Sixty Percent of Americans Worried About Long Term Care

Posted on July 5th, 2011 by Em-Power Services

Nearly 60% of Americans over the age of 50 are worried about the costs of long-term care, while only 16% feel prepared financially, according to a recent study supported by the insurance industry.

The study was sponsored by Sun Life Financial and conducted by Kelton Research.

The study found that almost two thirds of Americans currently do not feel financially prepared to meet the growing costs of late-in-life healthcare (regarding either in-home help, assisted living, or nursing care options) with only 16 percent of respondents actually confident they could handle these financial burdens.

According to the study, the most consistent problem mentioned when preparing for late-in-life care has been the lack of understanding most Americans have about what the true costs of said care will be. Even accounting for the most conservative estimates of inflation over the next 30 years, the average cost of long term care calculated was more than double of what respondents were expecting.

According to the Consumer Price Index, the current nursing home rate for a private room is US$85,000 and the projected rate by 2030 is US$190,000, not the mere 56 percent rise to US$125,000 most respondents anticipated. The figures also reveal that 24/7 in-home care rate will currently cost US$184,000 a year, and an estimated US$272,000 by 2030 and 40 hour a week in-home care runs US$44,000 a year, rising to $65,000 by 2030.

Sources: Excerpted from McKnight’s Long Term Care News and International Insurance News

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Applications for Long Term Care Insurance Rising

Posted on June 29th, 2011 by Em-Power Services

The American Association for Long-Term Care Insurance estimates that over 500,000 Americans are expected to apply for long-term care insurance this year. The number represents a significant jump over 2010.

Over eight million Americans currently have long-term care insurance protection, with roughly 200,000 receiving benefits in 2010. This is according to the 2011 AALTCI Long-Term Care Insurance Sourcebook.  The majority (56 percent) of individual applicants are between the ages of 55 and 64.

Jesse Slome, executive director of AALTIC stated that “consumers in their 50s and young 60s are more aware than ever of the risks involved in living into their 80s and 90s.” He adds, “people increasingly understand the need to look into this protection prior to retirement age, when costs are more affordable and you are still most likely able to health qualify for coverage.”

The Association also noted that significant growth in sales will result from the thousands of federal employees signing up for coverage through the Federal Long-Term Care Insurance Program (FLTCIP) where open enrollment which closed June 24.  ”I would expect tens of thousands of newly covered individuals,”  Slome adds.

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Lost Wages Significant for Long Term Care Givers

Posted on June 23rd, 2011 by Em-Power Services

A new study released this month from MetLife examines the costs to working caregivers for providing long term support to loved ones.

The costs are staggering.

The report estimates that for women (who make up the majority of long term care givers) the lost wages from working less hours amounts to $120,616, with another estimated $64,433 lost in Social Security benefits. The total estimated loss amounts to over $185,000 in lost income. If the care giver leaves the workforce altogether it’s closer to a $300,000 impact.

Since most care givers are in their 50’s, the resulting financial impacts include less money for retirement, and can mean a lessened ability to help children with major expenses such as college tuition or weddings.

Overall, the report paints a difficult picture for care givers. In addition to lost wages, the report estimates out of pocket expenses of upwards of $5k a year, increased stress, less time with family, and about 14% of women care givers having fair or poor health themselves.

The facts in the report highlight why solving the long term care situation in the U.S. is so critical at this point. The need for long term care insurance to help reduce the burden, changes in public policy (such as advocated by the “3in4 Need More” Campaign), and expanded care options with consistent quality of service are at an all time high as the Baby Boomer Generation ages.

You can download and review the full report here.

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Long Term Care Takes Toll on Employees

Posted on June 8th, 2011 by Em-Power Services

A report from Genworth Financial finds that providing long term care, without the benefit of long term care insurance, can take a toll on employees.

The report called “Beyond Dollars”, finds that the average care provider is in their early 50’s (peak earning years) and is taking care of an immediate family member for a period of about three years.

Nearly half reported a significant increase stress at home. Part of this stress may be from having to dip into family savings or retirement to help pay for care related expenses. Contributions to savings accounts were reduced by an average of 73%, and contributions to retirement were reduced by an average of 80%.

Employees also reported having repeated absences from work (33%) or working less hours (29%) to meet care commitments.

Long term care insurance reduces these stresses by providing the funds to support various types of care, including at home and/or day care (including trips to doctors).

You see the full report here.

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Congressional Research Service (CRS) Issues Report on CLASS ACT

Posted on June 2nd, 2011 by Em-Power Services

The Congress Research Service (CRS) is the non-partisan analysis office used by Congress to review issues related to legislation.

The office recently (May 13th) released a report on the cost and financing for LTC services, as well as the market for private LTC insurance.

The report also details CLASS program requirements for enrollment, premiums, eligibility, benefits, administration, and oversight as specified.

Also included are the federal budget implications of the CLASS program, concerns about long-run sustainability of the program, and a timeline and discussion of implementation issues.

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25 States See Double-Digit Rise in Policy Holders

Posted on May 25th, 2011 by Em-Power Services

The American Association of Long-Term Care Insurance (AALTCI) reports that twenty-five states saw a double-digit jump in the number of residents with long-term care insurance policies in place.

The findings were released as part of the American Association of Long-Term Care Insurance 2011 LTC Sourcebook.

The states with the highest percentage of LTC insurance policy holders include California, New York, Texas, Florida and Illinois. Pennsylvania and Missouri were the only states to experience a decline.

“This tells us that awareness and interest in LTC is growing rapidly,” said Doug Ross, President of EM-Power. “and will likely translate into more employees asking their worksite about LTC benefits.”

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New Data on Long Term Care Costs

Posted on May 23rd, 2011 by Em-Power Services

John Hancock Releases Results of Nine Year Study

According to a John Hancock Insurance study released recently, the average cost of nursing home care in the U.S. is now $85,775 annually for a private room and $75,555 for a semi-private room.

The cost is $39,240 annually on average for an assisted living facility. And the average cost of home care is approximately $20 per hour.

Nursing home care costs nationally have risen an average 3.2 – 3.5 percent per year over the last nine years. The average cost for a home health aide has risen 1.3 percent per year.

John Hancock surveyed more than 11,000 providers in cities across the country. The study then calculated a 9-year average using data from past reports. You can see more from John Hancock here.

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3 Reasons to Offer Long-Term Care Insurance Even if Employees Aren’t Asking For It?

Posted on October 6th, 2010 by Em-Power Services

When I meet with employers I always ask them when they think their employees would get around to thinking about planning for long-term care if they didn’t offer it as an employee benefit. Typical answers are “never”, “when they get closer to retirement age”, or “when something happens to them”. Unfortunately, those are all correct answers and they don’t bode well for the financial security of their employees as they age.

This leads us to 3 Reasons Employers Should Offer Long Term Care Insurance:

1. Employees Do Not Understand the Long Term Care Issue

Unlike traditional benefits that are generally understood by most employees, there are many misconceptions about long-term care. So while many companies provide generous sponsored savings programs, health insurance and other benefits to help their people build a safety net, working age people tend to think of old people, senior citizens or nursing homes when they hear the words long-term care.

Here are some things that people don’t understand:

  • That nearly 70% of people who reach age 65 will need long-term care during their lifetime
  • That the cost of care can be as high as $100,000 per year
  • That long-term care is not covered by traditional health insurance or Medicare when you reach age 65
  • That if you have resources, you will need to pay for your own care

Despite the number of people living through these situations with their parents and grandparents, many people are not aware that there is a planning solution. Education for employees at a young (or older) age is a tremendous benefit that employees appreciate whether they purchase protection or not.

2.  Many Applicant’s Are Denied Coverage Due to Pre-Existing Medical Issues

As we age the likelihood of developing a chronic or catastrophic illness or injury increases.  Purchasing coverage when you are younger and likely healthier can ensure that you are able to put protection in place before you have the need.  Employees who are not educated about long term care insurance may not begin to address the issue until it is too late.

People can actually get approved for coverage with common medical conditions like arthritis, diabetes and high blood pressure, but what generally happens with those types of conditions? They generally worsen over time. The result is that when many people finally get around to applying for Long Term Care insurance its too late.  Their medical issues have escalated to a point where they are uninsurable.  Industry wide approximately 25% of all people applying for long-term care insurance are declined due to pre-existing medical conditions.

3.  Offering Coverage is the Right Thing To Do

If one of you’re employees was about to put themselves in a dangerous position you would warn them if you could, right?  The reality is that with 70% of people who reach age 65 needing Long Term Care, and annual costs of $100,000+, failing to at least be educated on the subject is akin to being in a dangerous position.

As an employer you are in a position to ensure that at the minimum you’re employees have addressed the issue. It can be done without costing the company anything and it has the potential to save many of their employees from tremendous financial and emotional pain. Education for employees helps them understand the problem and take action 5, 10 and even 20 or 30 years before they would have thought about. For many employees, this will be the difference between being medically underwritten (before pre-existing conditions worsen) and in every situation, age based premiums will be the lowest they will ever be.

There is a catch

While there doesn’t need to be a cost to implement a worksite long-term care benefit, there does need to be a willingness and commitment to get educate employees. The Goal is not that the employees will purchase coverage, but rather, they stake the time to learn about the issue.

Three benefits of Offering Group Long Term Care are:

1.  Education – for both the employer and the employees.

2.  Premium discounts on the same coverage they employees would purchase outside an employer sponsored plan

3.  Simplified medical underwriting – This allows many who might not qualify individually to secure coverage.

You’ve heard the saying before, “you can bring a horse to water, but you can’t make it drink”. Employers offering coverage provide every opportunity for employees to take control over their financial security despite the fact they don’t yet know enough to ask for it.

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Four reasons to Start the Long Term Care Discussion with Your Group Clients and Prospects

Posted on September 27th, 2010 by Em-Power Services

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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2010 CLASS Act Guide

Posted on September 14th, 2010 by Em-Power Services

The Community Living Assistance Services and Supports Act — more commonly known as the CLASS Act — is part of the Patient Protection and Affordable Care Act, the healthcare reform legislation signed into law on March 23, 2010. The new legislation creates a national voluntary program to defray some of the costs associated with long-term care for working Americans.

The CLASS Act addresses challenging problems brought about by an aging population — problems that tear at the very fiber of American society. As more Americans become working caregivers, one study estimates that lost productivity will cost businesses $33.6 billion. Another study estimates that healthcare costs eight percent more for working caregivers than for employees without caregiving responsibilities.

Although employers are encouraged to offer CLASS Act coverage, they are not required to do so. In companies that choose to participate, employers will automatically enroll their people unless they specifically opt-out.

Significant concerns have been voiced about the CLASS Act by actuarial experts both from within and outside of government. One concern is the potential for what the insurance industry calls adverse selection. The legislation requires pricing to ensure solvency over a 75-year period but must accept all employees over age 18 who meet a minimum ‘at work standard’ regardless of pre-existing medical issues. As higher pricing limits participation, a disproportionate number of people with pre-existing health issues will enroll.

Other concerns are the cost of subsidizing rates for the poor and the young, a ‘one-size-fits-all’ design that will cover only a minimal level of the expenses associated with long-term care, the exclusion of non-working family members, and the absence of protection against future premium increases. In fact, there are concerns that the cost of coverage may actually be more expensive than private insurance.

One of the benefits of the new law is that it gives employers a unique opportunity to protect their own productivity by educating their people on a problem that has been quietly — but rapidly — growing: the combination of an aging population and the rising costs connected with long-term care issues. It will also help their people avoid the financial pain and even devastation that can accompany the need for long-term care.

Long-term care has the potential to affect both a company’s productivity and the financial well being of its employees, and employers will be required to decide whether or not to participate in the program.

So what does CLASS Act mean for businesses?

Our new White Paper “The Class Act: What it means to employers, their employees, and the nation” addresses questions and concerns about the CLASS Act and is available as a free download. To get your copy:

Employers and individuals may download by going to:

Brokers and agents may download by going to:

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