Is It Time To (Once Again) Consider Long-Term-Care Benefits?

“Facing Financial Ruin as Costs Soar.”

“Desperate Families Search for Affordable Home Care.”

“I Wish I Had Known That No One Was Going to Help Me.”

These are all headlines from a recent multi-part series in The New York Times called Dying Broke, stories that paint pictures of an ever-growing crisis in how the nation provides long-term care to those no longer able to perform everyday tasks—what the medical industry calls “tasks of daily living.”

Unless someone in need of long-term care can qualify for assistance under Medicaid (qualifying rules vary by state and are complicated) or has purchased long-term-care (LTC) insurance, they are on their own, needing to pay with their savings. And consensus data shows that 70 percent of those turning 65 today will need some sort of long-term care.

Alas, the market and products for long-term-care insurance are also complicated. For instance, most policies include an “elimination period” of a number of days in which a person receives long-term-care services before insurance coverage kicks in. Some policies are sold as hybrids of whole life insurance with a long-term-care rider; if a person needs care, the amount of money spent on that reduces the death benefit. And some policies restrict coverage to a certain setting, covering nursing home care but not home care.

This byzantine situation might seem to call for employers to step in en masse and offer long-term-care insurance as a reliable hedge against future calamity. It’s not a new concept and has been explored as far back as the late 1980s. But in this crisis that seems to keep coming around, one might sense a new urgency in addressing it, according to experts.

“For decades, we have done an excellent job of kicking the can down the road,” said Jesse Slome, executive director of the American Association for Long Term Care Insurance, an advocacy and educational organization. “Other countries have not.”

Slome noted that the issue can have big implications for the workplace. “From an employer perspective, it typically affects their employees who have to split time to care for an aging parent,” he said. “So it’s not that the employees need long term care—a few will, but the immediate need is for caregiving relief.”

Of course, by the time a midcareer employee faces such a situation, it is likely far too late to address an emergent family crisis with insurance. But such situations bring higher visibility to the issue, and Slome said LTC insurance can and should be presented as a key piece of helping people fill in their financial goals for the future.

“Long-term-care insurance is a rather well-defined and small part of the solution,” Slome said. “It’s not for everybody. It never will be for everybody. But until we come up with some sort of government solution to address it, it is at least a very good, adequate part of the current picture.”

Take Emotions Out of It

Often, a family crisis precipitates someone’s perceived need for long-term-care insurance. Such a crisis propelled Jennifer Loftus, SHRM-SCP, co-founder of HR consulting firm Astron Solutions, into buying a company-paid LTC policy for her and her business partner (one other employee in the six-person firm is also covered, which allows the company to pay group rates for the coverage).

But before Loftus signed an agreement, she took a step back to evaluate her family’s financial situation and what sorts of situations would be covered by Medicare and Medicaid, and she comparison-shopped. She did not let the immediate emotions of the crisis dictate her actions.

“When you are in those emotional or pressure-filled situations, it’s easy to say, ‘Sign me up for X or Y’ and then five or 10 years later, or even a few months later, wonder why you did that,” Loftus said.

Having a well-established and well-presented LTC policy in the workplace can help take those emotions out of it, while also eliminating some of the hassle of the application process. The University of New Mexico (UNM), for instance, offers an LTC program. Though the university does not pay any of the premium costs—a change made in 2016 to address budgetary restraints, according to UNM HR Executive Director Joey Evans—it does offer employees coverage without the need for medical underwriting if they sign up in their first 60 days of employment.

And, like most insurance products, the younger someone is when they start coverage, the lower the premium. The university offers employees a link to an LTC cost calculator as well as the option to continue group coverage at the same cost if they leave the university, as well as the opportunity to enroll family members. Care delivered in a nursing home is covered at 100 percent of an elected monthly benefit of $1,000 to $4,000, while home care is delivered at 50 percent and assisted living facility care at 60 percent of the base benefit.

“You’ll naturally see a decline when you go from auto enroll and premiums paid by the university to where the employee has to take action to enroll,” Evans said. “But we still have, out of 7,500 benefits-eligible employees, about 2,700 still electing it.

“People have been happy with the offering we have for LTC coverage. The premiums have been increasing over the past few years, but most people pay under $10 a month for that base benefit, which won’t get you a long way—but it’s something.”

New Wave of Interest Coming?

The percentage of employers offering LTC insurance has been very steady over the years, with 20 percent to 30 percent offering it to some extent, depending on which survey one looks at. SHRM’s 2023 Employee Benefits Survey found that 20 percent of employers offer LTC insurance. But Tom Kelly, principal and voluntary benefits leader at consulting firm Buck, said the company’s latest survey, to be published early in 2024, shows a tremendous uptick in employers’ intent to address the issue: 66 percent of survey respondents said they plan to do something with respect to LTC and will look at it in the coming year.

Kelly said part of the reason for the heightened interest among employers may stem from state-level initiatives to fund LTC. The state of Washington has pioneered the concept with its WA Cares program, funded by a payroll tax of $.58 per $100 of annual income (with no cap), to be deducted from payroll and remitted quarterly by employers. This will provide a state-sponsored lifetime benefit of $36,500 to pay for extended care.

Kelly said one of the most popular LTC products is a hybrid policy that links permanent life insurance with a long-term-care rider; essentially, any money paid out for LTC would be deducted from the death benefit. He also said while the previous generation of standalone LTC insurance tended to attract a midlife demographic—“someone approaching the age of 50, definitely over 40, with a six-figure income”—the market for the hybrid product has shifted.

“Because of the flexibility of the product, they can get a death benefit within their budget and have a corresponding LTC benefit calculated off that,” he said, “and the population that is enrolling is skewing younger and lower-income. We are seeing that have a broader appeal in the workplace.”

Kelly also said employers seeking to address inclusion, equity and diversity issues within their firms might consider LTC insurance as a way to level the premiums women pay. In the individual market, women—who usually live longer than men and are more apt to need an LTC policy—often pay 20 percent to 40 percent more than men for equivalent policies.

Perhaps most importantly, considering LTC insurance as a benefit might also kick-start a more complete look at how employers promote a sense of financial well-being among their workforces. In a recent white paper, Kelly cited data from the National Association of Personal Financial Advisors that signaled employees need more guidance on handling their finances: Nearly 7 in 10 working adults report that they would perform better at work if their employer offered more financial wellness benefits.

“It’s yet another reason for organizations to consider things like LTC insurance as part of a broader financial well-being offering,” Kelly said. “Every bit helps, and if you can only afford a certain amount through your employer, you’ve taken a right step in terms of addressing some of that cost. You may need to look at other ways to address that need, but by having employers take a more active role, we hope more employees can be more prepared.”

Greg Goth is a freelance health and technology writer based in Oakville, Conn.