Critical Conversations About Financing Long-Term Care

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Critical Conversations About Financing Long-Term
Care

• Marlene S. Stum, PhD
• University of Minnesota
• mstum_at_che.umn.edu

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• 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

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We didnt think it would turn out this way
Weve never seen or talked to anybody about
financing . . .we would have to get to a point
where its a concern. Sometimes I think it is
better to take your chances, hoping that you die
before you get there. What we thought wed do is
go the way we are until we run out of money and
then figure out what to do --Husband with
Parkinsons and caregiver wife
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We didnt think it would turn out this way
No one plans to have their health change or 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!
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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
• Wont admit we might personally be affected

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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
• Dont 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!

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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

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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

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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

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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

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Challenges for Extension

• There are no answersor 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

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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

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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

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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

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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

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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

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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

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Whos 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

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Whos 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

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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

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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.

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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

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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

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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

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• 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

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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

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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.

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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

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Critical Conversations About Financing Long-term
Care

• Facilitators 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

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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

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Critical Conversations About Financing Long-term
Care

• Access curriculum after April 25th
• Go to www_at_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

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Coming Fall 2002

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

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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

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Welcome to Financing Long-term Care A
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.

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Welcome to Financing Long-term Care A
Resource Center for Families

• Whats 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!

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Welcome to Financing Long-term Care A
Resource Center for Families
The Basics
Decision-Making Toolkit
Educator Toolkit
Who We Are
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Welcome to Financing Long-term Care A
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

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Welcome to Financing Long-term Care A
Resource Center for Families

• Know Your Financing Options

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

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Welcome to Financing Long-term Care A
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

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Welcome to Financing Long-term Care A
Resource Center for Families

• Fact Sheets

• Creating Your Plan
• Why cant we talk?
• What are common later life financial goals?
• Factors to consider

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Welcome to Financing Long-term Care A
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

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Welcome to Financing Long-term Care A
Resource Center for Families

• 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

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Welcome to Financing Long-term Care A
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?
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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

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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/desc
  ription.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)

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• 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