It is no longer possible to turn on the news without being reminded on a daily basis that the Canadian health care system is already in a state of crisis. Those who have family or friends on long-term care waiting lists know that the situation is becoming desperate. The shortage of long-term care beds is so severe hospital acute care beds, already in short supply, are occupied by those awaiting transfers to long term care facilities. In some cities, like Victoria, that wait can last from one to four years, depending on the facility.
With growing pressure from an ageing population, the system simply cannot handle the increasing burden. Consider this:
In 1900, 7% of all adults were over age 65
Currently, 17% are over age 65
The number of Canadians aged 80 and over will double in the next 20 years - and triple in the next 40 years
The number of seniors in Canada has increased by one million in the last decade
By 2020, there will be as many seniors as children!
With an ageing population comes the increasing costs of geriatric medical care. Currently we are spending $3.9 billion each year on Alzheimer's and dementia. By 2031, the number of Canadians afflicted with some form of dementia will more than double, to 750,000.
Our medical system is already unable to deal with the overload, and we are seeing drastic cuts in funding for residential long-term care. This shift towards "less costly" community-based care has dramatically increased the demand for home care, but at the same time the average number of home care hours you might have received a few years ago has dropped from over 20 hours per week to just 2-4 hours per week!
Again, those of us who have elderly parents and friends might be forgiven for feeling somewhat cynical about the current debate surrounding two-tier medical services. When it comes to long- term care for our loved ones, it is readily apparent that a two-tier system is already well entrenched. In short, the services are available, if you can write the cheque.
So…what are the chances that you will need long term care? It's true, we are living longer - in fact, in 1996, life expectancy at age 65 was 18.4 years, 5 more than in 1941. But the other side of the coin is that of those 18 years, on average, 9 are relatively healthy, and the other years include 3 years each of slight, moderate, and severe disability. In fact, it is estimated that at least 40% of all people over 65 will need some form of long-term health care services.
Traditionally, we have counted on the government to provide for our medical needs, but when it comes to long-term care, you can expect the following from our medical system:
long waits, up to three or four years
outdated and overcrowded facilities
an annual financial assessment, to determine the level of subsidy received
no choice of location
reduced services
Unless you have medically trained family members, who are willing and able to drop everything and tend to you around the clock, you could find your retirement savings liquidated in a few short years if you elect to pay for private home care or facility care. Consider the following:
Current home care costs about $30 per hour, and up to $50 per hour for some services
Even a government facility will cost you from $750 to $1500 per month, in addition to the subsidy
Private facilities range from $2500 to $7000+ per month! And don't forget, this is the cost per person, not per couple.
Fortunately, there is now available in Canada insurance to cover the ongoing expenses of long term care. Available in the United States for decades, this coverage has recently been made available in Canada. Those of us whose practices consist largely of seniors know that it is long overdue.
Long-term care insurance covers virtually all of the expenses of long-term care, either in your own home or in a facility, for periods ranging from a few years to lifetime coverage. If you are between the ages of 30 and 80, you can apply for coverage. Depending on the level of benefit you select, you can receive up to $300 per day - tax free!
Although only a handful of companies in Canada currently offer this coverage, we can expect that many more will make it available in the next few years. When looking for a long-term care insurance program, we suggest that the following are important features to watch for:
Unisex rates (this keeps the premiums lower for women)
No extra charge for smokers
Waiver of premium (when you start receiving the benefits, you stop paying the premiums)
Limited premium payment period
No medical examination (although the companies will check your medical history)
Those of us involved in financial eldercare believe that the introduction of long-term care insurance may be the most significant step the insurance industry has taken in many years. For ourselves, and for our loved ones, Long Term Care Insurance may be the only thing that stands between us and the loss of our lifestyle, our independence, and our control over our health and finances.
As one senior put it so eloquently, "Most people want to choose where they go, instead of having to go where they are taken…"
Ken McNaughton, CFP, CLU, CH.F.C.
Chartered Financial Consultant
Zlotnik, Lamb & Co./Victoria
250-727-3445
250-479-9716 www.zlc.net Senior Years received the following question from one of our visitors:
Mr. McNaughton,
After reading your article, Long-Term Care Insurance in Canada, one
question
remains... How do you determine the amount of coverage for a LTC plan (LTC
insurance needs) since the future is unpredictable?
An excellent question!
My standard, simple answer is - buy as much as you can afford.
I base that response on a few facts that are nationwide:
the cost of health care, and especially long term care is increasing at a dramatic rate.
the ability of government to adequately fund these increases becoming less certain.
the demographic pressure on the long term care facilities is going to be huge
long term care facilities are currently having a hard time making money - price increases for their services will be a fact of life.
That said, I do NOT recommend spending more than you can comfortably afford, for the
simple reason that every company in Canada reserves the right to reprice the product
after the first 5 years of your contract. If you are just barely able to afford the
premium today, the contract might be in jeopardy if there was a large price increase.
Hope this helps
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