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June/July 2016  Volume 7, Number 3        

life insurance

Long-Term Care Helps Boomers Ensure Quality Care, Preserve Estates

“Unlike other forms of insurance provided through the workplace, long-term care insurance is typically funded completely by the employee, without a contribution from the employer. Even without a contribution from the employer, long-term care insurance through the workplace can give employees the advantages of group insurance over individual policies.” —U.S. Bureau of Labor Statistics

Are you offering your employees a voluntary long-term care (LTC) insurance program? If not, you are missing out on a valuable benefit and morale-builder for your older employees.

A 2010 survey conducted by the Southeastern Institute of Research’s Boomer Project found that more than half of consumers between ages 40-70 (51 percent) recognize that the cost of long-term care could drain them financially. Yet fewer than half (44 percent) have made plans to ensure they have sufficient funds to cover long term care expenses. Older respondents, those with substantial assets, and those who think it is likely that they will need long term care are more likely to have already established a plan.

Statistics show that those who worry have good reason. About 10 million Americans currently need long-term care services, including four million under age 65. But a serious coverage gap exists—only 8 million Americans have long-term care insurance. Since other forms of insurance do not cover long-term care, uninsured individuals would have to rely on savings to fund their care.

LTC insurance pays a benefit to meet care needs when an insured becomes chronically ill or disabled and unable to perform two or more “activities of daily living” (ADLs). Most policies cover the cost of custodial care (including in-home services) as well as skilled nursing care.

When it comes to providing LTC benefits, you have three basic options:

  • True group plans. Insurers write true group plans on a “guaranteed issue” basis, meaning they exclude no employee for health reasons. As a group plan, you can offer a select set of identical benefits to all your employees, no matter which state they live in. The insurer may offer benefits other than the select set, but will usually require medical underwriting. An individual can convert a true group plan to an identical individual plan—at group cost—when he or she leaves the group. Insurers usually limit true group issue to employer-funded plans.
  • Modified guaranteed issue. Modified guaranteed issue means the insurer requires no medical underwriting, but employees must answer one or more qualifying questions to eliminate disabled or very sick workers. Groups with low participation will generally have higher rates than under a true group plan, but will still enjoy a discount over individually purchased policies. Because modified guaranteed issue programs issue individual policies, the employee can keep the policy and rates when he or she leaves the group.
  • Individual plans with group discounts. These are identical to plans that are offered to the public but the premiums are discounted from five to 15 percent for members of the group. The employee can choose any of hundreds of benefit options since everything is medically underwritten.

The key components of the LTCI policy include:

  • the daily benefit, a maximum dollar amount
  • the benefit period — usually two to six years or “lifetime”
  • the elimination period — usually 20 or 100 days, during which employees must pay LTC costs out of pocket.

Policies with higher daily benefits and longer benefit periods provide the most protection; however, they also cost more.

Other features to look for:

  • Inflation rider (optional). This increases the daily benefit amount as costs rise, protecting your employees from the effects of inflation.
  • Waiver of premium (optional). Many policies include this option, which waives an insured’s premium payments when he or she is receiving long-term care services, usually after an elimination period of one to several months.
  • Guaranteed renewability. A guaranteed renewability provision allows an insured to renew coverage no matter what his/her current health condition. This feature is extremely important, because it ensures that the LTC coverage will be available when needed.

LTCI policies typically exclude coverage for long-term care needs arising from: mental and nervous disorders, other than Alzheimer’s disease; drug or alcohol addiction; war-related injuries or illnesses; treatment paid by government; and injuries or deaths that are self-inflicted.

Employees can deduct premium payments for qualified long-term care insurance as a medical expense, subject to age-based limits. •

  • Age 40 or under – $390.
  • Age 41 to 50 – $730.
  • Age 51 to 60 – $1,460.
  • Age 61 to 70 – $3,900.
  • Age 71 or over – $4,870.

For more information on how you can provide your employees with this valuable benefit at no cost to your organization, please call us.

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In this issue:

This Just In...

Long-Term Care Helps Boomers Ensure Quality Care, Preserve Estates

Enhance Your Benefit Plan with Cancer and Critical Illness Insurance

Legal Plans Help Employees Stress Less

Enrolling Non-Native English Speakers



The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2015 The Insurance 411. Tel. 877-762-7877. www.theinsurance411.com