If you are looking to provide additional value to your employees in your group benefits plan, long-term care (LTC) insurance is an important option to consider. This coverage provides employees with the ability to secure quality health care in their later years. Including this coverage in your group benefits plan can be a helpful tool to boost retention among your experienced and high-value employees.
In this article, we’ll discuss what you need to know to decide if LTC insurance is right for your company.
What Does Long-Term Care Insurance Cover?
Long-term care (LTC) insurance is different from traditional medical insurance in that it covers long-term health services and support, typically needed due to a chronic or long-term health condition. A policy holder qualifies for their LTC benefits when they are no longer able to perform certain activities of daily living. There isn’t an age minimum or maximum requirement to access the benefits of this coverage.
This coverage will reimburse for services that assist with daily living activities, such as eating, dressing, bathing, moving around, including the ability to use a toilet (incontinence) and/or getting in and out of bed, as well as any cognitive impairment. Typically, an individual must not be able to do at least two of these things for their policy to start covering the cost of long-term care services.
Most LTC policies that are available today are comprehensive and pay for long-term care in various settings, including:
- Adult day service centers
- Alzheimer’s care facilities
- Assisted living facilities (also known as residential care facilities or alternate care facilities)
- Nursing homes
- Hospice care
- Respite care
If an individual chooses to have long-term care provided in their home, comprehensive policies generally cover the following services:
- Skilled nursing care
- Necessary therapy (i.e., occupational, speech, physical, and/or rehabilitation)
- Assistance with personal care, such as bathing and dressing
Who Needs LTC Insurance?
Contrary to popular belief, LTC insurance isn’t just for the elderly. It provides coverage that traditional medical plans do not provide for long-term care needs arising from accident, illness, and aging. The need for long-term care increases with age, but an accident or illness can occur at any time, so all individuals can benefit from having LTC insurance.
How is LTC Different Than Long-Term Disability Insurance?
LTC is different from long-term disability (LTD) insurance for two primary reasons. First, LTC is not tied to a specific age, and second, it’s meant to cover out-of-pocket expenses related to the policy holder requiring long-term care either in a facility or at home. To qualify for use of LTC benefits, the policy holder also would be unable to work.
Long-term disability is designed to cover a certain portion of the policy holder’s income as the result of a disability related diagnosis. A diagnosis could be physically or mentally related (i.e., early onset Alzheimer’s). The disability would keep the policy holder from performing the expected duties of their job and so they would qualify upon diagnosis. At that time, they would receive the allowed monetary benefits until they turn age 65 or normal retirement age.
How Much Does Long-Term Care Insurance Cost?
The cost of LTC insurance depends on several factors, including:
- Whether the policy is purchased on an individual basis or as part of a group plan offered by an employer
- The care options and benefits that are included in the policy
- The age of the policy holder when they purchase the policy
- The maximum amount the policy will pay per day
- The maximum number of days or years the policy will pay benefits
Group Benefit Plans and LTC Insurance
Individuals can purchase LTC insurance on their own or, if available, through the group benefits plan at their workplace. Both employees and employers will realize several benefits of having LTC insurance part of the group benefits plan.
Benefits for Employees
When employees purchase LTC insurance through their group health plan, they will be able to take advantage of pricing discounts and simplified underwriting only available on a group basis. In addition, a LTC policy does the following:
- Enables employees to safeguard their retirement savings.
- If the need arises for long-term care, they can pay for this care through the LTC insurance rather than with their retirement savings.
- Gives employees the ability to control their long-term health care decisions rather than relying on family or government for financial support.
- Provides peace of mind by providing coverage for needs that are not covered by other medical benefits.
Benefits for Employers
When employers offer LTC insurance for their employees, they can choose to pay all, part, or none of the premium for employees who opt in for the coverage. Regardless of which option employers choose, they and their employees will still enjoy benefits of making this type of insurance available.
- Discounts on the policy premium. Even if employers choose to simply offer the coverage as a voluntary benefit where the employee pays 100 percent of the premium, the policy will be available at a group-discounted rate.
- Health underwriting concessions. Generally, insurers require individuals to meet certain health standards to qualify for long-term care insurance, but when the policy is offered on a group basis the medical qualifications are often simplified.
- Improve recruitment and retention. Find and retain key employee talent with enhanced benefit packages that include LTC insurance. Comprehensive and competitive benefits packages matter.
- Improve employee productivity. When an employee is dealing with a long-term care situation, either for themselves or a dependent, it can be time consuming and stressful. This can cut into employee productivity. Having access to long-term care solutions can help eliminate this problem.
- Tax incentives. Contributions to long-term care premiums are tax deductible expenses. For tax details, visit http://www.aaltci.org/long-term-care-insurance/learning-center/tax-for-business.php
Contact your Leavitt Group insurance advisor to learn more about this important coverage.