As you consider offering more value-added benefits to your employee population, I encourage you to think about seriously offering long-term care insurance. As many of us are seeing our parents and other family members live well into their 80s and 90s, it's more and more likely that the elderly people in our lives will at some point need long-term care services. It's the rare and fortunate elderly person who continues to live independently in his or her own home without home care services.
Typically, the scenario is quite the opposite. Either care is rendered in a facility or in the home with the help of additional services. Regardless of which option you and your loved one choose, paying for long-term care is expensive.
Nursing home costs, though they vary by region, can approach $95,000 per year. Private home health aides' rates, meanwhile, can average $23 an hour. For someone receiving 28 hours of care a week - that's just four hours a day - the cost would be almost $31,000 a year. Not surprisingly, many families now are looking at LTC insurance to defray those costs.
Employers offering long-term care insurance to employees are often doing so by paying:
* For a small base policy. Employees can then purchase additional coverage at their own expense. Their payments can be done through payroll deduction, and the policies are portable if they leave.
* For a set percentage or dollar amount toward a long-term care policy for the employee. The employee is then expected to pay the difference in cost.
* Nothing toward a long-term care policy, but making it available for all employees to purchase on a voluntary basis. The employer typically allows an agent to conduct education sessions and meet with employees to answer their questions.
Here are six basic factors for you and your employees to consider about LTC coverage:
1. The elimination period. This is the time between the beginning of a claim and when the policyholder is actually eligible to receive benefits. Most policies require some period of paying for care out of the insured's assets. The longer the elimination period, the lower the premium. Rather than a 30-day elimination period, consider a 60-, 90-, or even 180-day period.
2. The benefit period. This is the number of years for which the insured will receive benefits after meeting the elimination period requirements. The average length of stay in a nursing facility is two-and-a-half years, but that's only an average. The longer the benefit period, the higher the premium.
3. Inflation riders. These are designed to provide some degree of protection against the increasing annual cost of long-term care. They can be calculated at a simple or compound percentage rate, and age is a factor in considering these riders. The older the insured will be (say, older than 70), the simple rate may make more economic sense. The compound rate can be one of the more expensive premium options in a policy.
4. Shared benefits. This is a benefit that can be shared between the insured and the spouse so that one spouse can use the benefits of the other's policy. It can be a complicated benefit to structure, but one worth investigating.
5. Premiums. These can vary widely by insurance carrier. Similar benefits from different carriers can often have up to a 45% price difference. Always shop around and get competitive quotes. Premiums do have to be paid each year to keep the coverage in effect.
6. Financial stability of the insurance carrier. Is the carrier going to be around when the coverage is needed? Just as with any benefit decision-making, one needs to examine the company's financial stability, its premium increase history and its claims paying history.
LTC insurance isn't for everyone, but with the extraordinary cost of long-term care, paying for care out of pocket is something you can shield employees from and should consider.
Contributing Editor Betty Long is a registered nurse and founder of Guardian Nurses Healthcare Advocates, a health care advocacy firm that has helped thousands of patients navigate the health care system and saved millions of dollars in health care costs. She can be reached at firstname.lastname@example.org.
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