LTC Planning in a COVID World: What's Changed & Why It's Essential

Six months. It doesn’t seem like a long time, until you’re unexpectedly locked down, prohibited from seeing your family and friends, in a care facility that’s now a potential COVID hotspot.

Imagine you’re there but you didn’t want to be in the facility in the first place… you wanted to receive the specialized care you needed at home, but your family thought it was best at the time. Safer, at the time. The most feasible option at the time.

The raw truth is that that this scenario has already played out, for someone’s mom, someone’s dad, grandma, grandpa, great uncle Todd, or cousin Denise. And it was devasting, not only because the separation, the loneliness, and the loss, but also because it didn’t necessarily have to be this way, if only some sort of plan were in place in the first place.

In Pennsylvania, the state government banned visitation at nursing homes for six months over the course of 2020, during the global COVID-19 pandemic, due to the virus’ alarmingly high morbidity, mortality, and infection rate at long-term care facilities. Other states saw similar restrictions put in place. Whether those lockdowns were necessary or not, we’re not here to argue; they happened, and who’s to say they couldn’t happen again? We are here to say that there’s a way to make sure your clients are never put in this all-too-real situation — and it starts with you… and long-term care planning.

Home ‘Safe’ Home?

In a 2016 survey, 77 percent of individuals indicated they would like to receive long-term care in their home, and as a result of the COVID crisis, we expect to see even more people prefer this form of care. There’s a real fear, and quite honestly, chance, associated with getting and even dying from COVID at a nursing or care facility. According to The New York Times, 42 percent of all COVID-19 deaths tie back to nursing homes and other long-term care settings. And if a resident is lucky enough not to contract the virus, who’s to say the effects of isolation won’t get to them, when whether or not they can see their loved ones or neighbors can change with some sneezes or coughs?

Forty-two percent of all COVID-19 deaths are associated with nursing homes and other long-term care settings.

Don’t get us wrong. Long-term care facilities are not bad. In fact, they are a valuable option in our society and COVID risks can be mitigated with proper protective equipment, cleaning, sanitation, and testing. However, these places are simply not where the majority of people have indicated they’d prefer to receive long-term care pre-COVID, and we believe that will remain true post-COVID.

You may think home health care is cheaper, so what’s the big deal? But, that isn’t always the case and it’s not always feasible for every family. It may seem financially doable for a client to just stay at home or move in with one of their children and receive care from them, but there are quite a few logistics that can easily get overlooked in the little time, if any, your clients spend thinking about how they may physically or mentally decline and need additional assistance in the future. For example, who will provide the care? Will the family member or friend be able to afford missing work or quitting their job to help? What if more skilled care is needed?

Long-term care facilities are not bad; they are simply not where the majority of people have indicated they’d prefer to receive long-term care pre-COVID, and we believe that will remain true post-COVID.

Did you know that 33 percent of people surveyed stated they didn’t have any plan for their own long-term care needs? Only 35 percent reported setting aside money to pay for ongoing living expenses. People must have a plan in place to ensure they can afford the care they want and may need, but they often don’t. This problem has existed since before the pandemic… it’s just a little more visible now.

Long-Term Care Planning and COVID

Helping people plan for how they’d afford an unexpected health care event has always been, and will always remain, one of insurance agents’ top priority; but too often, agents forget to help their clients think and plan for the long haul. Given the world’s current health situation, one could argue this is an even more vital piece of the puzzle than we’ve thought.

To be able to afford the care they may want and need, your clients will need a long-term care plan.

Health care costs have been on the rise, and they’re likely going to increase more sharply due to COVID. If home health care requests increase, we could see a supply and demand issue with home health aides, and the costs of these services going up. At long-term care facilities, the need for protective equipment, increased cleaning and testing, and private rooms will likely push up the rates. Both types of care — facility or home — are expensive and can drain retirement savings really fast. To be able to afford the care they may want and need, your clients will need a long-term care plan.

What does long-term care planning look like during COVID? Generally speaking, we’d say it looks pretty much the same as it did right before COVID, but with more of an emphasis on home health care and its accessibility and affordability. While not all long-term care planning involves long-term care insurance, this additional coverage can help provide many individuals with peace of mind over their future finances. It’s important to recognize that long-term care insurance carriers are adapting to COVID as well.

It’s important to recognize that long-term care insurance carriers are adapting to COVID as well.

How Are Long-Term Care Insurance Carriers Adapting to COVID?

  • Temporarily lowering the maximum issue ages on their LTCi products from 70 to 75 years old to around 64 to 65 years old (due to the higher risk of mortality from COVID for older individuals) — some carriers have already reverted to their pre-COVID requirements
  • Raising their combination product premiums (to make up for lower returns on their investments in the low-interest-rate environment) and/or requiring a single premium payment for certain policies
  • Delaying application processing for anyone with COVID-like symptoms or who has potentially been exposed to the virus
  • Taking preferred rates off the table for people exposed to COVID
  • Accepting electronic medical records and phone calls or video meetings in place of in-person interviews and exams

It’s still too early to tell how the virus will affect the long-term care industry over the next few years, but no matter the outcome, long-term care planning will remain a critical step for anyone wishing to secure their retirement savings and desired forms of future care.

How You Can Help

You educate your clients on and protect them from other health out-of-pocket costs. Why not help out with long-term care?

You don’t have to be an expert in long-term care insurance to make a difference to your clients’ ability to secure proper care and coverage. The role you play could really be as simple as starting a conversation and letting your clients know there are ways to help them afford any future care they may need and want — whether at home or in a reputable long-term care facility. You can then refer your client to a specialist, like the ones at Advisors Insurance Brokers, for further assistance and maybe even earn some commission from a resulting sale!

You educate your clients on and protect them from other health out-of-pocket costs. Why not help out with long-term care?

About 40 percent of people mistakenly believe Medicare will help pay for their long-term care needs as they age. If you sell a client a Medicare product and they find out they’re not covered for long-term care down the line, who do you think they’re going to blame for not clarifying that in the first place? Not themself, of course.

We’ve known for some time that around 70 percent of individuals turning age 65 will need some form of long-term care services or supports as they age, but still, too often advisors leave their clients without filling this coverage gap or making sure their clients even know it’s there. A prominent research group found that 44 percent of advisors report that 3 out of 4 their clients age 50 and older did not have a long-term care plan. Only about 21 percent report that over half of their clients age 50 and older had a plan for affording future long-term care expenses. But, get this: 81 percent of people with a long-term care plan say they’re highly satisfied with their advisor! That’s 13 percent more people than those who don’t have a long-term care plan and are satisfied with their advisor.

If you don’t consider long-term care planning with your clients essential, there’s no better time to start doing that than now!

If you don’t consider long-term care planning with your clients essential, there’s no better time to start doing that than now! We’ve covered different elements you can use to create a long-term care plan in the past — including traditional LTCi, hybrid life/LTC or annuity/LTC policies or riders, and 1035 exchanges. But if you don’t feel comfortable discussing long-term care options with your clients in depth, consider just mentioning the coverage gap and referring your client to a financial advisor who can help them prepare for that part of retirement. Your client will likely appreciate you going the extra mile, and you may just keep their loyalty for the long term.

● ● ●

The long-term care industry has adapted to people living longer than ever before, increased long-term care insurance persistency and claims, and the rising costs of health care. And it is, and will continue, adapting to COVID-19. The question is, will you?

Don’t forget: Ritter’s strategic partner, Advisors Insurance Brokers, offers agents the option to refer prospects/clients interested in long-term care insurance to AIB! If you refer someone to us, AIB will do the work for the sale and split the commissions with you 50/50. You get credit for the sale in your clients’ eyes and don’t have to learn new products. This is a great way to easily help your clients with their long-term care planning and earn a little extra income!*

*Agent must be affiliated with Ritter

Related Posts