The recent catchphrase caution about senior living is real. Aging is not for sissies! It’s also not cheap. This is why government and the financial sector are adding the often unexpected, unplanned for and unavoidable costs of senior living to their business models.
Like many things in the business galaxy, jargon is important, and the many needs and options about senior living are categorized as long-term care (LTC). Many things, from chronic or urgent health issues, medications, tests and treatments, to lifestyle matters, everyday personal needs and routines are not only basic facts of senior living, they are now acknowledged as often underestimated and overlooked extra costs.
More and more Baby Boomers (and even gracefully aging Millennials) confront the realities of senior living expenses, which are not a part of Canada’s government health plans.
According to Mark Dickson, Sun Life regional vice-president for Central and Northern Alberta, “Many Canadians lack awareness of the financial realities associated with aging. Long-term care needs, including home care, prescription drugs, specialized equipment and other health and lifestyle needs, are often underestimated. Canadians tend to assume their healthcare needs will be fully covered by the government, without realizing that many elder care services essential for aging individuals fall outside the scope of the Canada Health Act.”
He notes recent trends about Canadian perspectives on aging and LTC, which show that many Canadians are poorly informed, underestimate and have limited knowledge about the true costs associated with aging, senior living and elder care.
The introduction of long-term care insurance (LTCI) in Canada traces back to the late 1990s. It stemmed from a growing surge of concerns about the actual costs and the financial burdens of health and personal lifestyle care for seniors and their families.
“While government programs like Medicare and provincial healthcare plans cover basic healthcare needs, they often fall short when it comes to long-term care (LTC) services, such as stays in nursing homes, chronic care facilities or home care assistance. With the aging Baby Boomer population and increasing life expectancies,” Dickson explains, “it became clear that many Canadians would need specialized, long-term care services, which often come with significant costs not fully covered by public healthcare programs.”
According to the Canadian Life and Health Insurance Association (CLHIA), it is what LTCI is designed for – helping Canadians, regardless of age, manage the high costs of elder care in case an illness or accident (or aging) makes it difficult or impossible to perform routine tasks.
Current LTC stats highlight that subtle, gradual, or acute, contemporary senior living requires extras which come with extra costs. Nursing care. Rehab. Therapy for ongoing medical needs. Personal care like assistance with dressing, eating or bathing. Homemaking services, such as meal preparation, cleaning and laundry. Supervision and assistance, including having someone available to help as needed.
LTCI is becoming popular as financial protection for people unable to care for themselves due chronic illness, disability and yes, some common issues of aging like limited mobility, Alzheimer’s, dementia and other cognitive impairments and memory care services.
Of course, money’s not everything and Dixon is experienced and practical.
“The financial aspects of senior living are critical. Care costs can run into thousands of dollars monthly, causing strain on personal savings or family members’ finances. Long-term care insurance is becoming widely accepted to mitigate the burden, ensuring people get the care they need while reducing stress about dealing with the emotional, physical and financial challenges of senior living.”
Tracking recent stats and trends, some common senior living needs covered by LTCI are:
- Personal Care Assistance: including help with daily activities such as bathing, dressing, eating, toileting and transferring (e.g., moving from bed to chair).
- Home Care Services: because many people prefer care at home vs. a facility.
- Facility-Based Care: in assisted living facilities, nursing homes or other long-term care facilities, some with 24-hour supervision and assistance with daily living activities.
- Cognitive Care and Supervision: including the cost of memory care services.
- Medical Equipment and Modifications: to cover the costs of durable medical equipment (e.g., walkers, wheelchairs) and modifications to the home (e.g., ramps, bathroom adaptations), which make living spaces safer and more accessible.
CLHIA and professionals like Dixon are candid and realistic about long-term care insurance having benefits and drawbacks.
A key positive is flexibility, covering various types of care – at home, in a retirement residence or at a long-term care facility, ensuring that seniors receive care where they feel most comfortable, tailoring the care to personal preferences and medical needs.
It is also wealth and legacy protection, safeguarding a person’s financial resources and legacy, without the high cost of long-term care depleting personal savings, potentially impacting the assets that could be passed on to family; and, simplicity, providing an income-style benefit with policyholders receiving regular payments without the need to submit receipts for reimbursement.
On the flip side, LTCI does have drawbacks. Complexity in policy options, because while the concept is meant to simplify the care process, choosing the right policy can be challenging. Policies vary in terms of benefits, coverage limits and exclusions, making it difficult for individuals to determine which plan best suits their needs.
Cost is also a factor. LTCI premiums can be high, especially for individuals who purchase policies later in life. There is also the possibility of unused benefits, since the person may never use their LTCI, particularly if they do not require long-term care. In such cases, the premiums paid over the years may not translate into tangible benefits, making some hesitant to invest in a policy.
Financial consultants and insurance experts agree that for various reasons, the extra costs of senior living have become an easy but misleading social stereotype.
Despite the clichés, extra costs about health care are not generationally exclusive to people who may have lost the ability to care for themselves due to age-related impairments. Dixon cites facts, confirming that people of all ages can and do develop conditions or get into accidents, which can cause need for assistance with daily routines and activities. The practical reality and fact of modern life is that the need for adequate long-term care expenses does span across age groups.
“The massive volume of the Boomer generation and the approaching Gen Xers are indeed key demand factors in the financial planning landscape, particularly in areas like legacy and estate planning. These two generational cohorts are entering or nearing retirement, making this a critical time for them to address the complexities of wealth transfer, financial security in their later years and the hot topic of unexpected healthcare costs.”
He explains that for Canadians nearing or already in the senior age bracket, the need for advice is crucial.
“Many are not only planning for their own retirement but may also be assisting aging parents, gaining firsthand experience with the financial realities of healthcare and aging. They want solutions that offer security and the flexibility to choose the type of care they will need in the future without compromising their financial legacy.”