Cross Selling: Long-Term Care Solutions For Clients

By Phil Calhoun

As consequence of technology and today’s advanced health care systems, many people are living to age 80, 90, and beyond. This reflects the truth behind the marketing phrase “60 is the new 40.” Now, with ongoing scientific research beginning to offer hope of truly understanding the genetics of aging, we may soon see additional increases in life expectancy. One consequence of longer life expectancies, however, is that individuals are more likely to eventually require some type of long-term care assistance.

What Is Long-Term Care?

Essentially, it refers to the wide range of services and care that individuals need when they are unable to care for themselves as a result of a chronic (long-term) medical condition. The need for long-term care can arise at any age from the effects of an illness or injury, and it can also arise simply because of the normal effects of aging.

The likelihood of chronic illness—and the need for long-term care—increases with age.

In fact, the chance of a person who is currently age 65 eventually being confined to a nursing home at some point in the future is now one in three. Every day, thousands of people in this country turn 65, and more than 5 million are currently aged 85 or older. According to the U.S.

Census Bureau, the age 85 and older population group is the fastest growing segment of the U.S. population, and one out of four people in this age group today lives in a nursing home. Approximately two-thirds of nursing home residents are women.

The programs that many believe cover chronic long-term care events are not necessarily designed for this purpose.

Medicare and Medicare supplement insurance, for example, primarily pay for the costs associated with acute (as opposed to chronic) medical conditions and provide very limited coverage for long-term care. And, while Medi-Cal (Medicaid) does provide long-term care benefits for many senior citizens, individuals must first exhaust most of their income and assets to qualify. It is no secret that many seniors are spending a growing proportion of their income on out-of-pocket costs for health care and long-term care services at home due to limited or no coverage of these costs by insurance. And, once they have depleted their assets paying for home health care or assisted living facility care, many people have little choice but to move into Medi-Cal/Medicaid facilities.

The problem of paying for long-term care is made even more difficult by the ever-increasing cost of services. Currently, the median cost of a semi-private room in a nursing facility in California is $342 per day or $124,688 per year. Even the cost of nonmedical, homemaker services is significant: seniors can expect to pay $34 per hour for such care.

What Are Americans' Concerns For Their Futures?

A recent study revealed:

• Retirement savings and financial well-being are an important part of supporting overall health and well-being.

• Competing priorities and limited financial resources make it difficult to balance multiple goals. As a result, 21 percent report that this impact is going to delay their retirement by four or more years.

• Nearly half of respondents self-manage their retirement savings, yet only 13 percent correctly answered all of the financial literacy questions.

• Financial literacy can have a meaningful impact on the ability to navigate competing priorities.

• Those without a retirement plan report feeling less impacted by competing financial priorities than those with a plan.

• Emergency savings was the top choice for retirement planning, evidencing the desire to receive help navigating immediate financial challenges.

• Forty-two percent of respondents experienced a hardship that caused them to stop saving for retirement.

• Fifty-six percent of working respondents have less than three months of income saved for emergencies.

• Seventy-eight percent of working respondents with a financial plan report their retirement savings as on track or ahead of schedule, compared to 34 percent of those without a plan.

• Preparing for emergencies can prevent early withdrawals from retirement savings.

Further:

• Someone turning age 65 today has almost a 70 percent chance of needing some type of long-term care services and supports in their remaining years.

• Women need care longer (3.7 years) than men (2.2 years).

• One-third of today's 65-year-olds may never need long-term care support, but 20 percent will need it for longer than five years.

The average adult age 65 and older receives long-term care services of some kind for approximately three years, and 69 percent of people use some type of care.

When someone needs long-term care, a wide circle of primary caregivers, secondary caregivers, and other family, friends, and community members often provide the care and are impacted by these responsibilities.

In addition, few people correctly anticipate the total potential cost of health care in retirement, which is estimated at $315,000 for a married couple.

Finally, approximately one-third of early retirees who claim Social Security at age 62 do so to help pay for health care expenses until they are eligible for Medicare coverage at age 65.

As these facts show, consumers are concerned about long-term care issues and are looking for credible guidance from insurance agents, financial advisors, and other sources.

Long-term care insurance is a category of coverage designed to address these growing problems.

Obviously, the ideal time to purchase long-term care insurance would be the day before a person needs it, but as we know, life does not work that way.

A recent study by the Life Insurance Marketing Research Association indicated that the number one reason people purchase long-term care insurance is for asset and income protection in retirement.

Policy holders also obtain peace of mind knowing that they will preserve their assets and will be able to maintain their independence by obtaining such coverage.

Given the marketplace for long term care insurance the age range to look to secure coverage is from age 50 to 65 as premiums increase with age and underwriting can be a concern as we age.

Life and health insurance professionals can add to their client check list to remember to ask about LTC and educate them on the expenses. Work with a LTC agency or expert to bring solutions to clients. Many solutions do exist for CA clients.

Learn more: https://partner.buddyins.com/calbrokerltcigroup

Phil Calhoun is the owner and publisher of California Broker Media, and he owns Integrity Advisors, a health insurance agency. Phil started Commission.Solutions to provide coaching for health insurance professionals on how to protect, grow and sell health commissions. Phil is an active member of several insurance associations including the California Association of Health Insurance Professionals (CAHIP) and local chapters in Orange County, Los Angeles, San Diego and Inland Empire Health Insurance Professionals. He serves on board for the Exit Planning Insitute.

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Phil@commissions.solutions 714-664-0311