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Insurance Insights with Claude Thau

Impact of the pandemic on long-term care financing

"Unfortunately, COVID has impacted the home care industry in many of the same ways it has impacted facility care: new protocols, reluctance of people to provide service, etc."

COVID-19 has increased the importance of long-term care (LTC) planning for all family members because:

  • People are more determined to get care at home.
  • The cost of LTC at all levels will increase and might be harder to find.

Through November, more than 100,000 nursing home residents had died from COVID (39.3% of total USA COVID deaths)1, making people more determined to keep care-needy relatives at home and to avoid a nursing home future for themselves.

Furthermore, COVID will increase the cost of facility care.  A December 2020 survey2 indicated that 65% of nursing homes currently operate at a loss and 2/3 lack the resources to remain open another 12 months.  Although I suspect the situation is not that dire3, new protocols and salary pressures will clearly drive up cost.  From October to November 2020, personal care aides (63%) ranked #1 in percentage increase in new job postings, while total new job postings decreased 6.8%4.

In addition to cost pressure, the high number of job postings casts a pall on quality of care.  A 2018 study5 found that 64% of new hires in senior care turn over within six months of employment.  Numerous studies over a long period have found similar results.  Turnover decreases the quality of care for many reasons.6

Fear of a loved one’s potential experience in a nursing home and the high cost of nursing homes will generate increased demand for commercial home care.  Home health aides (38%) ranked #2 in percentage increase in new job postings in November.4

Unfortunately, COVID has impacted the home care industry in many of the same ways it has impacted facility care: new protocols, reluctance of people to provide service, etc.

The increasingly aging population coupled with an at-best flat pool of potential commercial caregivers and the above factors make it more difficult than ever to find and pay for care.  When people find a reliable home care aide, they may be willing to pay extra to encourage retention.

Government LTC programs likely will remain focused on the least affluent segments of society, including those who became impoverished from paying for LTC.  At best, others can hope for incentives and rewards for purchasing long-term care insurance (LTCi).

When the care recipient stays at home, more direct care and supervision of commercial caregivers falls upon family members.  Thus, the pandemic will substantially increase the burden on family caregivers.

Caregivers sleep and exercise less.  As they go to their doctor less (they may go to Mom’s doctor a lot), their chronic conditions are not diagnosed, monitored or treated.  In addition, as a group, they eat more; adopt a less healthy diet of more fast foods; drink more alcohol and take more drugs.  Hence their health deteriorates.  People who are caregivers are more likely to need LTC themselves in the future, even though they die younger than people who are not caregivers. 

Employees who are caregivers are particularly tired and stressed, which harms employers in many ways.

Is it surprising that interest in LTC planning has surged since the pandemic?

Individuals (employers) would do well to ask their financial (employee benefit) advisors about LTC planning.

 

Citations:

1https://www.cnbc.com/2020/11/30/covid-cases-and-deaths-in-nursing-homes-are-getting-worse-.html

2 American Health Care Association and National Center for Assisted Living, https://www.ahcancal.org/News-and-Communications/Fact-Sheets/FactSheets/State-of-Nursing-Home-Industry_Dec2020.pdf, posted December 16, 2020.

3 The survey does not indicate the nature of the 953 interviewed facilities.  As only 68% of facilities are privately-owned (according to Pintas & Mullins, Injury Lawyers, https://www.pintas.com/blog/for-profit-vs-non-profit-nursing-homes/, posted September 10, 2020) the survey results might suggest that 68% x 65% = 45% of facilities lack resources to remain open another 12 months at current cash flows.  Cash flows should also improve post-pandemic.

4 Gartner, “Tracking COVID-19 Impact and Recovery: Hiring and Job Demand Trends”, December 2020, https://www.gartner.com/ngw/globalassets/en/human-resources/documents/talentneuron-labor-market-hiring-trends/talentneuron-labor-market-trends-december.pdf.

 5 On Shift, June 12, 2018, https://www.onshift.com/blog/6-turnover-prevention-tips-from-an-employee-retention-pro.

6 On Shift, September 6, 2019, https://www.onshift.com/blog/senior-care-staff-turnover-by-the-numbers-why-it-matters-to-you

 

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Ingram’s Long-Term Care expert, Claude Thau, a former inner-city schoolteacher and actuary, has helped employers, advisors and clients with LTC planning since 1994.  He has written the most-read LTC insurance (LTCi) surveys annually since 2005, was named one of 10 “power people” in the industry by Senior Market Advisor in 2007 and helped develop the LTCi program for Federal government employees.  He can be reached at 913-707-8863 or claude.thau@gmail.com.  He created this website where you can privately study LTC and LTCi: www.usa-bga.com/claude-thau.