Home Radio Segments Guest Segments What Seniors Must Know About Long Term Care

What Seniors Must Know About Long Term Care

Howard Schwartz, Long term care

With Howard Schwartz, Co-Founder of Schwartz Family Home Care

70% Of Us Will Need Long Term Care

Statistics show that somewhere on the order of 70% of people turning age 65 today will need a Long Term health care service to support them during their remaining years.  Steve has invited Howard Schwartz, Co-Founder of Fort Lauderdale based Schwartz Family Home Care, to the show to talk about the manifold issues related to Long Term care and to get some “behind the scenes” insights into the industry.  Everyone can benefit from getting a clearer idea of what to expect if (or most likely, when) we ourselves need these kinds of services.

What Leads To People Calling A Home Care Business​?

Howard explains that the majority of his time goes into fielding calls from patients and their families concerning home care or facility care, though he adds that interest in home care usually far exceeds that of “institutional” care.  Steve asks what kinds of events trigger a patient or one of their loved ones to recognize a need for more intensive care.   Howard describes a general sort of immobility and decline in energy for normal activities—they’re not getting up quickly or going out as much, and they seem more introverted than normal.  This kind of change is often gradual and subtle, but there’s a recognizable progression.  Other times the triggers are more acute, like a fall that causes injuries or a home visit by a child that reveals deplorable living conditions, such as the AC is not on, the place is a mess, and the parent seems oblivious.  Situations like these often lead to a search for information about in-home aides and healthcare providers and, perhaps, a decision soon after.

Powerful Attachment To Independence And Home Shapes Long Term Care Options

One of the major complicating factors that frequently comes on the heels of family members’ initial concerns and research into care options is resistance by the potential patient to the idea of needing help.  They don’t want a caregiver in their home, and they’re even less inclined to move into some kind of residential facility.  In these cases, the child or relative is often on their own in identifying the problem and taking action to address it.  Steve asks Howard how these family members might overcome this opposition.  His reply is that there are several methods that he’s seen work: simply trying to persuade the loved one that they need help, making a case that accepting outside help is really for their (the child / relative’s) well-being and peace of mind (“I don’t feel good with you being alone, and I can’t move in with you”), and even a tough love approach based on the threat that if they don’t accept help in their own home, they’ll have to be moved into a nursing home.

Facility Based Treatment Options

Beyond in home care, Howard describes some of the residential care options: independent living facilities where patients have their own small apartments and the facility provides meals and social events, and assisted living centers in which clients get minimal care and a certain amount of help with “ADLs” (Activities of Daily Living) like bathing and dressing.  Nursing homes provide the next, much more intensive level of care.  It’s usually the last step before hospice.  Most people understandably dread moving into a nursing home even though many do reach a point where they need that kind of comprehensive care.  Unfortunately, because Medicaid will pay for a nursing home but not for independent living, assisted living, or home care, many people are forced to choose between nursing home care or no care at all.

Taking Someone Out Of Their Home Can Damage Their Mental And Physical Health

Steve says that he imagines most people want to “age-in-place” (to use a somewhat clinical industry phrase) in their own homes because they’re comfortable there and they own it.  He wonders whether this is an option that is growing in popularity, and how it fits or doesn’t into the residential options just described.  Howard agrees that the vast majority of aging people do want to stay in their own homes, even when that might not be in their best interests for health, self-care, and quality of life reasons.  In fact, many people suffer health and emotional setbacks when they are moved out of their homes, even when they move in with their well-meaning children.  He mentions that his own mother-in-law, suffering from dementia, began declining more rapidly when she moved into his and his wife’s home.  Of course, sending her to a nursing home would probably have incited an even worse decline.

Identifying Patient Needs And Matching Them With The Right Home Care Provider

Given this negative cause and effect, Steve asks what it takes to get adequate care in the home.  Is it possible to get all of a person’s needs filled by home care operators?  How does one set up something like that?  Howard states that finding the right home caregiver is possible in most cases and that the process starts with identifying the client’s needs.  Simply saying that “my Mom needs help” isn’t very productive, so the home care provider has to collect some facts to better match a caregiver to a patient: Is the patient bathing and dressing by themselves?  Are they active?  Do they like to go out?  Do they have a social life?   Beginning with the most basic level, patients need help with “Activities of Daily Living,” which is comprised of five things: bathing, dressing, feeding, toileting, and transferring.  The first four are obvious enough while transferring refers to helping the client get from bed-to-chair or sitting-to-standing.  These services would be provided by a Certified Nursing Assistant or, in Florida, a “home health aide” who is trained to perform this kind of work. The second level of help would include shopping and preparing food, light housework, driving, and other tasks.

Who Pays For Long Term Care?

Steve shifts the conversation to the topic of payment: Who pays for these services, and how much do they tend to cost?  Howard replies that there are several payers, including out-of-pocket cash paid by patients or their families.  Medicare reimbursements are quite limited when it comes to home care. They may pay for intermittent skilled care like occasional visits by a nurse—maybe three times a week for a half an hour—and possibly for some therapy.  He remarks that most people need several hours with an aide rather than quick visits from a nurse, and Medicare falls woefully short on meeting that need.  Medicaid, as previously mentioned, will pay for nursing home care but not in-home care.  He adds that Medicaid policies are different in different states and that in states other than Florida they may pay for more in-home care.  This bias against home care in Medicaid policies causes a lot of consternation and, arguably, even more suffering for patients and their families.  Steve finds this baffling from a cost perspective, given the fact that in-home care is much less expensive than nursing home care.  Howard concurs, adding that this policy goes against the grain of what people want.   Steve asks Howard to run through some of the out-of-pocket costs in the industry.  He replies that nursing home care costs about $78,000 a year, though again, Medicaid foots the entire bill for most patients.  Home care costs $14-$20 an hour, which by Steve’s math works out to about $180 a day for 5 days of 4 hour’s worth of care.

Long Term Care Insurance: An Industry In Flux

Aside from these government programs and out-of-pocket payments, insurance policies expressly designed for Long Term care play a role in paying for home and facility care costs.  You pay a certain premium for a number of years and the policy is supposed to cover these expenses when you eventually need them.  Steve asks Howard to talk about the current state of these kinds of policies.  His response is that Long Term care insurance is a dynamic industry.  It usually does pay for home care if the policyholder needs help with at least two Activities of Daily Living.  However, there’s been a lot of change in this realm thanks to business mergers, rate increases, and a tightening of claims eligibility, allegedly because they’ve all been losing money on these policies.  Companies have stopped selling lifetime benefits policies because they are actuarial losers.  He talks about the Penn Treaty insurance company which recently went out of business, and how their policies were backstopped, though also simultaneously limited, by a “state guaranty fund” which will pay out claims up to $300,000.   Complications around who qualifies for reimbursements by this fund has created a lot of frustration among former customers of Penn Treaty.  Steve wonders whether Howard’s company is seeing greater or lesser payouts for these kinds of Long Term care policies than in the past.  Howard explains that these policies continue to be an important part of his business revenues and that claims and payouts have remained pretty stable despite all the changes and turmoil wringing the industry.  He points out that many old policies for Long Term care that covered home care have been sold to other insurance companies including some foreign ones—sometimes multiple times—and that navigating the claims process has gotten very inefficient.  The new companies often don’t even know the benefits of the policies they own.

How Do People Use Long Term Care

Steve moves on to the topic of how long people need this kind of care, how many years someone might expect to use it.  Howard answers that most people use this care for 2-3 years, though women tend to use it longer as they have longer life expectancies.  He notes with a chuckle that people with lifetime benefits policies often live longer and, therefore, keep care going longer than others.  Steve remarks that there are new hybrid policies which combine Long Term care benefit with a life insurance benefit or annuity that can be converted early if needed.  Howard admits he hasn’t seen these kinds of policies yet and doesn’t know whether they will pay for the services his company offers, but notes that home care providers are often late to these innovations.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: It is said that someone turning age 65 today has almost a 70% chance of needing some type of long term care service.  That service includes support in their remaining years, so why isn’t anyone talking about it?  Well, I’m going to talk about it today.  To help me go behind-the-curtain, I’ve asked Howard Schwartz.  Howard is Co-Founder with his wife, Mindy, of Schwartz Family Home Care, a licensed nurse registry.  Howard has been working in the home care industry for 25 years.  He’s witnessed enormous change.  We’re going to go behind-the-scenes to discover what we can expect if our own need for long term care arises.  Hey, Howard.  Welcome to the show.

Howard Schwartz: Nice to be here, Steve.

Steve Pomeranz: You work in this home care industry.  You do this every day.  Tell me typically what your day comprises.  What kind of people do you see?  What kind of services would I expect?

Howard Schwartz: Well, in terms of the patients, the clients, and the families, we mostly speak to them by phone.  Throughout the day, we’re fielding calls from clients and their loved ones.  Many times, they’re out of town trying to decide how best to get care for their parents.  Sometimes, that’s home care.  Sometimes, they’re considering facility care, but usually home care is primary.  Usually, people want to stay home.

Steve Pomeranz: Something has happened in their life where they realize there’s a need.  At what point would I probably realize that myself or a loved one needed this type of care?  What would I be looking for?

Howard Schwartz: When you see them starting to fail a bit; they’re not getting up maybe; they’re not going out.  They’ve become more introverted than they normally would be and that’s the slow, steady progression.  Sometimes, it’s acute—a fall, they’re in the hospital.  Sometimes, being in South Florida, a child comes to visit and is horrified that there’s no air-conditioning on, the place is not clean. So, those kinds of things get things started.

Steve Pomeranz: You can tell when there’s a line that’s crossed between what would be normal living conditions and habits of a person throughout their lifetime, something has changed.  That usually spurs some kind of a call or a decision.

Howard Schwartz: Yes, and, unfortunately, it’s not always clear.  Sometimes the client, the patient doesn’t see the need.  Sometimes, it takes a child or a relative to identify it because, during the situation, they’ll typically say, “I don’t need any help.”

Steve Pomeranz: Yes.  That was a question I was going to ask you next is, in some cases, the individual doesn’t really believe they need the help.  They don’t want somebody in their home.  They don’t want to go to another place.  How do you deal with issues like that?

Howard Schwartz: There’s numerous ways to deal with it.  Some people just try to convince the loved one that they need it.  A popular technique is to tell the parent it’s not for them, it’s for me, the kid.  “I don’t feel good about you being alone.” Sometimes, the tough love technique works by telling them, “If you don’t get care, you’re going to go to a nursing home.”

Steve Pomeranz: I see.

Howard Schwartz: You have to have care.  You can’t be home alone.

Steve Pomeranz: You mentioned nursing home, typically, there are a number of choices.  Nursing home you just mentioned as one of the; we all know about going to a nursing home.  What are some of the other choices that people have these days?

Howard Schwartz: There are independent living facilities where people have a small apartment and they provide meals and activities.  There’s assisted living where people get limited care with ADLs, which is help with bathing and dressing.  Typically, it could be from one to four hours a day in those kinds of institutional facilities.

Steve Pomeranz: It’s like enhanced independent living, I guess.

Howard Schwartz: Right.

Steve Pomeranz: More specific services for those who are past a certain point, but a nursing home is completely different, right?

Howard Schwartz: Right.  That is usually the last step.  To go into a nursing home is where most people want to avoid, but that’s where people need lots of care.  Actually, the truth, sometimes people wind up there because they don’t have money because Medicaid will pay for a nursing home.  It won’t pay for the independent living.  It won’t pay for the assisted living, so it won’t pay for the home care.  Some people wind up there, unfortunately, by default because of the financial, but most people start off with home care.  That’s usually the first step.

Steve Pomeranz: Yeah, I was going to ask you that question about home care.  I would imagine that most people want to stay in their home.  I think the term is age-in-place.  It’s where they’re used to living; it’s theirs.  They’re comfortable there.  Is that an option that is increasing in popularity or where does that fit within the other three options you must mentioned?

Howard Schwartz: Most people want to be home and some people want to be home even if it’s not the best place for the situation because their friends, they’re comfortable.  Especially as people age and they become cognitively impaired, they’re very comfortable in their home.  Once you take them out of their home, a lot of times they fail, they start to decline.  Even when the kids have the best intentions, moving them in with them, they become totally out-of-sorts.  I had this with my own mother-in-law when she had dementia.  We brought her to our house.  She couldn’t handle it.  She did fine in her place in Delray Beach; out of her house, couldn’t deal with it.

Steve Pomeranz: A nursing home would have been even worse.

Howard Schwartz: Right.  Right.  Would have been much worse.

Steve Pomeranz: Wow!  What does it actually take to get adequate care in your home because that’s a whole new set of needs that have to be filled, and you don’t have necessarily the professional staff there or an institution taking care of you?  How do you set something like that up?

Howard Schwartz: First, you have to identify what the client needs.  People call us and they say, “My mom needs help.” Well, that’s a broad spectrum.  We ask questions.  Are they bathing themselves?  Are they dressing themselves?  Are they active?  Our goal is to match the right caregiver to that client’s needs.  Step one would be try to get an idea about what the person needs.  Do they like to go out?  Are they socially active?  Then, express that to the provider of care.

Steve Pomeranz: But that person who comes in may need some nursing or other kinds of skills. What are the levels available in home?

Howard Schwartz: The most basic level is typically people that would need help, we call them Activities of Daily Living or ADLs.  Those are bathing, dressing, feeding, toileting, and transferring.  Transferring is helping someone from bed-to-chair, sitting-to-standing.  Those are the basic activities of daily living and those would be provided by a certified nursing assistant or a home health aide in Florida.  They’re trained to help with those items.  Secondarily, they can help with shopping, cooking.  They do light housekeeping, driving, things like that, but the five core items are typically what starts the ball rolling to get some care.

Steve Pomeranz: I’m speaking with Howard Schwartz, he is the Do-Founder and President with his wife, Mindy, of Schwartz Family Home Care.  Today, we’re really trying to find out what goes on behind-the-curtain.  We can Google this all we want and there’s no lack of information and articles written, but I found something missing when I was researching this.  That was, this idea of what is it like to be doing this every day and what is the real human experience behind this type of event in a person’s life?  That’s why I’ve asked you here today. Let’s discuss payment.  Where’s payment come from for nursing home care or for in home care?  What are the ways that this can be paid for?

Howard Schwartz: There are several payers.  The first is Medicare.  Medicare pays for very little in the home.  A lot of people think it will cover a lot, but it’s skilled intermittent care.  They have to meet the guidelines for that.  Typically, someone will come in and do a visit.  A nurse will come in, half hour, three times a week.  They might get some therapy, but what most people need in the home is an aide.  That’s where Medicare is lacking.  That’s the other part of the care.  Medicaid, in Florida, pays for very little in the home.  In some states, it does pay more for home care, but in Florida, it pretty much pays for the nursing home.

Steve Pomeranz: I read that there’s an institutional bias with regards to this that Medicaid would rather pay a facility than pay for in home care, which, in a sense, limits the playing field of the choices a lot of these people, especially if they want to stay in their home.  I think, to some degree, staying in your home might be less expensive than being in a nursing home?

Howard Schwartz: Yes, it is.  It’s unfortunate and people do not want to go to a nursing home and yet, that’s the place the government will pay for.

Steve Pomeranz: Mm-hmm (affirmative).

Howard Schwartz: It’s reverse in terms of what people want.

Steve Pomeranz: Medicare, you mentioned, Medicaid.  I guess money also comes out of the individual’s pocket, of course, to pay for this.  That would be obvious.  What about insurance companies?  Now, I’m sure most of my listeners have heard of long term care.  This has been insurance that’s been around for a while.  You pay a certain premium every year, depending upon your health and your age, and it’s supposed to pay these kinds of expenses later in life.  What’s the current state of play or the state of insurance companies in long term care?

Howard Schwartz: Long term care is a dynamic industry.  It does pay for home care if you qualify and, typically, you have to need at least two or those Activities of Daily Living, but the industry is in flux.  Recently, there’s been a lot of consolidation, big rate increases by the carriers, and they’re getting tighter on claims because all of them say they’re losing money.  The other part is, a recent development, one of the big insurance companies named Genworth was recently sold to China.

Steve Pomeranz: To the country of China or to a company in China?

Howard Schwartz: It’s China Ocean …  Well, in China, sometimes the country is the …

Steve Pomeranz: You don’t know the difference.

Howard Schwartz: Right, right.  It is a big insurance company in China, but somehow they’re related to the Premier of China.  Recently, Penn Treaty, which has been an insurance company that’s been around a while, went bankrupt.  There’s been a lot of turmoil, but there is a state guarantee fund that will pay the claims.  It limits the policy.  For example, we had a client that had a lifetime benefit with Penn Treaty.  When it goes into the State Guaranty Fund, in Florida, it’s limited to $300,000.

Steve Pomeranz: I remember many years ago, there was an insurance company that sold annuities and they went out of business.  The state plan came to bear.  They immediately lowered the guaranteed rate on the annuity.  It’s the same thing because they don’t have to honor the whole contract.  They just have to kind of honor the basics of the contract.

Howard Schwartz: Right.  It can become confusing because each State Guaranty Association gets involved depending where they bought the policy, depending where they’re getting the care, so it’s a very frustrating situation for people.

Steve Pomeranz: Are you seeing a lot of payment for services with these policies now?  Is that declining?  Is it becoming less-and-less or has it stayed stable?  Is it increasing?

Howard Schwartz: It’s a big part of our business.  People that have long term insurance.  I’d say it’s been fairly stable.  There’s still a lot of old policies on the market.  They haven’t been here for a while.  They only pay for home care.  Those are the ones that seem to have been sold, the policies.  Now, there’s a lot of turmoil.  For example, when you call to figure out benefits, you’re getting someone offshore.  The company’s been sold two or three times.  They don’t even know what the benefit is.

Steve Pomeranz: Yeah, that’s not a great thing.  Let’s talk about need.  Typically, the person needs long term care.  On average, how long do they need that care?  How many years or so would I expect to use it?

Howard Schwartz: It’s a big variation.  I mean, we have people on claim for a month.  We have one client, 13 years.

Steve Pomeranz: Okay.

Howard Schwartz: On average, I would say two to three years.  Women tend to be able to keep the care longer because they live longer, but I’d say that would be a general average, but there’s something else, Steve, that’s a little interesting.  People who have the lifetime benefits, they tend to live longer and keep care longer.  We always laugh about it.  The people that have a short benefit, it’s one of those things.

Steve Pomeranz: They’re doing everybody a favor.

Howard Schwartz: Right.

Steve Pomeranz: They want to leave some money behind or something like that.

Howard Schwartz: Also, they don’t sell the lifetime benefits anymore.  I failed to tell you that before.  That was something that used to be sold, but as part of the industry, they stopped selling it.

Steve Pomeranz: They now have these hybrid policies.  You may have a life insurance policy or an annuity that can convert early if needed, right?

Howard Schwartz: Right.  I have not had claims with those new policies because, regarding the home care, we see things later.  I’m not sure how those policies will perform because we haven’t actually gotten involved in them.

Steve Pomeranz: Interesting.  If you’re listening to this and you’re being offered a hybrid policy, at least the gentleman I’m talking with today, hasn’t really seen them perform yet, so just, I guess, do everything with a wary eye.  Let’s talk about costs.  Typically, if I go to a nursing home, what can I expect to pay?

Howard Schwartz: Nursing homes annually run about $78,000.00 a year.  It varies state.  Again, most people don’t pay it.  Most people, even if it’s short term, they usually go on Medicaid.

Steve Pomeranz: The government’s paying for that.

Howard Schwartz: Yes.

Steve Pomeranz: What about in home care?  What’s the cost per hour and, I guess, an average number of hours?  There’s a lot of variables here, but just in general, what are those costs?

Howard Schwartz: Down in South Florida, it can be from $14.00 an hour through $20.00 an hour, depending on where you are and how many hours you get.  A typical starting point would be parttime help, let’s say four hours a day, five days a week.  That’s how a lot of people start.

Steve Pomeranz: Are we talking about $180 a day kind of thing?

Howard Schwartz: Right.

Steve Pomeranz: Figure $150 to $200 a day when you’re doing your math, something like that, right?

Howard Schwartz: Right.

Steve Pomeranz: You know, Howard, we are out of time.  I know it goes fast, but I want to reintroduce you here.  My guest is Howard Schwartz, Co-Founder and President of Schwartz Family Home Care.  What is your website address?

Howard Schwartz: www.schwartzfamilyhomecare.com.

Steve Pomeranz: Thank you, Howard.

Howard Schwartz: Good to be here.