The Business of Families

Long Term Care and the impact of role-reversal

By Maria Sarci

Ms. Sarci is Vice President Long Term Care with Ash Brokerage, in Red Bank, New Jersey. She can be reached at [email protected]

The weeks leading up to the holiday season are often the busiest for those of us in the long-term care planning space. We realize that clients will be gathering with their families to catch up, share memories and discuss family business. But, some of those families would be wise to use the opportunity to address the issue of long-term care for a loved one. Often a long-term care event is unexpected and many people are caught unprepared for next steps.

Having worked with many families over the years, there have been many touching stories shared with me about that moment of impact; stories about adult children being forced to take time off from work, or time away from their own children, to care for a parent in need.

The Impact of Role Reversal

The overwhelming impact of the role reversal of caring for mom or dad is greater than anyone can imagine and not something they plan on, but it has been a harsh reality for many.  I speak from personal experience about watching a loved one in a care event and suffering the absolute despair of knowing I could not provide the kind of help they needed.  A care event impacts … families, across generations, can be affected by its ripple effect on an emotional level.

Having a plan in place is key for every client we serve.  If you are someone who’s unable to grasp an impact until you have experienced it, you are not alone. Many people are unprepared and unaware of the impact potential. It is often unfelt until it is too late, until there has been a care event and the realization sets in … no one is prepared.

As financial professionals, our responsibility of helping clients prepare for retirement is huge. We owe it to our clients and their families to help them through the unexpected. … to help them to prepare … to be ready to face whatever life brings … to be there when they need us most. How? By creating awareness, we create confidence. Decisions made today prepare you for a better future tomorrow. We can eliminate the uncertainty by showing them how.

Clients and their families need to understand the facts. There is no right answer in the changing economic times, there are only informed decisions. The statistics are incredible: with more than 39 million people over the age of 65, less than 1 percent purchased private long-term care insurance in 2011. Less than 1 percent! With statistics like that, we cannot say we have helped enough of our clients. Our time is now.

Care planning is not as complicated as some make it out to be. It’s a matter of knowing the client and asking the right questions:

  1. What are the key objectives for the client in this process?
  2. Why is the client looking to plan now?
    1. The younger the client, the healthier the odds are for insurability; engaging a client in a care-planning discussion can never happen too soon. Has the client had a family member or friend who needed care?
    2. What is their risk tolerance to taking on some, or all, of the care event expense?
      1. Some coverage is better than no coverage.  Some coverage can take the sting out of anticipated finances, even if every dollar of care need isn’t covered.
      2. What perception do they have about how care will be provided if they are not insured?
        1. Most clients think our government will provide care. Medicare/Medicaid are designed for the short term or financially destitute, respectively, and are not permanent solutions. The CLASS Act has officially been shelved. The only choice is to shift the risk or meet it head on. Whom does our client rely on? Family members?
        2. What funding solutions are available to pay those expenses?
          1. Identifying funding sources for care insurance and comparing that cost to the out-of-pocket expense has been extremely helpful in a client’s decision to take next steps with private insurance. The myth that long-term care is too expensive can easily be addressed when the client has the proper information about cost of coverage vs. paying 100 percent of care expenses out-of-pocket.

One Size Does Not Fit All

Insurance solutions have evolved to include a number of different concepts. The traditional pay-as-you-go insurance is no longer the only option; products that link life insurance or annuities are ‘must reviews’ for clients who have said no to the more traditional planning solutions

Just as each client is unique, so are the solutions available to consumers today. One size does not fit all. The answers to these questions will help guide the customized solution that fits your client. I have always found it to be of tremendous help tailor the plan design so the client gets the precise coverage they expect.  Planning doesn’t need to cover every last dollar of expense; however, clients need to understand some is better than none.

Insurance solutions have evolved to include a number of different concepts.  The traditional pay-as-you-go insurance is no longer the only option; products that link life insurance or annuities are ‘must reviews’ for clients who have said no to the more traditional planning solutions. They can be a wonderful fit for the client who seeks a promised benefit, care event or not.

In my opinion, one of the greatest yet unrecognized positive aspects of care insurance is the care coordination benefit that supports the insured and their family. This benefit helps determine care needs and provides valuable information on local resources available to the insured.  It’s reassurance of a starting point when a person we love needs help the most; emotionally, that impact can be greater than the financial toll. I have personally felt and have been told by clients over the years that the feeling of peace of mind is priceless. Helplessness, despair, anger and confusion can easily be replaced by confidence, hope and clarity when care professionals are available to guide the family through the hardest of times.

2012 was a year of adjustment in the LTC industry; some insurance carriers exited the market altogether, benefit options changed and premiums increased. And yet, the need for care insurance has never been greater. All indications are that our societal obligation to help people live with dignity and choice has never been greater; an aging population with people living longer and medicine advancing. Instead of fear or paralysis in decision-making, we can focus on the positives that proper care insurance planning brings; financial and emotional support, choice in care providers and freedom from worry for the insured, their family members and you, as their financial professional and client advocate.  Today’s consumer seeks the education of all available options … we owe it to them to deliver.

We do not have a crystal ball; we cannot see into our future … but we can prepare. We can anticipate and we can educate.  We can be advocates for our clients and their families. Are you prepared to have the care planning discussion with your clients?

By understanding the client’s objectives, listening to the values most important to them and taking them through the ‘what if’ scenario, you can help them in this most important decision.  It really can be that simple. Knowledge is power.

How will you respond when the call comes from a member of your client’s family about a care event? The answer can go two ways: 1) “We are prepared; here is the action plan we put in place,” or 2) “”We will need to discuss which assets need to be liquidated and how long the money will last.” Which response feels right to you?