Viewing Extended Care Through The Eyes Of The Pandemic
How does your family react in an emergency? Do they approach things calmly and intently, or do they make rash decisions? What is the fallout of the choices they make? A long term care plan can help your family handle an emergency in much the same way that a disaster recovery plan may keep a business operating. Advisors can use the current pandemic as a frame of reference, assisting families in seeing this need in a new light.
Why look at this in the context of the pandemic? An extended care event can be eerily similar to our national health care crisis. Besides the direct corollaries, it’s an analogy we can now all relate to, even if we’ve never experienced a care event in our own families.
Long term care is in the news daily. Most newscasts start with an update on COVID-related deaths in nursing homes. If someone didn’t want to go into a nursing home before, they certainly don’t now. Nationwide Retirement Institute recently did a survey showing that 61 percent of people would rather die than ever go into a nursing home.1 In addition to concerns about exposure, they know facilities barred visitors. They’ve seen images of families communicating through windows, or worse yet, stories of people dying alone without friends or family nearby to comfort them in their final moments.
A long term care plan, properly funded, can help provide people with options and the flexibility to stay in their home. However, unless they have already experienced a care event first-hand, most people haven’t taken the time to create a plan. Preparing can be daunting, but it is essential to avoid making rash decisions while in crisis mode.
I believe that the pandemic can help people understand the need to prepare without dragging politics into the conversation. We’ve seen the unintended consequences of actions taken in haste. We know that decisions made in haste may not be the best decisions. Just as the country is split in our opinions around how to handle COVID-19 (mask vs. no masks, kids in school vs. distance learning, lockdowns vs. herd immunity), families can become divided. Arguments can erupt from discussions about providing care or how it’s paid for (especially if inheritances might be involved). We’ve all heard stories about siblings who will no longer speak to one another because of disputes related to caregiving.
Ripple effect effects and financial behavior
Humans do not naturally use logic when facing a crisis. Our brains are hard-wired for immediate survival. We have fight or flight responses to risks.
Think we don’t make irrational or emotional decisions? If someone had told you that an invisible virus would cause Americans to hoard toilet paper, you would have called them crazy. Yet it happened.
Why do we respond irrationally? Nobel prize-winning psychologist and economist Daniel Kahneman’s behavioral finance research suggests we have two modes of thinking: System 1–intuitive, emotional, fast thinking; and, System 2—rational, deliberate, and slow thinking.2
System 1 is 95 percent unconscious. It’s automatic. These acts are based on intuition and “what feels right” compared to rational decisions that could be better in the long run.3
System 2 is rational thinking. It’s slow and logical. It’s also more demanding work for our brains—and therefore leads to only five percent of decisions.
To picture how people respond emotionally, imagine a rollercoaster with many ups and downs. Without a plan in place, stress (often financial) starts to build. As a result, your emotional competence starts to go down, which can then cause an increase in irrational decisions. These decisions can result in a decrease in physical and financial health.
Let’s look at two examples of financial behavior—one pandemic-based, the other related to long term care.
Do you see how a single act can impact so many? Now, consider that most crises have multiple rash decisions, each with ripple effects. No one wants their caregivers to put their own lives on hold, yet most of us know families who have done just that.
Family caregivers themselves don’t feel they make the best decisions. More than half of those don’t feel highly qualified for the job. They think they lack a firm foundation for their decision making when it comes to caring for aging loved ones. Fifty-two percent did not feel qualified to provide physical care.4
Now imagine how things could look if a strategy were in place beforehand. A plan can help flip the script. Let’s look at our long term care scenario.
Think of other rash decisions people make when facing a long term care event. If you haven’t provided instructions on how to pay for your care, family may not be able to follow your wishes. They may tap the wrong assets, sell off family properties like a lake cabin, or have to up-end legacy plans you intended to fund a charity or inheritances.
The pandemic has caused many parents to struggle with homeschooling their kids while still working full-time. This is akin to an adult daughter trying to keep her own family on course while also being expected to provide some (or all) care to an aging parent.
2020 hindsight can bring 2021 foresight
What if we could go back just one year and, knowing what we know now, we could create a plan to handle the pandemic? Would things be handled differently? Absolutely! Things still might not be perfect, but they would likely be magnitudes better.
Imagine having the luxury to prepare for a crisis that might not arrive for another 20 or 30 years. That’s your long term care event. It’s something that will impact at least half of us. Knowing the toll that caregiving can take on your family, wouldn’t you put a plan in place to help them best navigate that crisis? Provide resources they might need? You need a plan.
Why plan now, while in the middle of a national health crisis?
- Receive care where you wish.
- Lower rates. The economy may feel unstable, but you lock in your current health by purchasing now, keeping your rates down.
- Your health could change. This crisis came on fast and showed that health could change on a dime.
- Premiums are primarily based on age and health, so there isn’t a better time to buy.
- What happened with your other investments? Did they grow at the same rate as before the pandemic? The benefits in a long term care policy not only hold their value, but if you have an inflation rider of three percent or five percent compound, it will continue to grow by that rate, year over year, despite what happens in the economy.
- There was a shortage of long term care workers before this crisis. The number of Americans needing long term care will double by 2030, reaching 24 million individuals.5 An aging population and the increasing prevalence of chronic conditions will drive up demand for long term care services. But the supply of caregivers will not be enough to meet the need. A long term care policy can help secure and pay for care when demand is at its highest.
- Costs will continue to rise. In addition to costs due to caregiver shortages, the pandemic is accelerating growth.
- 53 percent of home care providers reported serving more clients in 2020 than in 2019.
- 43 percent of providers expect client costs to soon increase by more than five percent due to new costs associated with personal protective equipment, cleanliness, and safety.6
While our emotional responses to an extended care event may not be much different than how we view the pandemic, the impacts are more personal. We can see first-hand that it’s not the risks, it’s the consequences of our choices. The decisions we make today have a lasting impact on our loved ones, often for generations to come.
Our primary caregivers—most often the spouses or adult daughters—are our front-line workers. They are putting their own mental and physical health at risk to care for others. You have the opportunity right now to create a plan that could provide tools that may help them maintain their own physical and emotional health. That is what a long term care plan is. It’s the written strategy for how your family will cope with an extended care emergency.
There’s a tsunami coming—a silver tsunami of an aging population that will soon need care. Now that you know a crisis is coming, what will you do to prepare for it?
References:
- “Nationwide Retirement Institute Long-Term Care Survey”, presented by The Harris Poll. November 2020.
- Thinking, Fast and Slow, Daniel Kahneman, 2011.
- Gerald Zaltman in “When to Sell with Facts and Figures, and When to Appeal to Emotions,” Harvard Business Review, 2015.
- ”Beyond Dollars 2018: How Caregiving Impacts Families, Communities and Society”, Genworth Financial, November 2018.
- “Report: The Ballooning Costs of Long-Term Care” The American Action Forum, February 18, 2020.
- “Drivers of the Cost of Care”, J&K Solutions for Genworth, November 2020.
