Saving Enough Money for Long-Term Care

Adjusting to living with dementia brings plenty of challenges for Canadian families, including figuring out the cost of care. Whether you’re leaning toward at-home assistance or a private or public care facility, everything has a cost.

“People sometimes think long-term care is all going to be covered, but it’s not,” says Kathy Mendham, founder of Proactive Seniors, a Calgary-based agency that helps families plan for future aging needs. “You should always be anticipating there will be a cost for long-term care.”

According to Mendham private-facility, long-term care costs an average of $8,000 per month. “That would be a very average cost and it can certainly go up from there,” she says.

Many extras — including things like cable, telephone, personal laundry, personal care products and outings — are typically added on top of the monthly fee, making it possible for private long-term care costs to easily exceed $100,000 per year.

“The higher the nursing needs, the more expensive the care will be,” Mendham says of private facilities, then goes on to point out that there are also “quite a few seniors’ facilities offering public dementia care, and you’d be looking at around $2,000 a month for those.”

But wait lists for the public facilities can be long when there is more demand than supply.

“The private market can often allow for quicker access,” Mendham says. “Planning for the costs of seniors’ residential care as far in advance as possible is the prudent thing to do.”

But what is the first step in this kind of forward-planning?

Choosing the right insurance

There are insurance options available specifically for long-term care. The problem is, most families don’t consider these policies until a loved one has already been diagnosed with dementia.

“If someone is already diagnosed, there is [little] we can do on the finance side for [long-term care insurance],” says Jennifer Jacobs, owner and senior insurance specialist at LTCI Consulting Inc. “All people should consider insurance of this kind, especially if you know your parents or someone in your family had dementia.”

Jacobs tries to get her clients to start discussing long-term benefit planning around age 40, but she says most people don’t consider it until they are closer to 65. She says someone in their late 60s could certainly qualify for coverage, but the cost-benefit analysis changes quite a bit for older Canadians.

“I wish I could educate more people 25 to 50 to consider long-term care insurance, because, mathematically, it is potentially very beneficial,” she says. “A younger individual would only need to collect on the policy for one year of their life to equal all the payments they could ever pay into that policy. Still, I just can’t convince a lot of young people to [buy in].”

To add to this, the options for long-term care insurance are dwindling. According to Jacobs, as Canadians live longer, insurance companies are abandoning their limited pay policies. These are policies in which the customer only pays premiums for 25 years or to age 65 (whichever is greater) and long-term care coverage is then guaranteed for the rest of their life. Jacobs says major insurance providers Desjardins and Manulife recently discontinued their limited pay
polices, leaving Sun Life as the only national provider offering stand-alone income benefit/long-term care insurance.

Jacobs believes within the next five years, Sun Life could stop offering its long-term policy, too. In the meantime, it is selling more of these policies than ever before as customers realize this offering is the last of its kind.

Care at Home

According to Miles Posner, director of strategic planning and business development at MyDignity (an Ontario-based business providing insurance solutions), getting approved for a long-term care policy can be difficult.

“These policies are great if you can get them, but they have a decline rate of 50 per cent,” says Posner, who helped create an insurance product more than 10 years ago that he says is a more realistic option for many aging Canadians.

“MyDignity is easy to get. We have a 95 per cent approval rate,” he says.

MyDignity is endorsed by CARP (formerly the Canadian Association of Retired Persons) and is fixed to pay out $100,000 in total. Because the policy has a set limit, Posner says it is much easier to get than traditional long-term care polices.

The MyDignity plan focuses specifically on home care costs. Customers only require a doctor’s form indicating the individual needs personal assistance to activate the policy, and, according to Posner, they can start expensing home-care costs immediately, unlike most long-term care policies that take 90 days to kick in.

“That’s probably you’re most vulnerable time, because things are happening and it’s taken you off balance,” Posner says. “The plan we’ve created isn’t Lotto Max, but it goes a long way for most Canadians.”

Whether you’re looking into long-term care insurance, are considering a plan like the one provided by MyDignity, or are exploring other methods for saving or accessing money, it’s important to keep in mind that the costs of care, especially for individuals with dementia, can be unexpectedly high, so forward-planning is a must. [ ]