By: Robert Castillo, ADPA®
October is LGBT History month and I’d like to highlight the future of the aging LGBT community and the long-term care they will need. With 10,000 baby boomers retiring every day, it’s important to consider the cost of medical expenses in retirement years and the fact that 70% of people age 65 and older are expected to need some sort of long-term care, according to the US Department of Health and Human Services. This means that most people will need another person present at least some of the time to help do basic activities of daily living like getting out of bed or buying groceries. Some people are fortunate enough to have a partner or children to help with these tasks, but many seniors face these tasks alone and are forced to bear the high costs of LTC services. When it comes to the LGBT community, the likelihood of needing to pay for LTC is exponentially greater than their heterosexual peers due to the simple fact that many LGBT elders never married or had children—after all, same-sex marriage was achieved late in their lifetime. On top of the pressure of having to cope with the costs of LTC, the aging LGBT community must also deal with finding a community that will feel welcoming to them. Unfortunately, the supply of LGBT senior living facilities is far below the current demand, let alone future demand. According to the organization SAGE, Services and Advocates for GLBT Elders, the number of seniors in the LGBT community is expected to hit 7 million by 2035. With LGBT senior assisted living facilities still being rare, many elders have resorted to hiding their sexual orientation for fear of being ostracized in a traditional nursing home. As a Financial Advisor, I encourage all my clients 50 and older to consider protecting themselves by getting LTC insurance, especially if they are LGBT and may prefer an inclusive environment. Below I outline some of the most frequently asked questions about LTC that I’ve gotten from my clients.
What is Long-term Care? Does Health Insurance or Medicare cover LTC?
Let’s first clarify what long-term care entails and if any of your current insurance covers it. LTC generally refers to the assistance that an elder requires to get through the day whether it’s due to a physical impairment such as being unable to get dressed or make breakfast, or a cognitive impairment such as Alzheimer’s or dementia. LTC policies can cover expenses related to home care services and nursing home services. There is a waiting period that an insured must meet before qualifying for coverage, but there are some companies that waive the waiting period for home care services. A typical health insurance policy will not cover the costs of having an in-home nurse or living in an assisted-living facility. Everyone will have access to Medicare but unfortunately it won’t cover costs for custodial care like a nursing home. Medicare will only cover care in a long-term care hospital (LTCH) that specializes in treating patients who may have more than one serious condition, but who may be able to improve with time and care before being allowed to return home. As you can tell, LTCH is like a traditional hospital that will treat a patient until they are well enough to be discharged—not suitable for someone who needs ongoing living assistance. The only ways to insure against LTC expenses is through a LTC policy or a life insurance policy with LTC benefits, known as “LTC riders.” By having adequate LTC coverage, LGBT retirees can both protect their retirement assets and have the power to choose where they receive LTC services.
Why would living in an LGBT-friendly environment be essential for some LGBT elders?
The aging LGBT community is one that has dealt with the greatest levels of discrimination throughout history, and it has unfortunately persisted today in senior housing facilities. According to a 2014 study by the Equal Rights Center, 48% of LGBT-identified seniors “experienced unfavorable differential treatment in terms of availability of housing, pricing, financial incentives, amenities or application requirements.” Because discrimination against the LGBT community is still imminent, LGBT people are more likely to suffer from mental health issues such as depression, loneliness, or thoughts of suicide. These potential health issues are further magnified by the increased likelihood of LGBT people being unmarried and childless in comparison to their heterosexual peers. The issues surrounding traditional senior living have motivated many LGBT elders to hide their sexual orientation, adding to a potentially detrimental state of mental health. It’s worth it do a little research on the location and costs of LGBT-friendly LTC facilities to determine the amount of LTC coverage you may need.
How much are LTC insurance policies? Are there ways to make it affordable?
There are many moving parts to LTC insurance policies so it’s important to go over all your options with a Financial Planner, especially one who has experience working with the LGBT community. If you are married or even in a domestic partnership, many LTC insurers will give you up to a 30% discount if you and your partner apply together. You could also get a joint policy which can offer ways to increase coverage or decrease premiums when compared to two individual policies. Another way to control your cost of LTC insurance is by limiting your benefit amount or extending your waiting period. Limiting your inflation protection can also reduce your costs, but I’d advise against eliminating inflation protection altogether if you are below age 70. One important fact to note about LTC insurance is that the premiums will go up periodically over time, so you must review the LTC insurance company before making any decisions to see how often they’ve increased their premiums and by how much. Some LTC insurance companies have been known to increase their premiums by as much as 40% from one year to the next! If you know you’re going to get LTC insurance then act fast because premiums tend to go up 3% to 4% each year that you delay applying. Not to mention, potential health issues could further increase your premiums or even inhibit you from qualifying at all.
Are there any alternatives to LTC insurance?
Yes! There are life insurance policies that offer LTC riders which means you can use a portion of the death benefit to cover long-term care related expenses. It’s important to note, however, that the LTC riders of life insurance policies differ greatly from a stand-alone LTC insurance policy. The two LTC solutions could differ in types of services covered, inflation protection, or triggering events. Therefore it's essential to review all of your options with a Financial Advisor who can advise you on all options.
Many people may not be able to imagine themselves living amongst strangers in a nursing home and might instead see themselves in the comfort of their own home. Whatever your preference, the chances of needing long-term care services is high and it’s important to know the ways you can plan and prepare for them through the appropriate long-term care coverage—especially if you are LGBT and will want to receive care in an inclusive environment.
Robert Castillo, ADPA® is a Financial Advisor at Santa Monica, CA based Gerber Kawasaki, an independent investment advisory and wealth management firm with over $585 million in assets under advisement. Robert is also an accredited domestic partnership advisor and has been specializing in financial planning for LGBT same-sex and unmarried couples since 2009. To contact Robert, please email him at Robert@GerberKawasaki.com. You can read Robert’s biography at www.gerberkawasaki.com/team/robert-castillo
Twitter: @RCastilloLA Facebook: www.facebook.com/robert.castillo.90405
Disclaimer: This article contains general information and is not intended as legal or tax advice. Every case must be reviewed independently with an attorney or tax advisor.
Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor.