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By George Schein
By Shawn Britt

The importance of long-term care planning for LGBTQ+ clients

November 09, 2021

For more on this and other useful insights you can use with clients, check out the latest issue of Current from the Nationwide Retirement Institute.

There are probably around 3 million LGBTQ adults over age 50 living in the United States today.[1] That number is expected to grow to around 7 million by 2030.1 Unfortunately, as these individuals continue to age, they will face challenges in planning for their long-term care (“LTC”) that result from a lifetime of discrimination.

Lack of marriage equality affects LGBTQ LTC planning

Although LGBTQ seniors have faced discrimination across many facets of their daily life, from their professional career to health care and housing, the most notable form of discrimination — for purposes of its impact on LTC planning — is LGBTQ individuals’ exclusion from the institution of marriage. LGBTQ adults were not legally permitted to marry their romantic partners nationwide, nor receive the 1,100+ legal benefits and protections that come along with marriage, until the United States Supreme Court’s Windsor and Obergefell decisions in 2013 and 2015, respectively.[2] The result of this exclusion is that LGBTQ individuals historically were not able to enter into and form the types of stable and long-lasting family units that most people will rely on as they age. Consequently, today’s LGBTQ seniors are 2 to 3 times more likely to live alone than non-LGBTQ seniors; they are also 4 times less likely to have adult children on whom they can rely for informal caregiving.[3] This means that LGBTQ seniors may be forced to rely solely on paid caregivers to assist with activities of daily living (e.g., eating, bathing, dressing, etc.) as well as other instrumental activities of daily living (e.g., managing money, running errands, housework, etc.) as they age.

Fear of continued discrimination

This dilemma can cause significant concern to LGBTQ seniors, who have legitimate fears of continued discrimination. Even today over half of LGBTQ Americans (51%) still report continued harassment and discrimination in public places and stores, and 20% report having faced the same type of behavior in apartment communities.[4]

One recent example of the type of discrimination that LGBTQ seniors fear as they age is the story of Marsha Wetzel. Ms. Wetzel moved into the Glen Saint Andrew Living Community, a senior residential facility in Niles, Illinois, in 2014 after her partner of 30 years died of cancer. Soon after, once other residents learned of her sexual orientation and past relationship with another woman (which included raising a child together), some began calling her names and even physically assaulted her, according to a lawsuit filed on her behalf by Lambda Legal.[5] “I don’t feel safe in my own home … I am scared constantly,” Ms. Wetzel explained in a phone interview.[6]

What LGBTQ seniors want from LTC

It is stories such as Ms. Wetzel’s that exacerbate fears and might lead some LGBTQ seniors to go “back into the closet” to receive the care they need, or to delay accessing care until a crisis. This is the reason that the vast majority of LGBTQ seniors say they would feel more comfortable with LTC providers who (1) are specifically trained in LGBTQ patient needs (88%), (2) use advertising to highlight LGBTQ-friendly services (86%), (3) have some staff members who are LGBTQ themselves (85%), and (4) display LGBTQ-welcoming signs or symbols in facilities and online (82%).[7]

Finding such LTC providers may be difficult and expensive. Having LTC coverage in place increases the chance LGBTQ clients will be able to seek out, find and pay for safe and affirming care — whether at home or in some type of LTC facility.

Understanding LTC coverage

This coverage provides a leveraged benefit amount, known when the policy is issued, that is ready to be used for a qualifying LTC event, no matter when benefits are needed.

When seeking a policy, two of the most important things to consider are:

  1. Which benefit payment model could work best for the individual?
  2. What type of LTC coverage will fit within the individual’s budget and work alongside their other financial strategies?

Deciding on a benefit model should come first in most cases, for that decision may help pare down some of the products or carriers from which to choose.

LTC benefit models

LTC policies usually pay benefits in one of two ways:

  • Reimbursement benefits are based on actual expenses. Only LTC expenses that qualify under the policy contract will be reimbursed, up to the monthly benefit amount. Any expenses not covered under the policy will have to be paid for out of pocket.
  • Cash indemnity policies pay the maximum monthly benefit amount available under the contract, regardless of what their actual LTC expenses are. Once the LTC claim is approved, there is no need to submit monthly bills and receipts. The insurance company places no restrictions on how LTC benefits are used for care, providing the policy owner with more choice, control and flexibility.

When you consider that many LGBTQ seniors may have a strong desire to seek out LTC providers that offer the kind of affirming care that ensures both their physical and mental well-being, cash indemnity benefits can offer flexibility that may be particularly valuable. Cash indemnity benefits can be used to pay for alternative care services that might not be covered by other LTC policies.

Types of LTC coverage

There are many options available today for LTC coverage that can pair well with an individual’s financial strategy and/or budget.

Traditional LTC policy — This solution is generally the least costly. That is because benefits are paid only if a qualifying LTC event occurs. This type of policy generally provides the most LTC coverage for premiums paid and allows the most customization of benefit periods, inflation options and elimination periods. However, premiums are not guaranteed and can be raised. A traditional LTC policy may be good for individuals or couples on a budget, for those willing to risk loss of premium if the policy is not used, or for those who have no other financial planning need. Currently, only reimbursement plans are available with this type of product.

LTC rider on permanent individual life insurance — This solution is for people who have a need for life insurance now, but value a solution that can transition to LTC protection later. The entire death benefit is paid, whether as a death benefit only, LTC benefits or a combination of both. Products with guaranteed premiums are available. Customization of the LTC rider is limited or nonexistent; but in return, the full amount of the policy will be paid out (assuming no withdrawals or loans), making this a cost-effective way to meet two needs with one policy. A few carriers also offer a survivorship life insurance version. Both cash indemnity and reimbursement plans can be found.

Linked-benefit LTC policy — While placed on a life insurance foundation, this is a dedicated LTC product, designed primarily for people looking for LTC coverage, but who also want protection of their premium if the policy is not used. This policy can be customized with a choice of benefit periods and several optional choices for inflation. Premiums and benefits are guaranteed, and if the policy is not used, a death benefit that is equal to or more than the premiums paid will be paid tax free to beneficiaries. Even if all LTC benefits are used, there is always a minimum death benefit amount that can help cover final expenses. Both cash indemnity and reimbursement plans are available.

Final thoughts

LGTBQ seniors often have additional concerns and may face additional challenges when planning for safe, high-quality long-term care. These concerns and challenges are best addressed when LTC planning is done in advance, long before a crisis takes place. Having dedicated funding in place provided by cash indemnity LTC coverage is a great way to plan for a cost-effective and flexible solution that helps LGBTQ seniors maintain choice and control of care options as they age.

Sources and Disclosures

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    United States v. Windsor, 570 U.S. 744 (2013); Obergefell v. Hodges, 576 U.S. 644 (2015).

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  • Nationwide and its representatives do not give legal or tax advice. An attorney or tax advisor should be consulted for answers to specific questions.