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Kevin-Barry Henry

Covid has changed the way we think about Long-Term Care

By: Kevin-Barry Henry, #1 Bestselling Author

Adults in Canada have no concept of how much it costs for long-term care, or how much they should be saving during retirement, and that number includes an alarming 59% of those surveyed aged 55 and older.

It will likely come as no surprise to my regular readers (thank you) that my father lives in a long-term care (LTC) facility. He enjoys the feeling of safety and security it provides. If he suddenly needs something, then he is not all alone and that makes him feel safe and it certainly makes his children feel a lot better.

As with all of us, there are days that we wake up on the wrong side of the bed, and now that my dad is in a long-term care facility, he has many people that he can tell all about whatever it is that he is upset about. Most days, however, my dad is just his happy and witty self. He has things he worries about, again like all of us, but his care is not one of them.

My relationship with my clients is often like a doctor patient partnership. There is the initial visit where we get to know each other and discuss where we are and where we want to go as well as what we have available in our toolkit to make that happen. Much like your first visit to a doctor where you discuss your current health and what problems you are having and how you can solve them. The second visit we take your vitals (or in my case, we go over your current financial situation) and the third visit, we discuss the diagnosis and what the path to healing or better health would be, or my case we go over the recommendations to achieve the goals we have put in place and discuss the best way to get there.

In those initial meetings, I have found that most Canadians will choose health and long-term care as an important priority for their retirement. The problem is that many of those same Canadians do not have a plan to pay for the costs that will come for their long-term care, nor do they have any concept about how much that will cost.

There was a recent study performed by Edward Jones Canada and it found that 66% of adults in Canada have no concept of how much it costs for long-term care, or how much they should be saving during retirement, and that number includes an alarming 59% of those surveyed aged 55 and older.

That same research found that the average national cost of a private room in a long-term care home here in Canada is $33,349 per year. But what if you choose to stay home and have the caregivers come to you? The study found that for those who decide to age at their own home, basic personal care costs will be about $25-$30 per hour, on average.

There has been much talk in the news recently about the effects of inflation and I will let the experts decide how long they choose to disagree on the topic, but I do know that gas, food, building supplies and homes are more expensive than they were this time last year. That means that you can expect the cost of long-term care or basic personal care to also rise along with it. Indeed, the study did find that costs of personal or long-term care have been rising by about 4% per year and that they expect that number to keep going up.

Less than a third of Canadians (29%) are even having the discussion about health and long-term care with their families. Just a simple discussion! That has got to change.

Many, if not most Canadians don’t like to think about long-term care for themselves, or their partner (or even their parents) but it is an essential discussion to have when you are doing financial planning for the future. We are living longer.

When I do meet clients for the first time, depending on their age and situation, the talk often turns to retirement the discussion usually involves travel, a cottage, a boat or an RV. Helping the kids and grandkids financially when able, but very rarely does talk turn to long-term care or any provision for a shift in health of any kind. Health and long-term care are very often an afterthought and that should not be the case.

Some don’t want to think about it, and some don’t think it will apply to them.

I think it is time we had the discussion. If you are still reading this (thank you) then you probably think it is an important enough topic to at least think about also.

That said, I have noticed a shift since covid became part of our lives here on earth. People are more open to discussing their own health and mortality. People have become more interested in knowing about the long-term care options available to them and what the tax breaks are. That is a good thing. Folks need to be aware, at the very least, of what type of care they will need, what the provinces provide, and what they can expect to pay for the balance.

That is where advisors can begin to help by providing road maps and resources to help clients navigate the system and understand what is available to them, such as long-term care insurance policies or critical illness insurance policies that help cover the gap in expenses.

Change is already on the way. In the November’s fall economic statement, the federal government promised $1 billion over 2 years to the provinces for long-term care. Some provinces are also introducing new funding plans. Ontario for example has introduced a new Senior’s Home Safety Tax Credit last November that will provide seniors and their families with up to a $2,500 tax credit when they spend $10,000 on renovations to make their homes more accessible. It covers renovations such as installing wheelchair ramps, stair lifts, grab bars around toilets, tubs, and showers for example. Or possibly making modifications to live on one floor. The credit may help with seniors who choose to age in place, but it is important to at least know it is out there.

The federal budget in April also proposed providing $90 million over 3 years, beginning in 2021 to launch the Age Well at Home initiative, which will support community-based organizations to help low-income seniors to age in place.

In a much broader move the government also pledged to inject $3 billion to Improve the Quality and Infrastructure of Canada’s Long-Term Care Systems.

Until all these new programs are put in place, however, the bathroom bars and single one-time tax credits will only be the beginning. If they do succeed in providing an opportunity to start the discussion on aging and care, then they will have been very useful indeed.

Good questions to ask yourself are: “Can you modify your home? Do you have the money for that? Can you easily get to your appointments, groceries and the drugstore from your home?” If you don’t drive, can you get to public transportation? Do you have family in proximity? Can you afford care in your home?

Older Canadians or perhaps one of their family members could potentially cover the costs of a few hours of private help every day. Tasks like meal preparation, cleaning, and dressing for around $25 per hour. That will cost around $2,250 per month, or $27,000 per year.

Full-time home care will be much higher and could run up around $10,000 per month. Be warned. Costs that high can quickly consume your savings and estate.

That is where Long Term Care Insurance can step in. As is the case with most types of insurance, the younger you are when you apply, the cheaper it is. That said, many Canadians who are a few years away from needing to collect the benefits can get long term care insurance coverage for a yearly premium now that will work out to approximately the equivalent of a month or two of care in a long-term care residence. That is good value and although the earlier the better, starting today is better than waiting until tomorrow.

Whatever your choice, if you choose to age at home with some help, or you choose a residence that fits your needs, as we did with my father, the costs and considerations can become overwhelming. And it will only get worse as boomers age and live longer. According to statistics, about 75% of all home care is currently performed by the children of the person being cared for.

Perhaps a conversation with those children would be a good place to start.

Once the conversation begins, the next logical step becomes collecting some information about your personal situation. It might be one thing to see and understand the percentages of folks who go into nursing homes, but it is a whole new level when you begin to say, OK: Here are my sources of income and would I like to live at home or move into a residence and how much would each cost me? Once you are armed with the information, you will begin to understand the tools available from your own resources, the government and long-term care insurance. If you think to yourself “wouldn’t it be great if I had some extra income every month that could get me into the level of care I would like have?” Then long-term care insurance is something you will want to know more about, because it will offset some of the costs of aging when you need it most. Just have a discussion.

If you would like to discuss your options, I would be happy to hear your story. Just book a 15-minute (free) call with me here and we can start to learn more about what options are suited to you.

Wishing you health and happiness.

With Gratitude,

Kevin-Barry Henry.

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