Broker Check

Please Mind the Gap

September 21, 2023

Our life span refers to the number of years we may live. Our health span refers to the number of years we may spend in good health, free from the chronic diseases and the disabilities of aging. For many of us, there’s a gap between our lifespan and our heath span. For some of us this gap may be many years. The need for long-term care services may occur in and even fill this gap.

For more than 25 years, I've discussed protecting against the risk of a long-term care event with clients. 25 years ago, the conversations were much tougher than they are today. They tended to result in a range of emotional and denial responses such as: “My family will take care of me”; or “I’ll call Dr. Kavorkian”; or “It’s not going to happen to me.”

25 years ago, long-term care was not a subject that was understood by financial professionals as well as it is today; it was not as well defined in the regulations as it is today and there were not a lot of creative insurance solutions available to address the issue.

Today, we understand that we need to address the risk of long-term care and the impact such an event might have on our lives and the lives of family members. I believe there are three basic reasons for this:

  1. The traditional caregivers that were around 25+ years ago may not be as present and available today. The multigenerational homes with mom, dad, the kids and grandparents may not be as common as they once were. Today, many of our “children” are carving out lives and careers for themselves in geographically disparate locations. Those lives and careers generally don’t include becoming a family caregiver. Finally, with increasing age comes increasing frailty. As each of us age, so do our spouses. Even though we may plan on relying on our spouses and life partners to help care for us, they may not be physically able to do so.
  2. The second reason is the high likelihood that we may experience a long-term care event. Someone turning 65 as of 2/18/2020, may have nearly a 70% chance of needing some kind of long-term care services. Although almost 1/3 of the 65-year-olds may not need any care, about 20% may need care for more than five years1. We readily address potential liability from auto accidents and potential property damage to our homes from flood and fire - risks which arguably may be less likely to occur than a long-term care service need.
  3. Last, but not necessarily least, is the cost of providing care. In the event a long-term care need arises, the cost of providing assistance in the home, in an assisted living or in a nursing home facility may be beyond the financial ability of most of us. Genworth’s 2021 cost of care survey estimated median costs nationally at about $60,000 annually for a home health aide, about $55,000 annually for an assisted living facility and about $95,000 annually for a nursing home2. These annual costs can vary widely from state to state and even within each state.

Perhaps the first line of defense in protecting against the financial risk of a long-term care event is arranging funding for some long-term care services in advance at a discount.

Yes, I am talking about long-term care insurance. Long-term care insurance is generally more available at palatable premiums when you are young and healthy, than when you are older with some medical problems. Youth and health are assets and purchasing insurance when you are young and healthy is one way to monetize these assets.

Unlike 25 years ago, I believe we are now more aware of the growing prevalence of long-term care needs. Also, unlike 25 years ago, there are today a broader variety of great insurance products that can be molded to a specific situation and coordinated with the rest of your financial planning. However, these products can be complicated and they do require some education and due diligence prior to their purchase. 

Finally, what if you do not qualify for long-term care insurance, either medically or financially? What are your options then? 

Our advice: “Mind the Gap,” monetize your youth and health, and address the long-term care issue proactively, rather than reactively. Contact us to arrange a complimentary consultation about planning for long-term care. Remember, we are here to help.