Long Term Care Insurance as an Employee Benefit

Why do you think less than 1/5 of 1% of businesses with under 1,000 employees offer long-term care insurance while 49% of businesses with 5,000 or more have implemented sponsored benefit programs?

What do these larger companies know that the smaller companies don’t? Do they care more about their employees? Are small business owners mean? Could it be that larger companies work with benefit consultants that have taken the time to educate their clients on the importance of long-term care planning?

Long-term care is the most misunderstood of all insurance products. Ask random working age people what comes to mind first when they hear the words “long-term care”? You’re likely to hear things like “old people”, “nursing homes” or “something their parents need”. You can understand the confusion. Many baby boomers got married older than their parents, and with young children long-term care is not top of mind.

With that as background, now lets add the CLASS Act to the mix, a legacy program from Ted Kennedy. Without getting into politics I will give the benefit of the doubt to Washington and say it is a well intentioned piece of legislation that was not completely thought out and is burdened by a poor design. According to actuarial experts within and outside of government the CLASS Act creates a situation with adverse selection. In other words, people with pre-existing medical conditions will be more apt to apply for coverage than healthy individuals which will cause the program to become unsustainable. Private insurance, which requires limited underwriting is projected to be less expensive.

There are two important benefits of the CLASS Act that I’ve discussed in previous blog posts. First, the CLASS Act will raise awareness of long-term care with a conversation on the national stage. The second huge benefit of the CLASS Act is that all employees earning enough income to qualify for Social Security (about $1,100) will be eligible for coverage regardless of pre-existing health issues.

So why is now the right time to start a conversation about long-term care with clients and prospects?

• Employer will need to decide whether to participate in the CLASS Act and that decision will have consequences for business owners, executives and employees.
• Opening a conversation with the CLASS Act will differentiate advisors by providing much needed information.
• Private coverage requires some underwriting so employees applying now will lock in insurability and the lowest rates that are tied to your age at application
• Once CLASS Act coverage is available you can always change to it if it turns out to be better that private insurance.

Over the next year someone is going to start the long term care discussion with your clients or companies that are your prospects. Shouldn’t that person be you?

EM-Power Services, Inc. is a specialized insurance agency supporting independent brokers working with employers to implement sponsored long-term care insurance benefit programs.

Our new White Paper “The CLASS Act: What it means to brokers, employers, and the nation” is available to help you start the conversation. Download a sample copy and contact Doug Ross at 800-483-1115 or by email to see about adding your logo to the guide.

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