Home health care and the caregiver crisis in America

America is facing a crisis. As baby boomers age into retirement, the demand for senior services and long-term care (LTC) supports continues to grow. So far, boomers are the largest population to retire, yet they face a unique challenge that past generations escaped: Who will be available to provide the care they may need?

Studies show that most people would prefer to receive LTC at home, especially post-pandemic.¹ However, the number of people available to work for agencies that provide home health care (HHC) was barely growing prior to the pandemic and has been further impacted since. Long-term care employers will need to fill an estimated 8.9 million direct care job openings by 2032 to accommodate the demand.² To make matters worse, turnover rates in the home care industry are high, exceeding 64%.³ Therefore, the HHC industry is bracing itself for a labor shortage and the challenge to fill these much-needed caregiving positions.

This situation could increase the need for informal caregivers to step in and provide care to help prevent an individual from being forced into a facility simply because professional care services at home were not readily available. However, the people charged with these tasks may not be financially able to reduce their working hours or step away from their job.

Simply put, an informal caregiver is an unpaid individual — usually a spouse or partner, family member, friend or neighbor — who assists an individual requiring help with activities of daily living (ADLs) or other living needs. Some of these tasks may be what are called instrumental activities of daily living (iADLs). This care usually takes place in a home setting. 25% of informal caregivers are millennials, who may pay a price for caregiving. They are more likely than older caregivers to be warned by their employer about performance and attendance, be turned down for promotions or get fired. This results in the risk of lower lifetime wealth, retirement savings and Social Security benefits.⁵ The resulting cost in cash and lost opportunities to people providing informal care is more than double the paid cost of home health care and facility care combined:

• $475 billion = annual cost of paid care at home, community or in a facility⁶
• $600 billion = annual cost resulting from people providing informal care⁷

To put these numbers in perspective, the cost of informal care is greater than Walmart’s 2023 revenue, which totaled $611 billion.⁸

Time spent caregiving

Caregivers often invest a significant amount of time into helping their loved one. This results in time away from their own family members, friends and personal and work responsibilities. While they understand the importance of the care they provide, half of caregivers report they had no choice in taking on the caregiver role.  

Cash indemnity: Value vs. price

When considering the available policies, how do you determine which one is worth more? On one hand, a reimbursement policy has more potential benefit dollars, but it reimburses only the actual cost of care covered under the policy provisions up to the benefit amount. A reimbursement policy may not pay for less expensive unlicensed caregivers and certain types of alternative care. And it either limits or does not reimburse payments made to an immediate family member to provide care. But a reimbursement plan may be a better choice when there are concerns about wasteful spending.

On the other hand, cash indemnity LTC benefits pay the full available monthly benefit and can be used 100% without restriction from the insurance company. That includes using LTC benefits to pay a family member or friend to provide the care. This could help replace some or all of the income the caregiver may have to sacrifice when taking on the caregiving responsibilities.¹⁶

There is also a future value to cash indemnity benefits in that they can be used to pay for the unknown. As other creative solutions to LTC services and supports — such as robots — become available, cash indemnity benefits can be used to pay for whatever is needed. Therefore, some clients may find more value in a policy with a benefit pool that is open to any care option — without the need for approval from the insurance company. As this shift in the LTC workforce takes place, it’s likely that LTC services and supports will continue to evolve to meet the ever-changing needs people will face. Owning cash indemnity LTC coverage is one way to prepare for those changes as it provides flexible funding to pay for family care.