LONG TERM CARE SOLUTIONS
According to SeniorLiving.org, from now until 2030, 10,000 Baby Boomers will hit retirement age each day. With medical advances and increased access to care leading to a much longer life expectancy, the long term care crisis continues to grow exponentially.
As an employer, long-term care insurance as part of a benefits package could be the key to bridging the gap in this overlooked coverage for your employees.
WHAT IS LONG-TERM CARE?
Long-Term Care (LTC) generally refers to the care needed for those requiring assistance with basic daily activities or due to cognitive impairment for both shorter and longer periods of time.
It is non-medical care, also referred to as custodial care, and can be received in many settings. While most commonly received at home, it can also be received in assisted-living facilities, nursing homes or adult day care centers.
Long-term care can be needed by anyone, at any time. The most common causes of the need to receive LTC are cognitive impairments, such as dementia or Alzheimer’s, progressive neurological conditions, like Parkinson’s or MS, strokes, cancer and accidents.
%
of LTC is Provided to Individuals Under 65*
%
Individuals Who Will Need Long-term Care After 65**
Why is long term care planning important?
According to Georgetown University’s 2007 study on long-term care (LTC), 41% of LTC is provided to those under 65.* The US Department of Health and Human Services cites that 70% of those who reach 65 years will need some type of LTC in their lives.** Despite these overwhelming statistics that show LTC does not discriminate by age, many are still in the dark about how to plan for their likely need of future care.
Many individuals thought that contributions to retirement plans and state and federal programs throughout their careers would leave them set for the future, but unfortunately that is no longer the case. Programs like Social Security, Medicare, and Medicaid are reaching capacities, leaving most of these costs left up to the individual– out of pocket.
According to Genworth’s Cost of Care Survey tool, the annual median costs for long term care in the Boston area range from $75,504 for Homemaker Services to $172,828 for a private room in a Nursing Home. As these costs continue to rise with the demand, many are struggling to address this challenge for both themselves and their family members.
Legislative Developments
With the aging population growing each day, many states are working to establish legislation to help protect their residents while controlling the costs of state-funded programs earmarked for care.
Washington state has led the charge with the WA Cares Act and, by implementing a minimal payroll tax for all W-2 employees who did not file for exemption, has begun creating a fund designated for LTC services while also adding to the state’s Medicaid budget.
In Massachusetts specifically, some inroads are being made; Bill HD.2610 was filed on January 19, 2023 but has not been introduced or voted upon. This resolution would establish a long-term care subcommittee that would steer action surrounding an actuarial assessment similar to the Long Term Care Insurance Taskforce project started in California.
REQUEST A CONSULTATION
MATT HOLDEN
Advisor | Employee Benefits
Matthew.Holden@rogersgray.com
office 617.997.3062
Matt Holden joined the RogersGray Employee Benefits team in 2023 and brings an in-depth understanding to all things long-term care. With expertise in the market, Matt can help employers understand the potential ramifications of proposed legislation, the importance of this unique coverage, and how best to include LTCI in an organization’s benefits package.
FREQUENTLY ASKED QUESTIONS
Long Term Care insurance can be confusing for both individuals and employers.
Here are some common answers to questions you may find helpful.
Who should purchase long term care insurance?
Our LTC Specialists can help best determine suitability but in general, individuals meeting this criteria should consider LTC insurance:
- Individuals between the ages of 40 and 72. Younger applicants are generally offered more choices and more affordable options.
- Individuals in good health. LTC Insurance is carefully underwritten to screen appropriate risks and deliver a stable product. Some carriers will treat certain conditions differently, again reinforcing the benefit of using an LTCi specialist since we know the underwriting criteria for each carrier.
- Individuals with assets to protect. If you have retirement accounts to protect, LTC can be vital. Some people can self-insure, but even high-net worth individuals understand the value of LTC insurance. LTCi is about peace-of-mind and control and can provide access to first-class care when it is needed.
What are the types of long term care insurance?
Long-term care insurance options vary depending on the insurance provider and the specific policy. Here are
some common types of long-term care insurance options:
- Traditional long-term care insurance: This is the most common type of long-term care insurance. It provides
coverage for a range of long-term care services, such as nursing home care, assisted living facilities, and inhome
care. - Hybrid long-term care insurance: This type of policy combines long-term care insurance with another type of insurance, usually life insurance or an annuity. It offers long-term care benefits if needed, but also provides a death benefit or a cash value if long-term care is not required.
When considering long-term care insurance options, it’s important to carefully review the terms, coverage limits, premiums, waiting periods, elimination periods, and any exclusions or limitations. Consulting with an insurance professional can help you understand the specifics of each option and choose the one that best suits your needs.
How does LTC Insurance differ from Disability Insurance?
Although long-term care insurance evolved from income disability insurance, major medical insurance or disability insurance does not protect a policyholder in the same way. Unlike a medical policy that will cover a limited number of days of recuperative time, a long-term policy will cover two years or more. Beyond that, disability insurance replaces only salary at the time of the injury and does not cover care. The policyholder will then have to pay out of pocket for any ongoing long-term care due to his or her accident or injury.
In addition, Medicare should not be considered a resource for handling any substantial long-term care expenses. This program reimburses the insured for a maximum of 100 days, with the average repayment of expenses being a mere 28 days.
Why would employers consider offering LTC as a benefit?
There’s a number of reasons why employers should consider incorporating long term care insurance into their benefits package:
- Attract and retain talent: Offering long-term care insurance can be an attractive benefit that sets an employer apart from competitors by demonstrating a commitment to employee wellbeing.
- Employee goodwill: Providing long-term care insurance shows that employers value their employees’ long-term financial security and peace of mind which, in turn, can enhance employee satisfaction and loyalty, leading to higher morale and productivity.
- Cost savings: By taking a proactive approach and offering long-term care insurance, employers can help employees plan and prepare for potential long-term care needs which may result in fewer instances of employees needing to take extended leaves of absence or reducing their work hours to care for themselves or family members.
- Financial stability: Long-term care expenses can be significant and potentially deplete individuals’ savings or retirement funds. By offering long-term care insurance, employers can assist employees in managing these expenses, reducing financial stress, and promoting overall financial stability.
- Tax advantages: Depending on the structure of the long-term care insurance plan, employers may be able to take advantage of certain tax incentives or deductions, which can help offset the costs associated with offering this benefit.
Webinar: How Employers Can Help Bridge the Gap in Long-Term Care
Matt Holden of RogersGray joins Steve Cain, Director and National Sales & Business Development Leader for LTCI Partners, for a dynamic discussion about the resurgence in worksite long term care insurance and why demand from both employers and employees is on the rise. This webinar uncovers what employers need to know about the marketplace and pending legislation.