Long Term Care Insurance as an Employee Benefit

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.