The first and second articles in this series about long-term care covered strategies for managing clients’ future health and personal care costs and how long-term care insurance can help later in life. Our final article delves into actual long-term care costs and why now’s the time to talk with clients about their health-care coverage options.
As Canadian life expectancy continues to climb, so do health-care costs. In Canada:
- a 65-year-old woman’s average life expectancy is almost age 87; a 65-year-old man’s average life expectancy is almost age 84. Thirty-five years ago, those averages were age 84 for women and age 80 for men.1
- over the past 10 years, health-care inflation averaged 4%2 – double the Consumer Price Index rate of 2%.3
Long-term health care can be particularly pricey. The Canadian Life and Health Insurance Association (CLHIA) recently reported it will cost almost $1.2 trillion to provide long-term care to the baby boomer generation as they age over the next 35 years. Although government programs and funding are expected to cover about half, the $590 million shortfall is significant — and equates to about 95% of all individual registered savings plans in Canada today. What’s more, only 22% of the population has saved money or otherwise planned for covering health-care expenses during their retirement.4
SPEAKING FROM EXPERIENCE
Stephanie Erickson, a clinical social worker and director of Erickson Resource Group, has over 20 years’ experience working with functionally-dependent seniors and offers this insight.
“We’re lucky to live in a society where the government covers many needs in terms of health and social services. Unfortunately, the needs are greater than the available resources. As a result, patients have to pay a portion of the cost for their long-term care, be it at a public nursing home, a private care facility or in their own home. And they’re often very surprised to learn that this care is not free, and how expensive it really is.”
Consider at home care, for example. A Leger Marketing poll conducted on behalf of CLHIA revealed that 77% of Canadians would prefer to receive care in their own homes — but how many will be prepared to pay for it?
For Ontario residents, a recent report by Taking Care Inc. shows potential costs for several scenarios based on varying levels of care.5 These costs factor in any government coverage or subsidies, representing the amount payable by the client.
|At home care||Monthly cost||Yearly cost|
|Part-time – approx. 10 hours/week||$1,118.00||$13,416.00|
|Full-time – 5 days/week||$2,904.87||$34,858.44|
|Full-time – 7 days/week||$5,786.19||$69,434.28|
Note: Scenarios presented by Taking Care Inc. are for illustrative purposes only. Actual costs will vary based on individual needs and circumstances.
“Health-care organizations in the public system have trouble meeting all the needs of those who are functionally dependent, and staffing is often unstable,” adds Erickson. “Public organizations do provide quality care, but families often prefer the additional à la carte options and services available from certain private resources.”
PLANNING IS KEY
For most Canadians, the ability to cover long-term care costs will require careful planning. Erickson encourages advisors to keep several things in mind:
- Family matters – “Of course it’s important to consider the financial and legal aspects, but don’t overlook the family dynamic in the planning process,” she urges. Advisors who take a holistic approach and ask questions to better understand the client’s family can gain valuable insight related to client needs and circumstances.
- Joint consideration – Would your married or common-law clients want both spouses to move into a facility if only one of them needed care? Where would they prefer to live if both spouses needed personal care? Before either takes on the role of spousal caregiver, are they aware of the potential physical and emotional demands? When working with couples, encourage them to think carefully about different scenarios and how they’d approach each one, taking into account both spouses’ needs.
- Sooner is better – Start the conversation with your clients right now — about health, aging and loss of independence — while they can clearly and comfortably assess all the options. “Unfortunately, I’ve seen difficult situations where the family has to make decisions for a client who’s not competent anymore.”
Planning in advance also gives clients the opportunity to take their time and view aging as a process that involves the entire family unit. “It’s a proactive and thoughtful approach that leads to better care-giving and more appropriate decision-making when the time comes, while helping keep family harmony intact,” concludes Erickson.
TOOLS TO START THE CONVERSATION
Sun Life Financial offers several tools and resources to help address this sensitive and often complex topic with your clients:
- Use our whiteboard videos – Why Health? and Options for care as you age – to show clients how health needs and costs typically progress over time and the importance of planning for their future health care needs.
- Check out the long term care insurance section of Sun Life Financial’s website for detailed information about costs, including the typical cost of care in every province and territory.
- The Money for Life web app offers several tools including a longevity risk illustrator and a resource called ‘Your health, your retirement’ that guides clients through the 5 stages of care. For web app access, contact your Sun Life Financial sales director or sign into www.sunlifeglobalinvestments.com or www.sunlife.ca/advisor.
1 Life Tables, Statistics Canada, 2014
2 Sun Life Financial Homecare Survey, 2014
3 Statistics Canada, 2013
4 2014 Sun Life Canadian Health Index
5 Long Term Care in Ontario 2013 – report prepared by Taking Care Inc., a service that promotes and supports caregiver wellness and wellness for seniors