Critical Conversations About Financing Long-Term Care

Marlene S. Stum, PhD

University of Minnesota

mstum@che.umn.edu

Plan for later life events Changing health and independence

--including long term care Act

Identify and communicate

strategies to manage the

risk of long-term care

“We didn’t think it would turn out this way”

“We’ve never seen or talked to anybody about financing . . .we would have to get to a point where it’s a concern. Sometimes I think it is better to take your chances, hoping that you die before you get there. What we thought we’d do is go the way we are until we run out of money and then figure out what to do

--Husband with Parkinson’s and caregiver wife

No one plans to have their health changeor wants to admit they might need long term care someday.

“We planned for a shorter and healthier retirement”

“I never expected to live this long!”

“We didn’t think it would turn out this way”

Financing Long Term CareDilemmas and Decisions Major gap in financial planning throughout

the lifecycle Critical gap in later life financial security Few have done any planning Won’t admit we might personally be

affected

Financing Long Term CareDilemmas and Decisions

Think we know more than we do! Significant gaps in perceived versus actual

knowledge of 45+ year olds and baby boomers Don’t understand risk, costs, financing options Believe we have coverage when we probably

do not (existing insurance/government sources) Gaps in knowledge makes it tough to plan

for long-term care!

Existing Educational Resources

Misrepresent what “long term care” involves

Are developed by sources with a self-interest in the message

Are too complex, overwhelming, and technical

Focus on one private or public financing alternative

Existing Educational Resources

Focus on solutions without helping consumers understand the problem

Ignore complex family values and goals Ignore long-term care risk as part of

retirement planning Too general or too specific given

differences in state policies/practices

Opportunities for Extension

Provide knowledge-based messages Offer objectivity and credibility in messages Present holistic picture of issue/decisions Offer “plain language” tools Focus on individual and family decision making

processes Address legal, financial, and social/emotional

dimensions of the decision situation

Opportunities for Extension

Collaborate with credible partners Area Agencies on Aging Health Insurance Counseling Network/SHIP Human resources/benefit departments Providers of specific alternatives

Build family decision-making research base Train other professionals and providers

Challenges for Extension

There are no “answers”or simple formulas “Just tell me what to do”

A changing and complex moving target Finding teachable moments Marketing the topic

Baby boomers and younger audiences Integrating with retirement and risk

management planning

Challenges for Extension

Establishing appropriate boundaries As Extension

Depth and detail decisions Focus on one alternative only? NO

Interpreting rules--eligibility/assessment? NO Personal financial planning role? NO Avoid duplication--who is doing what in your state?

As Educators Conflicting personal values and attitudes Framing problem, alternatives, solutions Sending implicit messages

Challenges for Extension

Need for state specific additions Medical Assistance/Medicaid Long-term Care Insurance regulation Long-term care language/options State/local financing options/waiver

programs/services Variation in long term care costs and

availability

A growing family economics research-base helps understand: What decisions are being made (outcomes)

Long-term care insurance (individual/group) Medicaid estate planning Utilizing personal resources Avoidance/immobilization

How decisions are being made (processes) What factors are influencing decisions

Individual, Family, Macro-environmental

Planning barriers/motivators

Critical Conversations About Financing Long-term Care Recognize your risk of long term care Understand possible costs and potential

financial implications Sort out expectations and goals Understand financing alternatives and

consequences Why plan now, before a crisis

Long-Term Care

Help with daily living activities and remaining independent Eating, bathing, dressing, transferring, walking,

toileting, taking medications, shopping Wide range of personal, social and medical

services Provided in a variety of settings: in-home,

community, skilled nursing facility

Most who need long term care

Live in their own homes Receive unpaid care provided by family/friends Overestimate the chance of needing nursing home

stay Underestimate need for in-home and community

services Are unprepared for needs increasing gradually

overtime Are unfamiliar with new and changing options

Who’s at risk?

The long-term care population is diverse in age and level of disability.

A risk across the lifecycle 57% over age of 65 40% below 65 years of age 3% are children

Who’s most at risk?

Individuals 85 years and older Need help with more activities of daily living Experience increased rates of home care and

nursing home use Individuals with chronic health problems Individuals who lack social support and

unpaid caregivers Women

Prevalence of Long Term Care Need

Age: 65-74 In Community: 11% In Institution: 1%

Age 75-84 In Community: 22% In Institution: 5%

Age 85+ In Community: 49% In Institution: 21%

What are the risks?

After age 65, almost 3/4ths will need some home care and almost half will spend some time in a nursing home.

Average lifetime home care use is just over 200 visits.

Average lifetime nursing home use per person is one year.

Potential Costs: Underestimated

In-home care: Degree of need and health status Type of service used Home health aide: $80/hour

Community services Adult day care: $60/day Assisted living

Skilled Nursing Home Care One month average in U.S.-- $5000 ($60,000/year)

Northeast and West highest: CT-$223/day; CO--$133/day; Arkansas--$79/day

Sort out Later Life Financial Goals and Expectations Multiple, complex and competing goals are behind

later life financial decisions There are no “right” goals--beware of assumptions Understanding the meaning of a goal is essential

(e.g. what does “control” mean?) Make unwritten and unspoken goals explicit Goals provide direction for selecting financial

alternatives

If I would need long term care, I would expect to: Remain financially independent Maintain control of my finances Keep my financial affairs private Involve family members (care/financially) Utilize government services Leave an inheritance

“Family” will not be one voice Goals can be a common source of conflict

Between spouses/partners Across the generations

Help elders and family members prioritize competing goals

Identify where there is agreement and/or disagreement

Understand Financing Alternatives and Consequences Identify the range of private and public

alternatives Personal resources Private insurance Government options

Help understand factors that can and/or should affect which alternative to select

Lead to specific credible resources

Understand Financing Alternatives and Consequences There is no one financial answer or solution

Consider a combination of alternatives Later life financial goals should influence

which alternatives are most appropriate Options and choices typically decrease with

age and increased risk What was may not longer be . . .change is a

given.

Who does pay for long term care?A patchwork of public and private sources

Income and life savings of elders Unpaid family caregivers Medical Assistance/Medicaid for low-income Long-term care insurance NOT existing health insurance policies, Medicare

Supplement policies Role of Medicare blurred with expansion into

home health care coverage

Critical Conversations About Financing Long-term Care Facilitator’s Guide

Content and suggested activities

PowerPoint presentation Participant handouts

Myths/Facts Quiz Protect Your Later Life Financial Health fact sheet Critical Conversations About Later Life Financial Goals

worksheets (versions for older generation and adult children) Financing Long-term Care Alternatives and Considerations

Evaluation tools

Impact Evaluation

Improved overall financial knowledge and literacy: Risk Costs Alternatives

Changed behaviors and practices: Gathered information Assessed situation Discussed with others Selected financial alternatives and strategies

Critical Conversations About Financing Long-term Care Access curriculum after April 25th Go to www@reeusda.gov/financialsecurity Click on “educator” bar Go to Programs/Resources Select “Critical Conversations curriculum” Follow guidelines for making state-specific Identify and critique existing state-specific

resources before using

Coming Fall 2002

Web-based resource providing anytime access to educational tools up-to-date unbiased plain-language practical interactive

Website Critique

Examined a random sample of first 100 sites found using top seven search engines and financing long term care key words

Majority of sites: macro-policy level decision making government related sites (regulating, implementing)

102 of 700 sites addressed how to finance long term care and focused on helping individuals make financing decisions.

62 sponsored by a company 31 directly selling long term care insurance

Welcome to

Financing Long-term CareA Resource Center for Families

The goals of this site: Improve what people know about long term

care as a family financial issue. Help families who are planning ahead make

more informed decisions. Help families take action before a crisis.

Welcome to

Financing Long-term CareA Resource Center for Families

What’s different about this site? We are not selling financial or long term care

products or services We offer unbiased, research-based information

for educational purposes We understand long term care financial

decisions are about more than money!

Welcome to

Financing Long-term CareA Resource Center for Families

The Basics

Decision-Making Toolkit

Educator Toolkit

Who We Are

Welcome to

Financing Long-term CareA Resource Center for Families

The Basics: An introduction to financing long term care and later life financial security

Why Plan Now? Are You Prepared? Know Your Financing

Options Creating Your Plan Carrying Out

Decisions

Welcome to

Financing Long-term CareA Resource Center for Families

Know Your Financing Options

Conversation Starters Fact Sheets Common Myths/Facts Planning Tools Family Experiences

Welcome to

Financing Long-term CareA Resource Center for Families

Decision-Making Toolkit: A variety of resources to help make more informed decisions.

Conversation Starters Fact Sheets Common Myths Planning Tools Family Experiences

Welcome to

Financing Long-term CareA Resource Center for Families

Fact Sheets Creating Your Plan Why can’t we talk? What are common later

life financial goals? Factors to consider

Welcome to

Financing Long-term CareA Resource Center for Families

Planning Tools: Worksheets, quizzes, and interactive planning guides to help you examine your own situation.

Are you at risk of needing long term care?

Who should be responsibility for paying?

What are your later life financial goals?

Couple decision-making

Educator Toolkit: Proven resources to help teach others about financing long term care decision making.

Teaching Outlines Case Studies Participant handouts PowerPoint

Presentations Recommended reading Relevant research

Welcome to

Financing Long-term CareA Resource Center for Families

Welcome to

Financing Long-term CareA Resource Center for Families

The Basics

Decision-Making Toolkit

Educator Toolkit

Who We Are

•Develop State-specific Links•On-line courses/workshops•A clearinghouse (for research)

Future Additions?

Critical Conversations About Financing Long-term Care Recognize your risk of long term care Understand possible costs and potential

financial implications Sort out expectations and goals Understand financing alternatives and

consequences Why plan now, before a crisis

Suggested Reading: Visit the annotated bibliography at www.reeusda.gov/financialsecurity/

The following articles by Stum, M. focus on financing long-term care and family decision making “Financing long-term care: Examining decision outcomes and systemic

influences from the perspective of family members. Journal of Family and Economic Issues (2001).

“To buy or not to buy: Examining long-term care insurance decision-making from the employee perspective” (Dec. 2001). Executive summary at http://fsos.che.umn.edu/stum/lresearch/ltc-dm/description.html

“Later life financial security: Examining the meaning attributed to goals when coping with long-term care” Financial Counseling and Planning (2000)

“The meaning and experience of spending down to Medicaid in later life” Advancing the Consumer Interest (1998)

Plan for later life events Changing health and independence

--including long term care Act

Identify and communicate

strategies to manage the

risk of long-term care