Caregivers and Care Receivers: Understanding the Impact on Families Part 2: Care Receivers’Issues February 26, 2017 Second Presbyterian Church
Presenters Charles Harlan - Certified Structured Settlement Consultant Cindy Levering - Associate of the Society of Actuaries
We’re all in this together! Have you had personal experience caring for a family member? What challenges did you face? What resources did you access? What resources were missing?
Part 2 Agenda Understanding the data Defining “caregiving” The problem Funding strategies Identifying resources Presentations and resources posted on SPC website – http://secondpresby.org/caregivers-care-receivers/
Today’s Agenda Summarize data and define caregiving Outline strategies to finance long-term assisted care risk Conserve assets and “planned for” later life income Transfer of assets at death Identify resources Questions
Key Data on Caregiving • By 2030 there will be 72.1 million older Americans age 65+ • 22.6% of the current U.S. population • Of that group, over 50 million will experience a long-term assisted care event • 30% of Americans currently providing long-term assisted care for a family member
Key Data on Caregiving • Largest segment of caregivers between 45 and 64 years of age. • 47% of working caregivers reduce or deplete savings to cover caregiver expenses. • 80% of primary and 50% of secondary caregivers have reduced their retirement savings to cover care assistance expenses.
Key Data on Caregiving • 43.5 million adults have provided unpaid care to an adult or a child in past 12 months. • Estimated number of adult caregivers is 39.8 million (12.5% of U.S. population). • Estimated number of child caregivers (under age 18) is 6.5 million.
Key Data on Caregiving • Caregivers by gender: 60% female; 40% male • 82% of current caregivers are taking care of one person. • The average age of a caregiver is 49.
Key Data on Caregiving • 85% of caregivers are caring for a relative and 49% for a parent or in-law. • One in 10 caregivers are caring for a spouse. • “High - hour” caregivers are almost four times as likely to be caring for a spouse or partner.
Key Data on Caregiving • Three in five care recipients have long-term physical conditions. • More than a third have short term physical conditions. • 25% have memory problems and 37% have multiple conditions. • 18 million caregivers are routinely marginalized and ignored within the health care system
Define Caregiving Caregiving starts with assistance for Instrumental Activities of Daily Living (Lawton IADL Scale): Ability to Use the Telephone Shopping Food Preparation Housekeeping Laundry Mode of Transportation Responsibility for Own Medications Ability to Handle Finances http://micmrc.org/system/files/IADL.pdf
Define Caregiving Caregiving progresses to assistance with Activities of Daily Living (Katz ADLs): Transferring (43%) Dressing (32%) Toileting (27%) Bathing (26%) Feeding (23%) Incontinence (16%) https://consultgeri.org/try-this/general-assessment/issue-2.pdf
Define Caregiving • Family caregivers are increasingly performing tasks nurses typically perform, such as injections and tube feedings. • Over 50% of caregivers self-reported that they had no choice in taking on their caregiving responsibilities. https://www.caregiver.org/caregiver-statistics-demographics
The Problem • 70% will need long-term care • 40% of those in need of long-term assisted care are below age 65 • Long-term assisted care can easily drain retirement savings as well as other assets
Medicare • Does NOT cover long-term care • Does cover – Care in a long-term care hospital Skilled nursing care in a skilled nursing or long-term care facility Eligible home health services Hospice and respite care • Must be hospitalized 3 consecutive days • Covers first 20 days at 100% and next 80 days at 80%
Medicaid and Long-Term Care • Eligibility criteria • Income requirements • Asset / resource requirements • Spending down assets • Transfers of assets • Look-back and penalty periods • Spousal rules for income and assets
Early Planning is Important • Funding for long-term assisted care is more expensive each year • Availability of preferred funding options decreases with age: Under Age 50 12% Age 50 – 59 17% Age 60 – 69 25% Age 70 – 79 44% Source: AALTCI 2014 Study
Possible Funding Strategies • “Stand - Alone” Long -Term Care Insurance • “Linked” Life/Long Term Care Insurance • Single Premium Annuities • Non-Insurance Solutions • Reverse Mortgages
“Stand - Alone” Long -Term Care Insurance • Wide range of payout options • 90 waiting period before payouts • Options to keep pace with cost-of-living • Spousal “share - care” option • “Portable” when employee leaves or retires • May be used anywhere in USA • Different levels of acceptance based on health history and number of applicants
State LTC Partnership Programs • Asset spend-down exemption • Estate recovery • Dollar-for-dollar offset method • Total asset offset approach • Suitability
“Linked” Life / Long -Term Care Insurance • Permanent life insurance benefit. • Pays “accelerated” benefit based on: 1. critical illness 2. long-term assisted care need, or 3. terminal illness diagnosis • “Portable” when employee leaves or retires • Different levels of acceptance based on health history and number of applicants
Single Premium Annuities • Deferred annuity used to pay for long-term care free of federal taxes. • Choose 200 - 300% for long-term care benefit (2 to 3 times initial face value) • Generally, easier underwriting • If long-term care benefits are not used, annuity can be redeemed for greater of accumulated value or the single premium paid initially, less any benefits paid or any penalties if paid during the first 8 to 10 years after policy is written.
Single Premium Annuities • Longevity annuities Annuity usually begins at 80 or 85 Payout grows with deferral No death benefit or early withdrawals Insurance against “catastrophic risk” Investing 10% to 15% of retirement savings =>50% to 60% of savings to immediate annuity* * Per Jason S. Scott - Financial Engines, Palo Alto, Calif
Retirement Plan Options • Qualified Longevity Annuity Contract (QLAC) New in 2014 Funded by qualified plan or traditional IRA Annuity begins between ages 70 1 / 2 and 85 Can be single or joint life annuity Exempt from RMD rules Annual limit of 25% of “funding source” Lifetime limit of $125,000
Retirement Plan Options QLAC Example* Invest $125,000 at age 70 Receive $14,825 annually at age 80 Total payout of $222,375 at age 95 Present value of $135,428 at 3% interest at age 70 * Based on single-life income annuity, purchased by either a 70-year-old male or female, or as a joint contract, with a cash refund feature. The best quote available as of 8/23/2016, was used from among the QLACs distributed by Fidelity Insurance Agency, Inc.
Non-Insurance Solutions • Designed for individuals age 65 & up for assistance in the home (both by licensed home care agencies as well as informal caregivers) • Choice of 4 different banks of hours of service with “rejuvenation” • Annual renewal discounts when benefits have not been utilized • No medical questions to answer (but cannot be receiving assisted home care)
Reverse Mortgage • Loan for seniors using home equity as collateral. • Loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. • Estate has approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. • Remaining equity is inherited by the estate. • Estate not personally liable if home sells for less than balance of the reverse mortgage • Property taxes and insurance must still be paid
Maximize Social Security • Can claim as early as 62 with a permanent reduction of 25-30% • Delay receipt to 70 if possible • Benefits increase 8% per year for delay past full retirement age (66 or 67) • Couples should carefully consider filing strategies • Also consider impact if still employed and have not reached full retirement age
Life Expectancy Actuaries Longevity Illustrator - http://www.longevityillustrator.org / Input (one or two lives) Date of birth Age for illustration to start (if not retired) Gender General health – Excellent, Average or Poor Smoker – Yes or No
Probability of Living for a Specified Number of Years - Couple age 65 http://www.longevityillustrator.org
Resources Ways Family Caregivers Can Ease The Financial Burden http://money.usnews.com/money/personal-finance/family- finance/articles/2016-12-09/how-family-caregivers-can-ease-the-financial- burden Registered Nurse In-Home Assessment (Independent) http://caregivingexchange.com/agis/caregiver-exchange/rn-in-home- assessments Caregivers Mall http://www.firststreetonline.com Caregivers Kit http://www.agis.com/caregiverkit/default.aspx Monthly Online Caregivers Articles and Resources
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