When we examine the voluntary benefits landscape, certain features rise to the obvious. For example, few voluntary participants doubt the desirability, indeed the necessity of medical insurance. Nor do they labor over the ins-and-outs of a vision care plan or dental benefits.
However, people put off thinking about Long Term Care insurance (LTCi) as long as they possibly can. I suspect it's because so many forces and subtleties attend the decision matrix. Let's examine some of these factors, and explore how LTCi approaches them.
The Social Components
Few people cherish the thought of long term care. Unlike medical insurance, its risks smack of the distant future and old age, two scenarios we tend to avoid thinking about. After all, our lives are too busy -- or the prospects are too scary - for us to ponder it for long. In addition, we as a society haven't settled our notions on how to treat, react to, or fund the process of growing old (ironically, a process that is as inevitable as the phases of the moon or the rising of the sun).
And, also ironically, involving a subset of the population that everyone agrees is growing. Yet one thing seems certain: There is a perceived vulnerability to senior citizenship which compels the involvement of family, friends, caregivers, and the state into the lives of the elderly.
Combine these factors with the usual crop of anecdotes, stereotypes, and speculations that drive social movement in our country, and it's no wonder that sober consideration of the ramifications of LTCi does not pervade the voluntary benefits landscape.
The Uncertainty of Needs of Long Term Care
Most of us can only guess what our needs will be upon aging. This uncertainty is derived in large part from the evolving treatments that are available to seniors. When the first LTCi policies came out in the 80s, convalescent care (i.e. nursing homes) ruled the day. Things like home health, assisted living, and adult day care simply did not exist mainly because, apart from catastrophic illness or injury, seniors aged and died at home.
Since then, however, all kinds of things have contributed to the evolution of what I'll call the "aging industry:"
People are living longer. A corollary of this is the extension of morbidity. In other words, people live longer in a disabled or dying condition today than they did 40 years ago. Therefore, the need for extensive care is far greater than before.
Self-directed care diminishes with age, another corollary of long life and extended morbidity. I recall a bumper sticker that said something like, "Be kind to your children, they'll pick your nursing home," a thought-provoking quip for anyone contemplating life as a senior or considering LTCi. Here's the real point: People other than the policyholder influence the policyholder's care.
Stay-at-home family has diminished. For better or worse, the children of seniors now work outside the home. No one is around to care for mom or dad as was the case in generations past.
Government regulation intrudes. Most states - I'm tempted to say all - have some form of regulation governing senior care. Difficulty arises because the focus of regulation addresses compliance rather than quality. Put differently, a compliant care provider comes with no guaranty of being a quality care provider. Regulators have yet to develop a method to mandate universally kind, sensitive, gentle, patient-centered providers.
So, why bother with all of this? Events will certainly resolve all of the foregoing considerations in much the same way that dying ends discussions about life insurance. Yet, while most of us agree that we cannot predict the time or manner of death, we do plan on growing old (a far lengthier and indeterminate process than simply dying). And so, as the uncertainties of "age management" nag, consideration of LTCi harkens.
The Financial and Social Forces of LTCi
What does LTCi have to offer? Many things, and most of them good.Estate protection. We have all heard about this one, but don't dismiss it out of hand. The fact remains that most of us accumulate wealth in varying degrees as we age. One way to insure that it stays in the family is to protect it from otherwise insurable risk.
Considering the risks associated with age, long term care costs loom large and virtually guarantee estate erosion if they are not contained. Estate planning. Here's another old saw that deserves second glance. Imagine planning an estate with uncontained long term care risks. Now imagine the same estate but with long term care out of the picture.
Which would you choose? In the second scenario, the premise becomes estate distribution rather than the estate conservation that's implicit in the former. I can hear the "hmph's" from here Care planning. If you think predicting one's long term care fate is difficult, try applying for LTCi.
Don't get me wrong: The application process is no more complicated than for any other benefit or policy. The difficulty lies in choosing coverage, benefit levels, and care options. I commend the voluntary participant who undertakes this exercise. It's a real eye opener!
Social Impact
I like to think I've saved the best for last. Try to do any late-stage life planning without involving at least one family member. Impossible! Addressing long term care and LTCi is always a very social event. Assuming you are not an ostrich, I can just about guarantee you will connect with another human being somewhere along the line.
After all, activities that make us think about ourselves produce thoughts we like to act on. We are our most important subjects! The actions I refer to will certainly include those related to LTCi, be they financial, familial, or political - most likely all of the above.
The conclusion? Actions on a broad enough scale (e.g. the entire insurance marketplace) are going to have social impact. If that impact begins the process of solidifying society's actions towards aging, that can only be a good thing. Collectively, the benefits of LTCi, not to mention its related planning, outweigh the burdens.
Addressing LTCi and its inevitable effect on long term care planning forces us "out into the open" and makes us confront those questions that complexity made us put off.
