brand new. You know you want to have care at home, in your own house, and possibly by someone you know and trust. This will not pay a family member, but it will pay for care from a friend or neighbor.
For more information contact www.TheLongTermCareGuy.com at (920) 884-3030
Don’t wait until it is too late, because once that care is needed it is too late for this.
Will You Burden Your Children to Pay for Your Funeral?
Will You Burden Your Children to Pay for Your Funeral?
Nobody intends to leave their funeral bill for their children, you probably have some life insurance and you certainly have money that can pay this bill.
The problem is that things change and are often out of your control. Your health changes and suddenly you find yourself needing money to pay for long-term care, lots of it. This happens to about 70% of us according the Health and Human Services (HHS).
Yes, the government will pay for long-term care once you prove that you are impoverished – broke. You must spend down everything you have to less than $2000. You must cash in your life insurance if it is more than $1500. You get to keep $45 per month out of your income and the remainder goes for your care.
When you die the $2000 goes back to Medicaid. So who will pay for your funeral?
Even if you have money left at death, it is locked up for some time by the probate process. Transfer on death requires a death certificate before the funds can be processed and the funeral home wants a credit card FIRST.
Life insurance also requires that death certificate, plus forms, plus processing, you get the idea.
What if you could have a special account for final expenses. One that releases the funds to pay those bills the moment of death, before the death certificate has been produced. Before they have picked up the body.
It is called a burial trust. Medicaid makes you cash in life insurance over $1500 but lets you put up to $15,000 into this account. It earns about twice the rate of interest that your bank’s CD pays (still nothing to write home about).
The money is safe from everything and can only come out to pay those bills. Your children do not need to drain their savings account, use their credit cards, or visit the payday loan store.
Funeral homes process bodies. Trust companies handle money. This is often a long-term care issue so these burial trusts are available without fees from The Long Term Care Guy here in Green Bay.
View the 4.6 minute video on this at the bottom of our home page (just scroll to the bottom). www.TheLongTermCareGuy.com Then call us at (920) 884-3030 to learn more.
PS: If you are spending down to Medicaid you know you cannot give money away with one exception – you can fund these for your children and even their spouses, and Medicaid rules allow this. Who would you rather leave money to, Medicaid, or your family?
Don’t get Burned By These 5 Common Mistakes in Long-Term Care Planning
Don’t get Burned By These 5 Common Mistakes in Long-Term Care Planning.
When should the spouse at home sell the house?
Let’s say the at-home spouse does not want the too-big, ailing, inconveniently located, etc. house after the other spouse enters a LTC facility. Assume they may be spending down to Medicaid impoverishment. The home is an exempt asset for the at-home spouse. If sold BEFORE the other spouse is on Medicaid the dollars go into the non-exempt column and may well be lost.
When to set up irrevocable burial trusts
Similar to above but for a different reason. To gain entry to a LTC facility when already eligible for Medicaid is difficult as facilities lose money on Medicaid reimbursement (and rapidly getting worse). The more money you have at entry, and thus the longer you can pay for care, the better chance a nice one will accept you. Once in (without signing that you will leave when out of funds) they cannot evict you just for turning to Medicaid. Thus setting money aside in an irrevocable burial trust for them and their children and their children’s spouses (yes, you can do this) before entering a facility may harm the client.
Saving money by paying directly to a caregiver
Yes, this may be much less expensive when not done through an actual caregiving company, but without a signed, dated, and notarized copy of the employment agreement in place before care starts, if Medicaid is later needed – every payment will be considered a gift. This will disqualify you from later receiving Medicaid when funds run out.
Adult children who list (elderly) parents as beneficiary of their life insurance
Adults who have no children to leave things to, often list their parents as beneficiary of life insurance and more. If those parents are on Medicaid, or spending down to Medicaid at time of death, that inheritance may go directly back to the state of Wisconsin to repay Medicaid for the care it paid for. Best to consult an attorney to set up a way for such assets to help, not miss your parents.
Medicaid does not honor prenuptial agreements
If you are older and considering a first, second, (or more) marriage, do not rely on a prenuptial agreement to protect your assets for your children. Medicaid does not honor them. Thus if your new spouse has a stroke moments after signing the marriage license, all of your assets are going to be available to pay for the other’s long-term care costs.
If you have questions about what happens when long-term care is needed, what will happen to your things, how to protect some of your assets from these costs, or how to prepare for something that HHS says will happen to 70% of us upon reaching age 65, call TheLongTermCareGuy.com at (920) 884-3030 and let’s plan appropriately. We can save you a LOT of money!
When A Loved One Needs Care
When A Loved One Needs Care
Sometimes you know the time is approaching, and other times the hospital calls and says discharge is tomorrow and they cannot return home by themselves. Scary business.
No matter how much time you have to prepare and choose a provider for home care or facility care, it is going to be expensive. Most people run out of funds and end up on a government program called Medicaid. Medicaid is a payer of last resort and they check to be sure you are completely out of funds before they take over the bills.
A single person must spend down everything, car, home, checking, savings, IRA, 401k, CD’s, investments, etc. until there is less than $2000 remaining before Medicaid will take over the bills. You must also cash in life insurance as well to receive Medicaid.
So who will pay for the funeral? Your heirs will pass the hat to pay this bill instead of receiving anything left over at death. Sad, but true. There is one strategy left by Medicaid though, and fortunately there is no cost to make use of it.
Medicaid will allow you to set aside up to $15,000 for funeral expenses if this money is put into an irrevocable burial trust account. That means the money can only be used for funeral expenses. If you do not do move some of your money to an account like this before it is gone – spent for care, your heirs will be on the hook for your funeral bill.
Married people get a bit of a reprieve. The at-home spouse can retain use of the house, one car, and some savings and income (a single person only gets a $45/month allowance from their Social Security check). The at-home spouse gets to use these things until death, when they all go back to the state of Wisconsin to repay Medicaid for what they spent on the other spouse’s care. Your children will likely get nothing.
Both of these problems can be fixed with the irrevocable burial trust. It is simply a bank account with a trust company that you transfer some of your money to before it is all gone. Medicaid allows you to keep this account and use the money to pay for your funeral expenses. The account earns interest, just like your bank pays now. So it is a do this or lose everything situation. Medicaid typically does not offer up this information to you. If you do not know about this, you lose.
You can also set up these trusts (no more than $15,000 each) for each of your children and each of their spouses as well.
This gives you the chance to choose between spending all the money on care, or, moving some to your family. Where do you want to leave your things to?
You can see a short video on how this works on the home page of my website, www.TheLongTermCareGuy.com Scroll all the way to the bottom of the page and you will see the video. Then call us at (920) 884-3030 to learn more and take care of this. Helping you take care of long-term care situations is all we do. Family meetings happen here all the time and there is no cost to advise and help you prepare.
Are You Wondering About Your Current Long-Term Care Insurance Policy?
Are You Wondering About Your Current Long-Term Care Insurance Policy?
What exactly does my Long-Term Care insurance policy cover?
Is the benefit still the same or has it grown to keep up with increasing costs? Does it cover home care, or assisted living, or nursing homes, or all three? Did the price increase? Can I lower or shorten my benefits? Which is better?
At TheLongTermCareGuy.com we get these questions quite often. It does not matter when or from whom you purchased your policy, we have probably seen ones just like yours, and are happy to review it with you. We’ve been doing this for 24 years.
If you have had a price increase we can review and see if the benefit might be more than you need and how best to reduce it (and the price). If you are not sure what it covers and how the benefits dovetail with your current income and assets, we will be happy to review and explain.
If you have inherited money, or your investments have done quite well and now the yield (interest) they earn is substantially more than planned on years ago, perhaps you do not need as large a benefit from insurance. Or if your fortunes have gone the other way, we can offer suggestions to make the benefits last longer.
We have ways to help people of any economic situation, from poor as a church mouse, to very wealthy, from very healthy to people already in care and sometimes even already on Medicaid. There are different strategies for everyone.
If you have been declined for long-term care insurance in the past, it does not mean you cannot get it. It only means the agent did not have enough options for you. If you are truly unable to get this coverage, it is still possible to protect some of your money from the costs of long-term care. We do all of this.
Give us a call at (920) 884-3030, we are here to help.
Go Broke without Long-Term Care Insurance
Bob and Tom are twin brothers. They have done well in life and saved for retirement in an IRA. They each have $1,000,000, they are both married, and are now age 80. Oh, and Tom bought long-term care insurance at age 60, a benefit of $60/day for 10 years including 5% compound inflation on that benefit. Both Bob and Tom have just had a stroke. They each need an assisted living facility costing $5500/month or $66,000/year – increasing at 5% annually. Will Bob Go Broke without Long-Term Care Insurance?
Bob will pay out of pocket $1,000,000 pocket growing at 3% for Long-Term Care and he will Go Broke without Long-Term Care Insurance!
Bob’s Story
Year one he takes out $66,000 leaving $934,000, but income taxes are due so he withdraws $81,500 to receive $66,000 and leaving $918,500 to grow back at 3% to $946,055 at year end.
Year 2 he starts with $946,055 and after income taxes (15% fed & 4% state) and care he has $860,455 which grows to $886,268
Year 3 he ends up with $820,156 after taxes, care, and growth
Year 4 he ends up with $747,631 after taxes, care, and growth
Year 5 he ends up with $668,089 after taxes, care, and growth
Year 6 he ends up with $581,011 after taxes, care, and growth
Year 6 he ends up with $485,965 after taxes, care, and growth
Year 7 he ends up with $382,505 after taxes, care, and growth
Year 8 he ends up with $269,865 after taxes, care, and growth
Year 9 he ends up with $151,682 after taxes, care, and growth
Actually he can apply for Medicaid (welfare) in year 9
Year 10 he ends up with $18,882 after taxes, care, and growth
Will Bob Go Broke without Long-Term Care Insurance after his Stroke?
Bob is broke and burned through $1,000,000 paying for Long-Term Care! Don’t be like Bob!
Tom keeps his $1,000,000 intact thanks to Long-Term Care Insurance! And it cost Tom only $2960/year for the tax-deductible premium!
Remember Tom?
Tom bought long-term care insurance for he and his wife back when they were only 60 years old!
It cost Tom only $2960/year for the tax-deductible premium for Long-Term Care Insurance!
It started out at $60/day benefit ($1800/month) but with it’s built in 5% compound inflation the benefit by age 80 had grown to $159/day ($4770/month). It continues to get bigger every year by 5% of last year’s benefit.
Tom is now on claim, collecting from this insurance so he pays no more premium ($2960/year).
Tom collects 3% from his IRA and pays 15% fed & 4% state taxes, giving him $24,300/year or $2025/month.
His $2025/month income + $4770/month insurance benefit pays for his long-term care. The insurance benefit gets larger every year by 5% to keep up with increasing costs of care.
Tom keeps his $1,000,000 intact and does not go broke, does not gamble his $1,000,000 away by not buying Long-Term Care Insurance! Be like Tom!
Financial planners suggest this will probably work out even better than this simple comparison shows.
If you do not have $1,000,000 in savings, you need long-term care insurance even more.