Start LTC Planning Now, Save a Bundle Later: Genworth

Families could save almost $11,000 per year on out-of-pocket expenses for long-term care if they started planning a little earlier, a report released Monday by Genworth found.

Genworth surveyed more than 1,200 caregivers and recipients for the "Beyond Dollars: A Way Forward" report. More than half of those who identified as caregivers said they had lost income because of those responsibilities.

Care recipients who use professional care were more likely to have planned for that eventuality. Forty percent of respondents who receive care at a day facility made plans ahead of time to meet those needs, compared with 23% of people who moved into a family member's home.

Long-term care is still a difficult subject for clients. Thirty-eight percent of care recipients said they didn't address their needs because they didn't want to admit care was needed, and 28% said they didn't want to talk about it. Twenty-three percent said they weren't sure where to start.

(Check out Top 10 Cheapest States for Long-Term Care Costs on ThinkAdvisor.)

Wendy Boglioli, national spokeswoman for Genworth and a former Olympic swimmer, has been in the long-term care industry since 1998. She says that sometimes, it's the advisors who don't want to bring up the subject of long-term care. "I'm seeing the shift more and more," she said. "Ten or 15 years ago, advisors didn't want to talk about it, but it has shifted. If they're a little leery, they just need to understand that they owe this conversation to every single client they have."

That reticence shifts a significant financial and emotional burden to family members. Thirty-eight percent of caregivers said they could have avoided a lot of stress if care had started planning earlier. Thirty-five percent of recipients agreed.

Boglioli stressed that young clients need to talk about long-term care just as much as older clients. "Long-term care might seem forever away," she said, but it's important to "fill in the blanks for them to be able to see what is coming down the road because it's all about being prepared."

Boglioli said most clients in their 40s, 50s or 60s already have "a long-term care story or situation" or are expecting one in their near future. "They're pretty in tune to needing that conversation."

It's important to include family members in long-term care planning. "Family is the backbone of caregiving in this county," he said, while adding that emphasis on family as caregivers is going to change. Older generations were more likely to have large families whereas younger families are more likely to have only one or two children. She recounted a story about her own family.

"My mother is going to be 93. She will have been in a nursing home in Wisconsin going on three years. I see my mother if not every month, at least every six to eight weeks. I'm one of seven and we all rotate through, so we're all spending a fair amount of money to fly and spend several days with my mother: you've got to get a hotel, rent a car, so there's those kinds of expenses as well as the cost of the nursing home. My mother is in a nursing home that costs $8,000 a month. Now, the good news is I'm one of seven children, so the seven of us are paying that bill. If I were a single child or one of a few, it would be astronomical."

She suggested approaching clients about bringing family members in for a meeting over the holidays when out-of-town guests are visiting. "I usually see it around Thanksgiving or early in January."

Many feel they made a mistake by not purchasing long-term care insurance. Almost 60% of respondents who didn't have a policy wish they'd purchased one. Of those, 59% feel it would have been easier on their finances and put less strain on their family.

"There are only four ways to pay for care," Boglioli said. The first way is through family and their support. Advisors need to "walk clients through what that looks like for them," Boglioli said, so they can understand how it will affect the care they receive.

Government programs are another possibility. While Medicare does not cover most long-term care services, Medicaid does. "Today Medicaid does if you are in poverty or indigent," Boglioli said.

Another way to pay for care is to self-pay, although Boglioli pointed out that this is where planning can get difficult. "What are the financial things we can do early on to build that nest egg, but as you build it, do you really want to spend that money on care?"

Finally, of course, is an insurance policy. "An [LTC] insurance policy is the least expensive way to go."

However, one of the biggest obstacles to long-term care planning is just putting it off, Boglioli said. "When it comes to long-term care conversations, there are physical issues — will I need care or be providing care — financial issues, emotional issues; how do I get that all together? How do I coalesce that into a plan?"

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