Continuing care in Alberta: What options are available and how do I plan for it?

Thinking about and planning for your continuing care needs, as you grow older, is something that should happen both prior to and during retirement.  Spending time planning for the possibility of needing assistance with daily living at some point during your retirement years, allows you to learn about services available from the province as well as private providers and the potential costs ahead of when you need those services. 

There are key questions you will need to consider:

• Will you consider moving into supportive living or long-term care?
• Do you want the flexibility to choose between privately operated or publicly funded communal living facilities?
• Do you want to live independently at home as long as possible? The decision to stay at home may necessitate research on the cost of assistive devices, modifications to your home, plus the cost of receiving personal care in your own home. 

By planning ahead and determining what options are available in your area, you can then make important decisions about your care, whilst you still have capacity to do so, and can budget and plan accordingly.  

This page will provide you with some key information and resources to help you with your decision making journey.

Why is planning for continuing care important?

According to Alberta Health Services’ 2018-2019 Annual Report¹, in 2018, 13% of the population, or 553,474 Albertans, were aged 65 or over and AHS provided care to 26,000+ seniors in 464 facilities (AHS care statistics exclude private care). They project by 2028, the proportion of Albertans aged 65 or older will increase to 17% of the population or 847,086 Albertans. 

Currently, the availability and cost of continuing care services varies widely between communities in Alberta.  As the proportion of our population age 65 and over increases, it is not unreasonable to assume the proportion of Albertans requiring care will increase. 

For some Albertans, their retirement period may exceed 30 years. It may therefore seem impractical to plan for your changing health and lifestyle needs over this duration. However, changes in your health can occur suddenly at any age. The process of researching your options, completing proactive financial planning and communicating your wishes to your loved ones gives you and your family the power of choice when it comes to finding care when you need it vs. having your options severely constrained due to lack of resources.

What are the main types of communal housing?

The phrase long-term care may be broadly used to refer to accommodations and support services provided when we may no longer be able to complete all the activities of daily living in our current home environment without assistance. 

In fact, long-term care in Alberta refers to a specific type of accommodation and health care services for individuals with more complex needs.

Depending on the level of services and care required, there are multiple housing options available for Albertans. Here, we will break down communal housing into three categories: independent living, supported living and assisted living (long-term care).

Adapted from Canada Mortgage and Housing Corporation, Seniors Housing Survey Data Tables, January 25, 2021. This does not constitute an endorsement by Canada Mortgage and Housing Corporation of this product.

Note: A standard space refers to a space where a resident receives less than 1.5 hours of care per day or is not required to pay an extra amount to receive high-level care. Both private and non-profit residences are included in the survey universe. These figures represent average costs only and do not include ancillary services. 

Source: Government of Alberta, Continuing care accommodation charges

Source: Government of Alberta, Continuing care accommodation charges 

In designated supportive living and long-term care facilities, accommodation charges may be fully or partly covered for residents who are eligible for the Alberta Seniors Benefit.

What services are available if I want to live independently at home?

Generally, most in-home care is provided by Health Care Aides, although service providers may also be referred to as Personal Support Workers or Personal Care Attendants amongst other job titles.

Alberta Health Services lists the following functions Health Care Aides perform for their clients²:

• Assist with bathing, grooming, dressing and other personal hygiene activities
• Assist with feeding patients
• Assist with bed transfers, lifting, turning and walking
• Assist with range of motion exercises
• Assist with simple wound care, respiratory equipment use or urinary care
• Report on patient condition to the nurse
• Assist patients to take their medications
• Communicate with patients

Private home care services

If in-home care is sought through a business or agency, costs will usually be determined based on the number of hours per week care is needed and cost per hour of the aide(s). It is recommended to research costs in your home area directly as the availability and cost of services vary across the province. Health Care Aide services do not include therapeutic services such as those administered by a therapist, LPN or RN and if those costs are not covered by AHS, they will be in addition to Home Care Aide services.

Private home care providers may also offer personal services for clients in addition to those listed above, such as:

• Meal preparation
• Light housekeeping
• Transportation
• Caregiver relief 

If you choose to directly employ a Home Care Aide, they may be considered a domestic employee and you will be responsible for screening, hiring, payroll and managing your own employee(s). For more information on this topic, please refer to the following resources:

• Government of Canada: Employing a caregiver, baby-sitter, or domestic worker
• Government of Alberta: Domestic employees - Employment standards exceptions

Public home care services

In Alberta, the AHS Home Care Program provides personal and health care services for clients living in their home or other private residential settings. Health and personal care services provided through the Home Care Program are publicly funded and provided at no cost to eligible Albertans. Home support services such as homemaking assistance may also be available, but a co-payment fee for these services may be required.

To access publicly funded home care services through AHS Home Care, an assessment is required to be completed by an AHS health professional. See the AHS Home Care brochure for more information.

Self-managed care: (hybrid model)

Self-managed Care is an alternate method of service provision offered through AHS. The program provides resources to directly pay for and manage personal care and home care support services. AHS guidelines state you must:

• have assessed unmet health care needs within AHS Provincial Home Care Service Guidelines;
• have stable health and predictable care needs;
• need ongoing personal care and home care support services (e.g., longer-term needs);
• be willing and able to assume the responsibilities and risks associated with contracting services for their own or a loved one’s personal or home care support services (a legal representative may do this on behalf of a client).

Ted’s father’s care home accommodation expense is $3,200 a month. Using that for our budget planning, we now look at the monthly expenses if Ted requires supportive living but Val remains independent:

Ted and Val’s advisor now needs to run their financial forecast to include an increase in monthly expenses from $6,000 to $7,490/month from Ted’s age 85 to his life expectancy, and further adjust again for Val’s ongoing needs, if her life expectancy is greater than Ted’s. Ted, Val and their advisor will also need to keep inflation in mind in the planning forecasts, as all the above listed costs will increase over time as the cost of living increases annually. If we assume a 2% yearly increase in the cost of living from today until Ted’s age 85, $7,490/month in today’s dollars becomes $12,784/month in future dollars.

If Ted and Val are like the majority of Canadians who are not a part of a defined benefit pension plan, their chief sources of retirement income will likely be from their retirement savings (RRSP, TFSA, non-registered accounts to name a few) and government pensions such as the Canadian Pension Plan (CPP) and Old Age Security (OAS). 

The risks of self insurance they must manage are:

• Ensuring spending in the early years of retirement stays at or below the budget set in their financial plan that affords them the long-term care needed later in life plus,
• Ensuring their retirement savings portfolio is invested properly to provide sufficient long term growth and income to sustain their needs including the increasing cost of living,

Major market downturns or unplanned/overspending against the recommended budget may impact their ability to retain retirement savings sufficient to pay for their desired long term care needs in the future.

What are some solutions for the costs associated with continuing care?

Insure the risk

If, on further analysis, you determine you want to guarantee some form of future income is available to you in the event you need long-term care or home care, then you may want to consider what product options are available.  Here are a few insurance based funding options:

Critical illness insurance

Critical illness insurance is a form of insurance designed to provide the insured with a tax-free lump sum payment if they are diagnosed with a serious condition. As serious illness can cause an increase in uninsured medical and personal expenses; plus a potential loss of income for both the affected individual and their immediate family members, these policies are designed to provide a lump sum that can be used by the beneficiary for any purpose. 

What conditions do a critical illness policies cover?

• Basic coverage plans may cover a few conditions, commonly, life-threatening cancer, heart attacks or strokes.
• Comprehensive policies may cover up to 30 serious illnesses and conditions.
• Some policies may also offer supplemental benefits such as professional services you can access to help you understand your medical condition and treatment options.

When looking at critical illness insurance specifically to help protect your household from the financial costs associated with receiving assistance with daily living, it is important to consider the conditions a policy covers, for instance:

• If the condition that resulted in your requirement for assistance with daily living is not covered by your policy, no benefit will be paid. 
• Degenerative conditions, such as Alzheimer’s or Parkinson’s disease, where your impairment is expected to worsen over time and may require assistance with daily living as your condition progresses, may not be covered in a basic policy. 

You also want to ensure your policy coverage extends to a reasonable age. For instance, if coverage ceases under a critical illness policy at age 75, the policy will certainly provide benefits during your working years and early retirement, but be of limited use if you are concerned about insuring against serious illness later in life.

Some comprehensive policies may offer, as a standard benefit or as an add on, a covered condition known as Loss of Independent Existence benefits. Loss of Independent Existence means a definite diagnosis of the total inability to perform, by oneself, at least two activities of daily living for a minimum continuous period of time (as stated by the insurance company) with no reasonable chance of recovery. This benefit may then cover other serious conditions not explicitly covered under the policy but require you to need daily assistance with living.

The cost of coverage will depend on the type of plan you choose, the payment period you choose, your gender, age, smoking status, medical history and other factors. Medical underwriting may be required, including information from your attending physician. If you are 65 or over at the time of application, insurance carrier and coverage choices may be limited.

Long-term care insurance 

This form of insurance is currently not widely available as it is only offered through a  very limited number of insurance carriers in Canada today. Long-term care coverage is intended to provide benefits if you become unable to care for yourself and need assistance to manage daily living activities.

Plans may include a waiting period (also known as an elimination period) before benefits can be paid, ranging from 30-90 days. Typically, insurance benefits will only be payable if you require the services of a long term care facility or professional assistance at home and you are unable to perform two or more activities of daily living, which include:

• Bathing
• Dressing
• Toileting
• Transferring
• Maintaining continence
• Eating 

The most basic form of benefit is a facility care benefit. These benefits are expressed as either a daily or monthly dollar amount payable to the insured. Benefits are paid once the waiting period has passed and personal care services are required on a long term basis, in a long-term care facility, by order of a physician. 

Some plans may offer an optional benefit that allows the insured to receive medically necessary care in their own home, called Home Care benefits.  Policies may offer additional benefits at additional cost. 

The cost of coverage will depend on the age and health of the insured at the time of application, as well as the waiting period, coverage and options selected. Long-term care coverage will require an application and medical underwriting may be required, including information from your attending physician.

Annuities

If paying ongoing premiums for a potential future benefit is not appealing; or you are not eligible for insurance, but you still want to protect your household’s ability to pay for care against unforeseen risks, such as market downturns or unplanned spending, an alternative solution may be an annuity.

Unlike an insurance product, where you pay premiums over time for a specified future benefit, which is paid out when an insured event occurs, annuities are somewhat reversed. You pay a lump sum today to a life insurance company in exchange for a period of guaranteed payments, which may commence right away, in the case of immediate annuities, or at a future date/age in the case of deferred annuities. 

Two of the most common forms of annuities are guaranteed life annuities and term certain annuities:

• Under a guaranteed life annuity, payments are guaranteed only for the lifetime of the annuitant or joint lives in the case of joint-life annuities (i.e. for spouses).
• With a term-certain annuity, payments are guaranteed for a fixed period of time. If an annuitant passes away before the end of the guarantee period, the remaining benefits will be paid to their beneficiaries.

There may be other types of annuities available in the market in Canada. More information is available on annuities from the Financial Consumer Agency of Canada - Annuities

Annuities can be purchased with registered funds, such as funds currently in an RRSP or a RRIF, or non-registered funds. 

Tax treatment of the annuity payment you receive will depend on the type of annuity purchased.

The amount of annuity payment you will receive is determined by multiple factors, such as:  

• Your age and mortality assumptions used by the insurer
• If the payment is based on single or joint lives
• Prevailing interest rates at the time of purchase
• Minimum guaranteed payment period selected, if any
• Indexing to inflation, if any

Impaired life annuities

This type of life annuity may be offered by insurance companies when an applicant has a permanent or progressive impairment that has severely affected their life expectancy. To be eligible, the applicant must generally be underwritten by the insurance carrier and have survived the impairment for a minimum period of time prior to application and be expected to survive for a minimum period of time post application as specified by the insurance company. This type of annuity may then result in either a lower premium or higher income than for someone of equivalent age and gender without a condition that shortens their life expectancy.

Advanced life deferred annuities

The 2019 federal budget introduced advanced life deferred annuities (ALDAs) as a qualified investment for an RRSP or RRIF beginning in 2020. This allows an RRSP/RRIF annuitant to transfer 25% of their account value (subject to a CPI-indexed dollar lifetime limit of $150,000) to a deferred life annuity, where annuity payments can be deferred until age 85. This allows registered account annuitants to defer the tax burden associated with minimum withdrawals to a later age. They may also provide some longevity and future care costs protection, as you now have a guaranteed annual income commencing at an age where you may need assistance with daily living and you may have significantly drawn down your other savings.

Annuity considerations

Annuities are generally considered illiquid. Some annuities may offer a short cooling off, or cancellation period, after a contract has been issued, allowing a purchaser to cancel the contract without penalty. Or, a carrier may allow cancellation for a certain period after payments commence for a fee. However, once these periods have passed an annuity contract becomes non-cancellable and changes are not permitted. Therefore, a purchaser needs to carefully consider the terms and conditions of any annuity contract before proceeding. 

Further resources