What is Long-Term Care & How Does It Work? With Eileen Dunn: Long-Term Care Series, Part #1

What is long-term care & how does it work?

Cameron Valadez 00:28
Hello, and welcome to another episode of Retired-ish. I'm your host, Cameron Valadez, and today we are going to begin our multi-episode series on long-term care. As with personal finance in general, many people and even professionals are simply undereducated in the world of long-term care. Yet it is something that has a very high probability of affecting all of us mentally, physically, and financially, particularly later in life. Long-term care is a critical topic, but so many of us put it on the back burner because we believe that it will never happen to us.

I'm sure you've felt that way at some point. This is especially true for pre-retirees and retirees alike, although financially, it can be devastating to your overall retirement nest egg or even capitulate the financial legacy you hope to leave behind to your heirs. That is if you haven't planned ahead. So today's discussion focuses on what you need to know to understand what long-term care is and the impacts it can have on your overall financial plan. There's both a financial element and a human element, and that's what I've brought today's guest in to discuss.

We are going to kick things off by answering the basic questions of what is long-term care and how does it actually work in the real world? To help educate us on all the real-world processes of long-term care, I brought a very special guest with me today who has decades of experience in the trenches and has amassed a wealth of knowledge hard to find elsewhere about the long-term care health system. This isn't the typical long-term care information you're going to find from a Google search or AI bot, so stay tuned and be sure to save this episode for future reference.
As mentioned, I have a very special guest with me today to help guide us through the different aspects of long-term care in great detail. Her name is Eileen Dunn, and she is a medical social worker with a master's in Health Services Administration, a hospital discharge planner, a geriatric care manager, and has a patient care management business.

00:02:43 She even grew up in a nursing home, believe it or not. Eileen, thanks for coming on the show. Tell us a bit more about yourself and your experiences in this field.

Eileen Dunn
Okay. Well, thanks, Cameron.

00:02:54 I think I'm a little bit of an anomaly in the long-term care world, particularly when it comes to long-term care planning, but I had been a hospital discharge planner for many years. I saw people lose everything to long-term care, but I also saw people in their 50s lose everything, even to a rehabable event. And it wasn't until when I left the hospital I live in the Adirondack Mountains in upstate New York and I had taken a job as a special assistant to the director of the New York State Medicaid program. And in New York State, we have this thing called the Partnership for Long-Term Care. And it had to do with this thing called long-term care insurance.

Here, I'd been working in a hospital every day dealing with Medicare, Medicaid, Blue Cross, Blue Shield, all of that, and I had never heard of long-term care insurance. So, of course, my first response was right, what's the catch? If something sounds too good to be true, chances are it is. So when I left the state, I started my private practice as a geriatric care manager, and the director of that program said, ‘Eileen, you really should incorporate long-term care insurance into your business because there's really not anybody with a healthcare background doing it.’

00:04:06 And I really wasn't sure about that. So I decided to start attending some seminars. The reality is it was flat-out wrong information, and it really wasn't intentional. It's just that the people that were talking about it were basically just talking about a product, but they had no understanding of the long-term healthcare system. And unless you understand a long term healthcare system, how could you ever decide if you need to insure for it?
So that's when I kind of started to take a deeper dive into those things and really seeing the importance of planning, particularly through my care management business, when people didn't exactly have the best plans in place.

Cameron Valadez
Wow, Eileen, that's a fascinating perspective and very enlightening. And with that, I'd like to dive into this important topic. So help us understand a little bit more about what really is long-term care because I think everybody has kind of a different perspective on it, and most just don't really understand it for what it really is. And I know you have that insight, so could you share that with us?

Eileen Dunn
Sure. And I would ask you, and I would ask the audience, too, what is the first thing that you think of when you hear long-term care? And most people are going to say nursing home, right?

Cameron Valadez
Right. To me, it's assistance.

Eileen Dunn
Right. Now, we have to kind of drill down on what we mean by that assistance. What we mean when somebody we say someone needs long-term care is that they need what we call standby assistance with these things called activities of daily living called ADLs. And there are six of them. It's bathing, dressing, eating, continence, transferring, and toileting. And toileting is not nearly as offensive as it sounds.

Very often, that's just assistance getting to and from and with clothing adjustment. And this term, standby assistance means someone within arm's reach for safety, fall precaution, verbal cueing, that kind of thing. Or it could mean someone that needs assistance because they have a cognitive impairment. But there's another level of assistance that is not talked about as much as it should be. And it's what we call the homemaker services.

00:06:13 Those are IADL's instrumental activities of daily living. And those are things like meal preparation, light housekeeping, laundry, those kinds of things. In fact, most of my care management clients come to me when they first just start needing somebody a couple of days a week to help get them to the store, maybe do some of the heavy lifting around the house, like the laundry, those kinds of things. Then eventually, they might need some standby assistance. Then down the road, they might need hands-on or physical assistance. It's really kind of a continuum of care.

Cameron Valadez
Got you. And although listeners may not be too familiar, I know that Medicare doesn't necessarily cover long-term care or a lot of those things that you talked about. Yet that seems to be what most people think. You know, they say, ‘Oh, I won't worry about that because I'll just have Medicare cover that.’ Or, ‘Hey, doesn't the state have programs that will just cover me if I don't have the money to pay for my care or assistance?’ And unfortunately, this isn't the case in general. It's only things like skilled nursing that are covered, which is totally different than long-term care and those six ADLs that you spoke of. And even then, skilled nursing is only covered for so long. And another thing people should know is that skilled nursing is actually medical care and assistance rather than assistance with any of those activities of daily living.

And that being said, where does Medicare coordinate with all of this? And what about programs like Medicaid or Medical in somewhere like California? Why is that really not a great option for care for most people?

Eileen Dunn
Okay, so with Medicare, I think it's important to remember that when we talk about Medicare, or if you're under 65, whatever your primary health insurance is, health insurance is really about treatments and diagnostics. You go to the doctor, fine, your insurance will cover.

00:08:07 And now maybe the doctor says, ‘Okay, I need to run some tests.’ Okay, great. Your health insurance will cover. But now, maybe you have a diagnosis of Parkinson's or cancer. That primary health insurance is not going to cover the care that you need because of that diagnosis. So that's where the big difference comes in.

Now, when it comes to home care, Medicare will pay a very limited amount for home care, but there are four very specific criteria that you have to meet. The first one is you must require a skilled service. Medicare and health insurance are always going to be tied to a skilled service. So wherever you see skilled care or skilled service, it means anything that requires a licensed professional, and that would be a nurse or a physical therapist, or an occupational therapist. I've had people sometimes that have said, ‘Well, my aunt went home from the hospital, and she had a nurse that came out three days a week to help her.’

That wouldn't have been a nurse. That would have been a home health aide who would be supervised by the nurse. But nurses are skilled medical professionals, so that wouldn't be their role. So you have to require skilled service. The second one is you must require hands-on care. Now, remember, before we just talked about standby under Medicare, it's a little more restrictive. You must require physical assistance with the task. The third one is you must be considered homebound. Physically unable to leave your home without substantial assistance in a wheelchair is not necessarily considered substantial assistance. And the last one is your care must be considered restorative. You need to be showing signs of improvement.

00:09:51 So let's say that someone was in the hospital and they had some surgery, they're getting ready to go home, and the discharge planner says, ‘You know, Mrs. Smith, I don't like the looks of that wound, so I'm going to make a referral to the public health nurse.’ So you go home, the public health nurse comes out and says, ‘Yes, I need to change the dressing on that wound twice a week.’ Well, there's your skilled service because that is something that the nurse has to do. And now the nurse says, ‘All right, I see you meet this other criteria.

00:10:19 You're homebound, you're restorative, and you need hands-on care. So I'm going to create this care plan for you, and I'm going to have a home health aide come out three or four days a week, and here's what she's going to help you with.’ So everything's going along fine. The nurse is coming out, changing the dressing a couple of times a week. You have the whole health aid, but five, six weeks goes by. What's happening with that wound? Hopefully, it's healing, right? So now the nurse comes out, and she says, ‘Well, Mrs. Smith, skin integrity is intact, the risk of infection is gone. You're discharged from nursing services.’

What happens to that home health aid service? And a lot of people say, ‘Oh, well, that's just going to go away.’ Well, it won't necessarily go away. The agency that's providing the aid won't just pull the rug out from under you, but what they will say is, ‘Mrs. Smith, you've exhausted the benefits for your primary health insurance. It doesn't mean you still don't need the assistance, but we've run out of that, so how would you like to pay for it?’

So Medicare, it's very limited. And the same applies now and again, we're talking mostly about home care here. Some people think they could turn to Medicaid, but the problem is now Medicare is what we call an entitlement program. It's Title 18 federal funds. Medicaid is Title 19 federal funds. And you must be at the poverty level because it's really intended for people without means. Years ago, what people would do is basically they would try to falsely impoverish themselves to gain access to Medicaid.

00:11:54 The problem is, like, for example, let's say someone had an irrevocable trust, and they say, ‘Well, I'm just going to get everything out of my name, and I'm going to put all this in an irrevocable trust.’ And then, if something happens, as long as I've had that trust for five years, those assets won't be counted. The problem with that strategy when it comes to home care is that you're always going to be bound by the income guidelines. I know that each state is a little bit different, but they're all really pretty similar. And in most states, a single person's income can't exceed more than about $900 a month, and a husband and wife about $1,300 a month.

Again, that would be up and down a couple of $100, depending upon your state. And in terms of countable assets, some states, it's down to $2,000. And for a husband and wife, $4,000. That's a very low bar. It's honestly why I became so engaged in wanting to learn more about this myself 20 years ago when I started my care management business because there were many times that I had patients in the hospital that could have gone home, that they just needed somebody for a few hours in the morning and a few hours in the evening.
The problem is people don't work for free. Remember, I said care kind of comes about incrementally, and when you're at home, you still have to buy the food, pay the lights, and you have all the expenses for being at home. So when you start needing this care, it's usually paid for out of their savings. And what would happen when their savings is gone? Their condition would deteriorate.

They would wind up back in the hospital. We can't legally discharge someone to an unsafe environment. We know it's an unsafe environment if they require, let's say, five or six hours a day for somebody to be there. Now, even though they have no assets, their income puts them over the limit. So they didn't qualify for home and community-based Medicaid, so they would wind up waiting nursing home placement in the hospital.

That's why I'm such a big proponent. Me, I think that home care is the biggest risk. Everybody has this big fear about nursing homes, but most people don't go to the nursing home, especially now that we have these great assisted living facilities. People want to age in place.

00:14:08 They want to be in their home environment for as long as they can. And so that, to me, is again, one of the biggest risks is you really can't count on Medicaid if you want to get your care at home or in a nice assisted living.

Cameron Valadez
If we can't rely on Medicare necessarily, and we also don't necessarily want to rely on something like Medicaid, even though, as you said, it can pay for some of this care. What if, let's say, your kids, your adult children, offer to help out? And especially, like you said, from what I've seen, normally, the kids don't really want to put Mom and Dad in a nursing home either. They'd rather have them at home and have that home care, and I think Mom and Dad prefer that, too, if possible. So usually when that's the case, the kids are usually saying, ‘Oh, well, brother or sister can take these days a week, and I'll take these days a week, and I'll go and help Mom or Dad out, and then maybe we can go get some professional care as well to take on the other days. Or we'll just show up and help.

What do you think about having kids offering to help out or even if the other spouse is still well and them trying to take that burden on?

Eileen Dunn
Well, I think that there can be a lot of pitfalls. And I work with adult kids all the time, and I've really never had any that consider taking care of their parents' burden. It's a natural act, but it's also one that, most of the time, they're not very well equipped for. The other thing, too, is especially when it comes to spouses. When I'm going out and doing a home care assessment, I'm assessing the primary caregiver just as much as I'm assessing the care recipient. And there are certain tasks that I don't want the spouses to do, like bathing and dressing.

00:15:56 There's too much twisting, there's too much turning, there's too much risk for injury. The last thing we need when we have one spouse needing care is to have the well spouse start needing care. The other thing that people have to understand is that as you're aging, so are your kids. I actually currently have an 87-year-old woman whose 65-year-old daughter lives with her, but the daughter has more health issues than with the mother.

Those kinds of things have to be taken into consideration also. And I actually had one that was very sad. The people had actually looked into purchasing long-term care insurance probably about ten years ago, but they assumed that they didn't need it because they lived in a side-by-side duplex. Their daughter lived on one side. They had five kids, all of them lived in the area, and they figured, no, the kids, the family will be there to help.

Fast forward ten years. Two of those adult children died before Mom and Dad. And the daughter that lived in the one next door died before them. And then, one of the sons had to move away for his job.

So now it's just down to two daughters that are left in the area. And I think that most of the time, the adult kids, want to be involved, but it's also better to be involved more as a supervisory type role rather than actually having to provide the care. Mom and Dad aren't often comfortable with that, and the adult kids often aren't comfortable with that. When we get into the later stages, I think, like I said, care comes about incrementally, and it's just running around, picking up medicines, getting some groceries, that kind of thing. But when they start needing that standby assistance but not only that, as we go back to, like I said, that bathing and dressing are usually the first two ADLs that people need assistance with.

00:17:50 But also from a clinical standpoint, it's better to have someone who's going to be looking for skin integrity, muscle strength, that type of thing that we can help the seniors with.

Cameron Valadez
Got you. So mainly, the role of the adult children would be not so much supervision of Mom and Dad, but supervision of their care and who they're hiring to do these things.

Eileen Dunn,
Right. And it can be, especially if the adult kids are working and they often have grandkids too, so they're juggling a lot. And I think that people underestimate the stress of being a primary caregiver.

Cameron Valadez
Yeah, absolutely. I would agree with that. Well, thanks for that insight. That was great.
I want to piggyback off of that and ask if you have any tips for our listeners that currently are the ones that are taking care of parents or managing their care or have a parent who is close to needing to make decisions about their future care. What kind of tips or insights would you have for them that we haven't discussed?

Eileen Dunn
Well, there is a lot of information out there. I would say also to start with some of your local organizations because there's something out there. I tend to call it the healthcare underground. There's a lot of little services that might be available that people just aren't aware of.

But your hospital discharge planners might know. Some social workers at the nursing homes might be able to give you some insight even through the Alzheimer's Association. Sometimes there's grant money available through places. There's a lot of small agencies that provide respite care that might be a couple of hours a week that's free to people. But I would also have them look up what we call a Caregiver's bill of Rights because it's really important.

Just like we talk about work-life balance, you've got to have this balance with your caregiving too. But I think one of the biggest things is to ask for and accept help. Sometimes people are afraid to ask. If you have a sibling that isn't offering to help, well, then ask. And it's okay to do that. If you have parents that are getting near where they might have to make some decisions or kind of thinking about things.

00:20:11 But a lot of times, the adult kids say, ‘I just don't know how to even bring this up to my parents. How do I even talk about this?’ One way is to open it up, talk about what you've done. Maybe you said, ‘No, Mom and Dad, I just want you to know that we just got some of our planning in place. We've got a will, and I've got a healthcare proxy, and Sue is going to be my healthcare agent. She knows exactly what my wishes are. By the way, have you guys done anything? Because I want to make sure that I know what you want so that when the time comes, I'm doing what you have asked us to do.’

Cameron Valadez
Yeah, that seems like a great way to kind of broach the topic. Thank you for sharing that.
I mean, you know, including long term care planning in one's comprehensive financial plans and things like long term care insurance, like you've mentioned before, can truly work when they're well understood, right? And if it's tackled early enough. And I'm glad you have shared more of the nuances around how the process actually works because the unfortunate reality is that more often than not, most people hear of or talk about long-term care only when talking with their insurance or financial professionals when they bring it up in their meetings. And most don't actually have an understanding of the long-term health care system unless maybe they've been through this before with a parent or some other family member and just some knowledge of products that may help alleviate some of the financial burdens, sometimes it would be putting the cart before the horse.

You don't go to your cardiologist to have brain surgery. Even though they're both licensed physicians. There are areas of specialty, and long-term care in the context of a comprehensive financial plan is definitely one of them.

Eileen Dunn
Oh, I would absolutely agree. And I think you're also right that long-term care is often one of those ‘oh, by the way’ conversations. I always say to my advisors, ‘Listen, it's really important to set a separate appointment with your client to define their long-term care plan.’ Because everybody has a long-term care plan, but we want to really sit and define it because if you're bringing them in, you're doing an annual review.

00:22:27 That's where their mindset is. It's on that review, but you really need a special appointment time set aside and designated specifically for long-term care. And I also find, though, that it's just an uncomfortable conversation sometimes, not only for the advisors but also for the clients. I was doing some training with advisors before, and I said, ‘All right, so you're comfortable talking to your clients about interest rates and how they go up and down,’ And they said, ‘Yes’. ‘And the markets and how they fluctuate and go up and down,’ and they said, ‘Yes.’ I said, ‘Are you comfortable talking to them about continence?’ And they just kind of looked at me, and one of them goes, ‘You mean like Asia?’

Cameron Valadez
Oh my gosh, that's funny.

Eileen Dunn
So it can be a little bit uncomfortable for the advisors, but it's just one of those things that you just you don't have to get into gory detail with them. You just got to say, ‘Hey, this is a real risk. How can we manage this for you?’

Cameron Valadez
Right. And again, going back to what we were talking about earlier, I think it gets put on the back burner a lot because most people just don't realize how impactful it can be. Not just maybe, they can imagine the burden and the possible stress. But as far as the finances go, I don't think a lot of people realize just how much this stuff can cost unless someone else has brought it up to them and said, ‘Look, the odds of this happening are a lot higher than dying,’ for instance. But people have things like life insurance, but they don't consider the cost of care. And again, another big problem of that is a lot of people just think, ‘Hey, that's not going to be me.’

Eileen Dunn
Well, and right, when they think about the nursing home, and they're correct.

Cameron Valadez
Right. But the home care, a lot of them don't even know that that's a thing either.

Eileen Dunn
00:24:10 Right. And I'll tell you a lot of times I'll say to people, if I tell you it's very likely you're going to need six hours a day of care, what do you think your physical condition is? And people think, ‘If I need six hours a day of care, I must be in rough shape.’ And by far, that is the amount of care that I put in place for my care management clients. And it's usually just a few hours in the morning and a few hours in the evening. As an example, I have a husband and wife who been having this care for probably five or six years now, and it's the husband that needs the assistance.

So we have a gal that goes in from nine to twelve. Now the wife has already gotten the breakfast, so when the aide gets there, she'll throw in a load of laundry because that's another one of those tasks that I would prefer my seniors not do. Think about again, the twisting and bending and carrying the basket, that kind of thing. So she throws in a load of laundry, she helps him. Again that standby assistance with bathing and dressing, does the morning grooming, makes sure the morning meds are done, gets them through the lunch hour, and cleans up after lunch. There's three hours right there. Then they're fine for the afternoon. Then we have another gal that comes back from five to eight. She puts away the laundry from the morning, gets him through the dinner hour, helps him back into his nightclothes, does the evening grooming, makes sure the evening meds are done, and cleans up after dinner.
There's another six hours right there. But it's six hours that makes the caregiver and the care recipient's life easier because people, again, caregiving full time can be really hard, and those three hours are just a godsend for the wife. She can run out and do some errands, that kind of thing. But at $25 an hour times six hours a day, you're looking at a little over $40,000 a year. And that's just for basic care.

Cameron Valadez
That would change based on the state and the exact location in each state, right?

Eileen Dunn
00:26:09 Well, the home care cost, state to state, they're pretty even, about $25 an hour. So some are actually even up to $30. I have a 94-year-old gentleman right now, that I have to have two caregivers there twenty-four hours a day. He's got four kids, but none of them live in the area.
Cameron Valadez
Yeah, I could see how it's easy to underestimate the need of care.

Eileen Dunn
00:26:31 Well, there's only three reasons that I have ever had to place someone in a nursing home. And the first one, nine times out of ten, it's because they've run out of money. I can make anything happen at home, but it has to be paid for. And the second reason, again, back to the caregiver stress. People seriously underestimate the stress of being a primary caregiver, and the last reason would be that their care did get to the point that they did need that level of assistance.
But it's almost always after the home care options have been exhausted, and that's where the long-term care insurance comes in.

Cameron Valadez
Well, if you didn't know much about long-term care before listening to this episode, or maybe you're somewhat familiar or have talked to, let's say, someone like your financial advisor about it once or twice, casually, like we mentioned, I ask that you move it up on your priority list and define your long-term care plan. Because the reality is everybody has a long-term care plan, as Eileen said. And if you haven't looked at what options are out there, then you're on what Eileen and I would call the default plan. That means that when something happens, you're not going to have a choice, and you're very likely going to run through all of your resources, your retirement income nest egg, other assets, and ultimately potentially any financial legacy that you may have hoped to leave behind.

00:27:56 So you actually need to sit down to define and implement your own long term care plan. So thank you again, Eileen, for educating us on the realities of long-term care. I can't wait to dive deeper into this topic and continue our conversation, which, of course, we will share with the listeners in the following episodes. This has been truly insightful.

Eileen Dunn
Thanks, Cameron. It's nice to be here.

Cameron Valadez
And that does it for part one of our multi-episode series on long-term care. Stay tuned into the podcast because, in a couple of weeks, we will return with part two, where we will discuss the ins and outs of long-term care insurance at length. So I know we talked about it a little bit today, but if you are wondering about the different types of long-term care insurance and how that works, stay tuned because we are going to have a full episode just on the insurance itself.

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