Some 70% of people want to age at home, yet only 10% have long-term care insurance, a recent HCG Secure/Arctos Foundation study found. Furthermore, about half of respondents had no idea how much in-home care would cost.
With the median annual cost of a home health aide nationally estimated at $61,776, how are folks going to fund this?
“The need for help at home is much more common than you think, but people don’t plan for it,” said certified financial planner Chris Chen, wealth strategist with Insight Financial Strategies in Newton, Massachusetts.
Scoping out the insurance option landscape
People with long-term care insurance will usually have home health care covered under the same eligibility conditions as for long-term care facilities — the inability to perform two of six so-called activities of daily living, Chen said. According to the Administration for Community Living, this situation typically lasts an average of two years.
“Basically, I try to segment the risk into a short-term need and a long-term need, and to fund them separately,” he said. ”Where possible, I encourage people to buy LTC insurance for a short period of coverage, maybe a year.”
“Then I encourage them to buy a hybrid life insurance to cover for longer periods,” Chen added. “And I like to plan for some assets to be used to cover the differences.”
Tom Beauregard, founder of insurance company HCG Secure, said there’s “a need for innovation in this space to cover middle-income families to age at home.”
“For most people, it’s a blind spot — they [mistakenly] think home care will be covered by their [employee] insurance or Medicare,” he said. “And most of them can’t afford long-term care insurance.”
Beauregard’s firm recently launched Home Care Secure, an indemnity plan that pays cash on a weekly basis, along with access to planning and coordination services such as well-being assessments, an aging-at-home plan, help with finding and scheduling in-home health aides, telehealth visits, etc.
While indemnity plans pay cash benefits, the policies themselves do not retain cash value like plans such as hybrid life insurance.
Creative ways for clients to fund aging in place
With a previous background in the home health-care industry, Taylor Kovar, CFP and CEO of Kovar Wealth Management in Lufkin, Texas, suggests several creative ways for clients to fund aging in place, including:
- Offering room and board in exchange for in-home assistance, especially in college towns.
- Cost-sharing and splitting hours of caregivers and other helpers with a neighbor or relative. “If neighbors share, then effectively, you’re so close, it’s like you have the [helper] available all day,” Kovar said.
- Digging into any corporate retiree benefits beyond just a pension, as there’s often additional services for in-home care, he said.
- Researching local nonprofits that can help pay for in-home health care, going through state aging and disability resource centers, and sites such as the U.S. Administration on Aging’s Eldercare Locator.
- Looking into benefits that may be available from previous law enforcement or other public service employment.
Scott Vance, CFP, owner of Trisuli Financial Advising in Holly Springs, North Carolina, focuses his practice on military members and veterans. He said the Department of Veterans Affairs offers eligible veterans many means-tested home care services, such as light housekeeping, laundering, meal prep, grocery shopping, transportation appointments and — in severe cases — bathing, toileting, eating, dressing, etc.
In addition, so-called Aid and Attendance benefits provide monthly payments for qualified veterans and survivors.
Vance said he helped secure such benefits for his elderly uncle and found it easy.
“The VA really stepped up,” he said. “It was almost painless to enroll him in services.”
Thinking about these things ahead of time can help you have a calmer and safer life as you age at home, said HCG Secure’s Beauregard.
“If you can get a little bit of home health support, your chances of a dramatic catastrophe are lower — like a bad fall [or while trying to keep] meds straight, getting meals together, showering,” he said. “There are all sorts of crisis opportunities.”