More and more employers – big and small
- are offering long-term care insurance (LTCI) to their employees.
Employees often are surprised to learn their personal savings
and retirement funds are at risk because they’re not covered
for long-term care through their regular health insurance or by
the government.
Usually the company offers LTCI as a voluntary benefit –
the employer arranges the offering and perhaps payroll deduction,
and employees pay for it themselves. This is a benefit that employees
will value, yet it can cost the company little.
Here is some information on worksite long-term care insurance.
Please contact us and we can discuss
your specific situation.
Please note – reference to company-specific research
does not necessarily indicate a preference towards that company;
the links are included because some companies provide valuable
research on this issue.
- Why should a company offer long-term care insurance?
- Which companies are most appropriate for long-term
care insurance?
- Who is eligible for insurance?
- What is the advantage to the employee of getting
this through work?
- Does everyone have to choose the same benefits?
- Are there tax deductions for the employer if the
company pays premiums?
- What happens if the employee leaves the company?
- What does the insurance cost?
- What’s required of the employer?
- What if you’re a sole proprietor or small
partnership?
- Which insurance companies offer long-term care
insurance?
1. Why should a company offer long-term
care insurance?
To maintain productivity. Many employees
– whether they work full-time or part-time – are helping
to take care of family members who need long-term care, usually
at home.
What is the impact on employees?
40% Unable to advance in careers
75% Affected their health
66% Affected their lifetime earnings
84% Made formal workplace adjustments (quit job, retired
early, full to part-time, decreased hours)
MetLife
Juggling Act Study: Balancing Caregiving with Work and the Costs
Involved
Helping employees and their relatives get insurance BEFORE they
need care can help both employee and employer maintain a productive
workforce.
The
MetLife Study of Employed Caregivers: Does Long Term Care Insurance
Make a Difference?
To help contain costs for other health benefits.
Caregiving is stressful. Employees who help loved ones with care
experience stress and health problems themselves, and use their
health benefits more. Encouraging use of long-term care insurance
can decrease the strain on family members.
How TLC Makes You Sick (Newsweek, May 30, 2004)
http://www.msnbc.msn.com/id/5039765/site/newsweek/
To protect employees’ retirement plans.
You probably already offer solid benefits to help employees save
for their retirement. Do you realize that only long-term care
insurance protects those hard-earned retirement funds from the
high risk of long-term care? Long-term care is typically the one
big hole in retirement planning, and it makes sense for the employer
to help their employees cover this risk. Please see other pages
on this website for general information on the risk and the insurance.
To attract and retain employees. Increasingly,
companies are responding to employee interest in long-term care
issues. Offering long-term care insurance (LTCI) as a benefit
can distinguish you from your competitors and make your company
a more attractive one.
Recent figures show that approximately 60 % of the Fortune 100
offer LTCI, and approximately 37 % of the Fortune 500 Offer LTCI.
As of May 2004, 14 of the Fortune 500 companies were out to bid.
Perhaps more significantly, many small companies are offering
LTCI (Source: HIAA LTC Market Surveys, 2003):
Sizes of Employers Offering Long-Term
Care Insurance
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2. Which companies are most appropriate
for long-term care insurance?
Companies with a significant number of employees over 40, earning
at least $40,000/year, are especially likely to be interested.
• Small businesses – from one sole proprietor up
• Law firms, accountants, and other professional firms
• Technology companies
• Employee groups within a company such as corporate executives
and officers (see next question re selecting groups)
• School districts or private schools
• Employees of banks, brokerage firms, and other financial
institutions.
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3. Who is eligible for insurance?
Companies usually offer insurance to employees and their spouses,
and can extend to other family members, such as parents, grandparents,
and in-laws.
Unlike other benefits, companies are allowed to select which
classes of employees are eligible, if they do not wish to make
it available to everyone. Sometimes companies “carve out”
groups of executive officers or managers, and their relatives
to be included.
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4. What is the advantage to the employee
of getting this through work?
Company plans with as few as 10 employees involved can offer
advantages:
• Employer endorsement - if your employee trusts you and
looks to you for other benefits, s/he may find it helpful to have
you do the research.
• Convenience – employees are busy – making
this available through work can save them a great deal of time.
• Discounts – it may be less expensive.
• Health eligibility – there are usually health concessions
for worksite programs. Employees who cannot qualify for insurance
on their own may be eligible through work, which is a huge relief
to them.
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5. Does everyone have to choose the same
benefits?
No. Normally there are limited standard choices for all, to make
selection easier. If the employer is contributing (not required)
and finds the standard choices too low, the employee may be able
to “buy up” more coverage for her/himself.
In general there are 2 types of offerings for long-term care
insurance (LTCI). True group plans usually apply to larger companies
– usually 1000+ lives, sometimes less. There is an RFP process.
For smaller companies, “multi-life” programs may be
better. Multi-life programs offer individual policies to each
employee or family member, but there are discounts and health
underwriting concessions available. Usually standard options are
recommended to simplify the program, but the member has a range
of benefit choices.
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6. Are there tax deductions for the employer
if the company pays premiums?
It depends on the corporate structure. For C-Corps., premiums
paid for employees and spouses are fully deductible. For others,
e.g. sole proprietors, partners, etc., premiums are deductible
as health insurance premiums but there are limitations. Please
ask us or your tax advisor for more detailed information.
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7. What happens if the employee leaves
the company?
The insurance coverage is fully portable. The employee continues
to pay the premium and retains the policy.
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8. What does the insurance cost?
There is a wide range of benefit options available, which means
that premiums vary widely also. Many people start this coverage
while in their 40’s when the premiums are much lower.
Contact us with some information on your company and we can
provide some sample premiums.
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9. What’s required of the employer?
The most important factor in a successful long-term care insurance
program is employer support for the plan. Such support may take
some time to develop, but it is important.
Initially the company will work with the insurance professional
to choose the right insurance company, and the best benefit choices.
Then employees need to learn about the offering. As this may be
unfamiliar to them, there is an educational process, usually involving
group meetings at which the insurance professional or company
will explain the program.
There is a far greater chance of success when the employer:
• grants and supports access to employees for meetings
and communications
• helps distribute materials
• understands that some employer time is involved in rolling
out the offering
• allows adequate time for employees to learn about and
enroll in the program
• offers long-term care insurance separately from other
benefits
The plan may be subject to ERISA, depending on the scope of employer
involvement.
The entire process, from first meeting to final enrollment, usually
takes up to 6 months.
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10. What if you’re a sole proprietor
or small partnership?
We have many clients in these situations. You can certainly apply
for long-term care insurance (subject to your health being acceptable)
but if there are no other employees you may simply get an individual
policy. There will probably be tax advantages to buying through
the company rather than on an individual basis.
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11. Which insurance companies offer
long-term care insurance?
Some of the leading companies involved in the company or worksite
market include John Hancock, MetLife, Prudential, UnumProvident,
MedAmerica, and more. We are independent professionals and can
choose whichever company is best for you – we have no interest
in “pushing” any particular company – we want
to find the best fit for your situation.
Contact us with specific questions
or to set up an initial meeting.
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