What Every Woman should know about Long-term Care
Why Women may especially be at risk
Longevity
On average, the difference between men and women’s life expectancies beyond age 65 is approximately 2½ years — with 55 percent of those women being single, divorced or widowed.
The longevity bonus women experience may create a greater risk for care. A look at who currently receives long-term care shows this clearly: More than two-thirds of the long-term care population in both nursing homes and residential communities are women.
Although the type of long-term care women receive will depend largely upon their needs, each comes with a different price tag. The reality is that the vast majority of adults (80 percent), ages 65 and older, who need long-term care are living in private homes, not in institutions.
Widows often encounter economic and lifestyle hardships that couples might not, including:
More likely to live alone (69 percent) with no one in their household to help with daily activities
Lower household Social Security income
Loss of pension benefits or reduced payouts to a surviving spouse Pew Research Center, http://www.pewsocialtrends.org/2016/02/18/1-gender-gap-in-share-of-older-adults-living-alone-narrows/, February 18, 2016
Who receives long-term care?
Women often need care for longer time periods than men
In fact, women typically need long-term care services for 1.5 years longer than men. The costs for an extra 18 months of care could add up to six figures, which means that long-term care expenses for women may be considerably higher.
U.S. Department of Health and Human Services, “How Much Care Will You Need,” LongTermCare.gov, https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
The cost of long-term care
Regardless of where you live in the country, the costs of long-term care are staggering and will likely continue to rise. Plus, the cycle of care is not linear, and it could quickly become overwhelming. Care might just as easily commence with the need for nursing home care as it could with an in-home health aid.
Annual costs of common long-term care services
Alzheimer’s disease and dementia
Women are more predisposed than men to develop Alzheimer’s disease, the most common form of dementia. In the United States, of the 5.2 million of those ages 65 or older with Alzheimer’s, 3.3 million are female. At ages 71 and above, 16 percent of women suffer from Alzheimer’s disease and other dementias, in comparison to 11 percent of men. Source “2016 Alzheimer’s Disease Facts And Figures,” alz.org, http://www.alz.org/facts/overview.asp, January 2017
Studies indicate that there are a number of factors at play that may increase the odds that women are more likely than men to develop Alzheimer’s disease, such as:
The fact that women outlive men – Age is the greatest risk factor for this disease.
Cardiovascular health in a female’s senior years – Since men have a higher incidence of death due to heart issues in middle age than women, men who survive beyond age 65 may have healthier cardiovascular systems and reduced risk of Alzheimer’s than women.
Genetics – Women may be more genetically predisposed to develop Alzheimer’s disease. alz.org, http://www.alz.org/facts/overview.asp, January 2017
Women as caregivers
Within their household, women are most likely to be the first, last, and most affected by a long-term care event. They tend to be the primary caregiver more often than men (75 percent) and dedicate as much as 50 percent more time providing care than males.14 On average, caregivers spend 24 hours a week caring for a loved one and nearly 1 in 4 provide 41 hours or more of care per week. Source: www.aarp.org/content/dam/aarp/ppi/2015/caregiving-in-the-united-states-2015-report-revised.pdf
Many times, American women are juggling the responsibility of caring for a family member and full-time employment. Today, 20 percent of women in the workforce are also family caregivers. The pressure of trying to maintain life balance while working and providing care may be even more significant for single women who may have to shoulder the burden alone. Source: https://www.caregiver.org/print/240
The sacrifice made by many female caregivers goes beyond personal time and includes time lost toward their career, parenting their own children, leading a healthy lifestyle, family life and more. Compounding the problem is the fact that caregiving has been linked to depression and anxiety placing women more at risk than men for these two conditions. Source https://www.womenshealth.gov/a-z-topics/caregiver-stress
What’s even more disconcerting is the fact that physical stress of providing care may contribute to the long-term care needs of the female caregiver.
1 in 4 develop health problems as a result of caregiving activities
Women spend 9 hours or more caring for a spouse double their risk of coronary heart disease.
They are subject to health issues, such as hypertension, disorders of the immune system, and increased mortality risk. Source: https://www.caregiver.org/print/240
Women, Work and Caregiving
While the costs of providing care are high, the demands on caregivers’ time are also substantial. Estimates indicate that some 20 percent of all female workers in the United States are family caregivers. But women don’t abandon their caregiving responsibilities because of employment. Instead, they cope—to the best of their abilities—with the combined pressures of caring for a loved one, their need for income, reliance on often inadequate public programs and fewer employment-related benefits.
One national study on women and caregiving highlighted the conflicting demands of work and eldercare. The study found that:
33% of working women decreased work hours
29% passed up a job promotion, training or assignment
22% took a leave of absence
20% switched from full-time to part-time employment
16% quit their jobs
13% retired early
Family caregiver Alliance, National Center of Caregiving. Women and Caregiving: Facts and Figures: Who Are the Caregivers? Source:
https://www.caregiver.org/women-and-caregiving-facts-and-figures
Financial Sacrifice
When women assume the role of caregiver, they often risk serious long-term financial consequences. They may need to put their careers on the back burner, reduce the hours they work, or take a leave of absence. Even though the Family Medical Leave Act gives job protection to millions of Americans, it does not guarantee paid time off. Only 13 percent of U.S. workers in the private sector have access to paid family leave. Source: https://www.bls.gov/opub/ted/2016/13-percent-of-private-industry-workers-had-access-to-paid-family-leave-in-march-2016.htm
Women providing home care
Today, half of the female working population in this country has taken leave to care for someone in their family. As a result, 50 percent of these workers are concerned it will have a negative effect on their retirement financial security.20 Fewer hours on the job and less career advancement could also be linked directly to lower retirement income from Social Security, pensions and other retirement programs. The cost to female caregivers has the potential to be quite considerable, amounting to an average of $325,000 in lost wages and Social Security benefits. https://www.eldercounsel.com/blog/impact-of-caregiving-on-women
The Sandwich Generation Trap
In the early 1980s, the social worker, Dorothy Miller, noticed a new phenomenon happening in the family, which she referred to as the “Sandwich Generation.” This term refers to multigenerational caregiving in a household, where adult children became sandwiched between the responsibilities of raising children and caring for aging parents. Source: https://www.interimhealthcare.com/miamieastfl/blog/may-2016/the-sandwich-generation/ Middle-aged Americans found themselves in this predicament because couples postponed having children until their mid- to late 30s while, at the same time, their parents continued to live longer.
Sandwich Trap
Today, this issue has blossomed into three categories of Sandwich Generation.
Traditional: Adults who are parenting young children and helping aging parents
Club Sandwich: Individuals in their 30s or 40s with young children, aging parents and grandparents, or those in their 50s and 60s who are assisting aging parents, adult children, and grandchildren
Open faced: Any other individuals involved in eldercare
Those who find themselves caught in the Sandwich Generation trap bear the burden of financial challenges, as well as stress and depression. Source: https://www.aplaceformom.com/blog/10-05-15-what-is-the-sandwich-generation/
Understanding the long-term care planning options
The limited role of public programs
Often individuals think that Medicare or Medicaid would cover their long-term care expenses. Yet, Medicare coverage is limited and focused on acute care. Medicaid does provide long-term care benefits; however, it is designed as a safety net for people with extremely limited assets and income. To become eligible to receive benefits under Medicaid, you would need to spend down assets, including real estate and sources of annual income, so that you are left with so little that it demonstrates your need for government support.
This is why private coverage has become the backbone for protecting assets from the high costs of long-term care expenses.
The protection landscape has evolved
Potential for Self-funding
Some people who want to maintain control of their assets may consider self-funding or paying out-of-pocket for their long-term care expenses. But the unpredictable nature of a long-term care event may make you think twice about this option. In addition to the risk posed by the high potential costs, self-funding also involves investment risks for the assets that will potentially be used to pay for care, as well as managing those assets during a long-term care event. Also, you should consider the tax risk of taking substantial portfolio withdrawals to self-fund your expenses.
Annuities with long-term care riders
If you are primarily interested in securing a source of retirement income but also want a product that offers protection from long-term care expenses, you might consider an annuity with a long-term care rider. The annuity could provide you a source of lifetime income. The long-term care rider gives you additional income to pay expenses if you need long-term care. However, its benefits may be restricted to care in a nursing home.
Life insurance with Accelerated Benefits Riders
For those who are looking for the financial protection of a death benefit and added protection from long-term care expenses, life insurance with an Accelerated Benefits Rider may be an option. It combines life insurance with access to death benefits, which, depending on the rider, may be used for long-term care expenses. Generally, the life insurance component offers the potential to accumulate cash value and leave a legacy for your loved ones. The riders could be exercised to access the death benefits while living; however, the benefits are generally restricted to compensate for permanent chronic care or terminal illness, although some may offer benefits for recoverable conditions as well.
Life insurance/long-term care combination products
These products offer long-term care expense protection and other benefits if you don’t need care. For example, a hybrid life/long-term care solution may provide you a choice of a death benefit, cash value growth or return of premium, or a combination of those benefits. If you never need the long-term care benefit, your heirs could inherit an income tax-free death benefit. Also, the premium flexibility of some of these solutions gives you the option to pay a single premium or lower payments for a number of years.
Traditional long-term care insurance
If you just want a policy that covers long-term care expenses, traditional long-term care insurance is an option. These insurance policies are designed specifically for long-term care coverage and help cover out-of-pocket expenses for a variety of services, such as nursing home care, in-home care, assisted living and adult day care. If, however, you never need long-term care, some policies may not offer benefits or a return of premium.
Take Charge of your life
Because the risk of eventually needing care or providing care, or both is much greater for women than men, generations of women in your family should take steps to prepare for the challenges. Here are three simple ways to get started.
Put yourself first
Think about your life and how the possibility that someone you love might need care in the future
If you have a spouse or partner, do you think you could physically provide that care?
If you have parents or in-laws, do you think you could physically provide that care, or help pay for the care they need?
If you’re an only child, only sister or sibling residing near your parents, what is the plan for your Mom or Dad needs care?
Think about the possibility of your needing care someday.
Would you want to stay at home and receive care? Or, would you rather receive care in a facility?
Maintaining friendships and continuity in your life are important to you, consider how a sudden health-related issue requiring long-term care might disrupt your lifestyle if no one knows your wishes because you haven’t planned.
2. Plan for long-term care as a family
Talk with your spouse, your siblings, your parents and your in-laws.
Have an open discussion about expectations and the importance of establishing a long-term care plan.
Encourage your loved ones to join you in a family long-term care discussion with a financial professional who can provide an unbiased perspective and planning options.
3. Talk with your advisor
Express your concerns about the issues and ask your advisor what you could do now to help protect yourself and your loved ones.
If you’re married or have a partner who does not see eye-to-eye with you, consider having a one-on-one with your advisor. It’s helpful to have an experienced professional listen to your perspective and give you an impartial point of view.
Consider these options
Learn more about planning to protect your future. Contact Robert Flood at LC Advisor to discuss and develop your plan. Bob Flood rflood@lcadvisor.com
