The heartbreaking stories and high death toll at nursing homes due to the coronavirus disease (COVID-19) may be changing the public’s perception in ways that could signal higher demand for long-term care planning and products, especially solutions for at-home care.
“Sadly, the pandemic has kept people from seeing their parents and grandparents for months at care facilities, or from being by their side in their final hours,” said Nancy Buller, Associate Director of Life and Long-Term Care Solutions at Senior Market Sales®. “Insurance and financial planning professionals are in a unique position to help clients and future generations avoid similar scenarios, and the industry likely will continue to innovate to address the demands of the evolving long-term care market.”
Even before the coronavirus crisis, the insurance industry had created innovative products to address the challenges that forced some long-term care (LTC) insurance companies to cease offering traditional coverage – increased life expectancies, higher-than-anticipated numbers of claims and skyrocketing costs of care. Buller and other industry experts expect that innovation to continue and even accelerate in the post-pandemic market.
“There already are many solutions that make long-term care more accessible and palatable to consumers than in the past, but all too often planning professionals and consumers just aren’t aware of these innovations,” Buller said. “Agents who educate themselves on these recent innovations and pay attention moving forward will be positioned to address the increased consumer demand that may result from the pandemic.”
While the impact of the coronavirus pandemic on the long-term care insurance industry remains to be seen, some recent surveys reflect that it’s already affecting consumers’ mindsets.
In a recent survey conducted by Genworth, 73% of respondents said the pandemic has changed their attitude about planning for the future. Of respondents, 32% said they want to make sure they can afford to get any long-term care services they need in the setting of their choice.
The survey also revealed two other findings that may also drive the demand for long-term care planning:
As previous studies have shown, the majority of people would prefer to receive care for themselves in their own home – a survey by The Associated Press-NORC Center for Public Affairs Research puts that number at 77%.
But as Forbes writer Janet Novack contends, aging at home will be even more compelling following the pandemic. Baby boomers and their children may actively seeks ways to avoid the heartbreaking scenarios that are playing out on the news – quarantined seniors only able to see loved ones through the facilities’ outside windows, and the infected suffering and dying alone.
Unfortunately, consumers seeking at-home care will be facing higher costs.
The Genworth Cost of Care Survey 2019 revealed that the national median annual cost of in-home care is rising sharply compared with the costs of assisted living and nursing home care.
For in-home care in 2019, the national median annual cost of homemaker services, which includes assistance with "hands-off" tasks such as cooking, cleaning and running errands, was $51,480, according to the Genworth survey. The national median annual cost of a home health aide, which includes "hands-on" personal assistance with activities such as bathing, dressing and eating, was $52,624.
The costs of at-home care are starting to reflect the mismatch between the supply of care professionals and demand for at-home services as the population ages, Genworth’s Senior Brand Manager, Gordon Saunders, said in a press release.
And the overall economics of long-term care will worsen due to the pandemic, PBS reported. The price tag for living in a long-term care facility will go up, as expenses like Personal Protection Equipment, coronavirus tests and cleaning supplies and staff are on the rise. According to the Genworth Cost of Care Survey 2019, the national median annual cost for a semi-private room was $90,155. Some industry experts expect private rooms to become the post-pandemic norm. The survey reports that the national median annual cost of a private room in 2019 was $102,200.
Long-term care, whether in a facility or home, is a frequently misunderstood piece of retirement planning. Misperceptions that Medicare and Medicaid will pay for extended care and that LTC insurance is only for nursing home care contribute to both advisors and consumers failing to include it in retirement planning – a mistake that can cost clients their retirement savings and hurt their quality of life in their final days.
While Medicare pays for medically necessary care for acute care, such as doctor visits, drugs and hospital stays, it does not pay for most long-term care services. (It does pay for short stays in skilled nursing facilities when you meet several conditions.) Even the most comprehensive Medicare Supplement plans don’t pay for long-term care, although Medicare Advantage plans now cover certain long-term care services, such as home-delivered meals and grab bars for home bathrooms.
Most long-term care is not medical care – it’s help with basic personal tasks of everyday life, such as bathing, dressing and using the bathroom.
Medicaid, the federal program that pays for long-term care services, can pay for certain in-home services, but for a client to qualify, they must be impoverished, meaning they must have low income and few assets remaining. This leads people to pay out of pocket until they spend down their resources enough to qualify.
Long-term care insurance can help protect clients’ income and assets. It also can protect family members from the financial and emotional burden of caregiving.
LTC insurance covers the costs of care at home, in assisted living facilities and in nursing homes. It is not “nursing home insurance,” as some people tend to think. In fact, most long-term care insurance claims are for home care. According to the Association for Long-Term Care Insurance (AALTCI), more than half of individuals who filed a long-term care claim and also owned an LTC insurance policy in 2018 received care at home.
AALTCI’s Director Jesse Slome said on the group’s website that while consumers mistakenly associate LTC insurance with care in a nursing home setting, the 2018 survey of seven leading LTC insurance companies as well as other studies show that “most people use their policy to enable them to receive the care they want and need at home.”
Today’s polices – both traditional or hybrid LTC policies, which combine LTC coverage and life insurance benefits – typically include coverage for in-home care, assisted living facilities and nursing homes and are known as comprehensive LTC policies.
“Not everyone understands that you can exhaust an LTC policy at home and never get to other levels of care,” said Jackie Slaughter, Associate Director of LTC Relationships at SMS. “It is not mandatory you have to go through all the stages – it depends on the care you need.”
Traditional LTC products may be too expensive for some clients, but the new hybrid products are gaining favor. While sales of stand-alone traditional LTC policies continue to decline, consumers remain more interested in hybrid policies, including those that add LTC benefits to annuities. Affluent Americans, in particular, are attracted to new hybrid product designs that allow an unused LTC benefit to be paid out to heirs in a death benefit, guarantee that premium rates won’t increase and provide some of the original death benefit even if the LTC proceeds are fully tapped.
Despite a greater range of products being available today, long-term care planning is not about selling LTC insurance. While LTC insurance may be the solution for some clients, others may decide to self-fund, or rely on family member to provide care.
As an advisor, it’s important to educate clients, point out the risks of different scenarios, examine all solutions and suggest alternative solutions – especially if more clients or prospects will be turning to you for long-term planning following the pandemic.
When you work with SMS, you don’t have to be an LTC insurance expert to help clients plan for extended care. Because of SMS’ extensive experience in long-term care planning, you have access to a team of LTC insurance experts who work behind the scenes to find the best solutions for your clients. If you don’t currently sell LTC insurance, SMS can help you get contracted and certified, learn the basics, help with your first case and any cases in which you need help.
SMS’ “LTC Planning Kit” can help you establish a plan of care with clients, overcome common LTC objections and find the best solutions. It also includes printable worksheets that can be used while on appointments.
SMS has an easy-to-understand, consumer-facing booklet that explains LTC and different funding options. Give this to clients to start the LTC planning discussion. The booklet, “A Short Guide on Protecting Retirement With Long-Term Care Planning,” is available order from the LTC page of the SMS website.
When you’re ready to explore what solutions might help your clients fund their long-term care, use the SMS “LTC Planning Process” interview questions to start the process and the “LTC Financial Solutions Case Development Worksheet” to collect what the client wants to do, the funding source and health information. (You can always find these forms on the LTC page of the SMS website.)
Submit the case development worksheet to an SMS marketing consultant, who can then do the pre-underwriting to see which LTC insurance policies your clients could qualify for.
SMS also offers sales and product training, including case studies and presentation tips.
You can show clients how the need for long-term care could impact their finances. With SMS’ proprietary Income ArchiTech™ all-in-one planning tool, you simply enter client data, and the tool’s stress tests produce easy-to-understand charts illustrating the dramatic impact of LTC costs to client’s income in retirement. You can then propose different solutions and show how those can mitigate the risks – helping you find the best solution for each client.
The coronavirus crisis has touched everyone’s life in some way. Whether you want to reach more prospects or better serve your existing clients, you have a greater opportunity now to provide solutions. More people are aware of the demands of caregiving, the need for long-term care planning and the challenges of congregate living facilities in a post-pandemic world.
At a time when The New York Times is reporting that one-third of all coronavirus deaths are nursing home residents or workers, simply educating prospects and clients that nursing home care is not their only option may help ease their anxieties and open the conversation for long-term care planning. SMS can help you take it from there, working as a team with you to find the solution that works for each client.
If you would like to speak to an LTC expert at SMS, call 1.888.456.8884, option 4.