Informal caregiving is facing a crisis in America—the baby boomers are aging into retirement with all that goes along with it, including the need for senior services and long-term care (LTC) supports. The boomers thus far are the largest population to retire, yet they face a unique challenge past generations have escaped—who will be available to provide the care they may need? The boomers didn’t have the number of children past generations had; and with America far more transient—it is now common for adult children to live far away from their parents.
But the number of professional people available to provide care at home is dwindling. Studies show that 74 percent of people would prefer to receive LTC at home, according to a November 2015 study presented by Nielson for Nationwide. However, the caregiving industry is preparing itself for a shortage of labor to fill home health caregiving positions. As the number of baby boomers needing home health care (HHC) continues to escalate, the available labor force to fill needed positions is barely growing. To make matters worse, turnover rates are high in the home care industry, exceeding 70 percent; thus, by 2024 it is estimated that there will be a critical lack of labor to fill these HHC positions. That means there will be a greater need for informal caregivers to step in and provide help in order to keep an individual from being forced into a facility simply because professional care services at home were not readily available.
So, what is an informal caregiver? Simply put, it is an unpaid individual—usually a spouse or partner, family member, friend or neighbor—who assists an individual in need of help with activities of daily living (ADLs) or other living and medical needs. This care is usually given in a home setting. But the people charged with these tasks may not be able to financially afford to step away from a job or even reduce working hours. As it turns out, up to 75 percent of the informal caregivers are female, generally the wives, daughters and daughters-in-law, and they spend 50 percent more time than males do providing care. The result is reduction of paid work hours for middle ages women on average of about 41%, says the Family Caregiver Alliance.
How can advisors help clients address some of these challenges? That’s where long-term care insurance coverage can help—particularly LTC coverage that pays cash indemnity benefits. Having any type of LTC coverage provides additional funds to help cover the cost of qualifying care; and possessing funds for LTC provides a person more options. However, there is a future value to cash indemnity benefits that could be even more helpful to address future care need challenges. Cash indemnity LTC benefits can be used 100 percent without restriction from the insurance company; thus the policy owner can pay their daughter, niece or other family member or friend to care for them, which could help replace some or all of the income the caregiver may have had to sacrifice. (But be sure to consult your tax advisor when paying an informal caregiver as there may be tax implications to such an arrangement.) In addition, there is a future value to cash indemnity—paying for the unknown. As other creative solutions to LTC services and supports come into being (for example non-human help such as robots), cash indemnity benefits will be there ready to pay for what is needed.
LTC services and supports are likely to continue evolving into the future to meet the ever changing needs people will face as the shift in the LTC work force take place. Owning a cash indemnity LTC solution is one way to prepare for changes and have flexible funding to pay for assessable care.
Shawn Britt, CLU, CLTC, is director of long-term care initiatives in the Advanced Consulting Group for Nationwide.