Posts Tagged ‘LTC’
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.
Tags: 2009 class act, 2010 class act, 2010 class act guide, class act guide, Class Program, Community living Services and Supports Act, Education for long-term care, Employee benefits, Employee recruiting strategies, Employer sponsored benefits, Federal long-term care legislation, group long term care insurance, long term care insurance plan, long term care insurance quote, Long-term care education, Long-term care insurance tax advantages, Long-term care planning strategies, LTC, LTCI, Opt out long-term care insurance, Voluntary long-term care insurance, worksite Long Term Care, worksite Long Term Care | Filed under: Class Act | Filed under: worksite Long Term Care | 1 Comment »
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.
Tags: 2009 class act, 2010 class act, 2010 class act guide, class act guide, Class Program, Community living Services and Supports Act, Education for long-term care, Employee benefits, Employee recruiting strategies, Employer sponsored benefits, Federal long-term care legislation, group long term care insurance, long term care insurance plan, long term care insurance quote, Long-term care education, Long-term care insurance tax advantages, Long-term care planning strategies, LTC, LTCI, Opt out long-term care insurance, Voluntary long-term care insurance, worksite Long Term Care, worksite Long Term Care | Filed under: Class Act | Filed under: Class Act, worksite Long Term Care | 4 Comments »
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: http://www.empowerltci.com/2010-class-act-guide.html
Brokers and agents may download by going to: http://www.empowerltci.com/2010-class-act-guide-for-brokers.html
Tags: 2009 class act, 2010 class act, 2010 class act guide, class act guide, Class Program, Community living Services and Supports Act, Education for long-term care, Employee benefits, Employee recruiting strategies, Employer sponsored benefits, Federal long-term care legislation, group long term care insurance, long term care insurance plan, long term care insurance quote, Long-term care education, Long-term care insurance tax advantages, Long-term care planning strategies, LTC, LTCI, Opt out long-term care insurance, Voluntary long-term care insurance, worksite Long Term Care | Filed under: Class Act, worksite Long Term Care | No Comments »