- Key insight: Discover how predictive AI plus LTC insurance can reshape employee benefits planning.
- What's at stake: Rising LTC costs threaten workforce retention and retirement security across employers.
- Expert quote: Eileen Tell - LTC needs are persistent, expensive, and largely uncovered by typical insurance.
- Source: Bullets generated by AI with editorial review
Many Americans will not be able to afford the long-term care (LTC) they, or aging loved ones they're caring for, will someday require. Benefits including
According to the U.S. Department of Health and Human Services, 70% of people who live past age 65 will need some type of LTC, which can range from help with daily needs such as bathing, dressing and food preparation at home, to more intensive care such as living in a nursing home. Much of this is not covered by
"The care needs are expensive, they can last a long time, and they're not covered by any of the insurances that we typically have," says Eileen Tell, principal and owner of ET Consulting, which focuses on long-term-care aging services, research and policy.
LTCi is meant to fill the gaps left by regular health insurance, and employees can purchase it for themselves or for eligible loved ones, such as their parents or spouse. A survey by the American Association for Long-Term Care Insurance found that the average annual premium for a $165,000 policy was $950 for a single 55-year-old male, $1,500 for a single 55-year-old female and a combined annual premium for a 55-year-old couple was $2,080.
Because premiums rise based on age, and applicants can be denied for preexisting conditions, it's cost effective for employees to purchase this insurance option for themselves or a spouse in their 50s to early 60s, according to Charles Schwab. For those interested in coverage for their parents, the search should begin earlier. As such, it's never too soon to start raising awareness, and benefit leaders have a valuable role to play, says Tell.
"We did a survey asking adults aged 50 and over what they thought the likelihood is they would need long-term care at any level, and who they thought would pay for most of the care if they needed it for six months or more. Only 14% of the respondents got it right," Tell says. "This is an important place where employers can come in at the front end in terms of education and awareness, just the way they're trying to incentivize people to make the best contribution plan they can for their retirement."
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The new cost of aging
Data from the Bureau of Labor Statistics shows households led by retirees over the age of 65 spent an average of $60,087 in 2023 on basic home, health and transportation needs. If they end up needing even lower-expense LTC arrangements, their financial output more than doubles: For example, though numbers vary depending on level of care and location, analysis by KFF shows the average annual cost for an in-home health aide providing 40 hours of care per week to be $68,640. On the higher end, it found the average annual cost for a private room in a nursing home is $116,800, and 24-hour in-home health-aide services average more than $200,000.
In a study by the Certification for Long-Term Care (CLTC) and UMass Boston's LeadingAge LTSS Center for which Tell was a leading researcher, families with and without LTCi shared feedback about their experiences with in-home long-term care. The strain on families without insurance was clear.
"They said they were surprised at the amount of cost just in meeting daily needs, not [including] paid care, but just the equipment, supplies and travel," Tell says. "The expenses add up. And it's a [particularly] tough situation for what we call the sandwich generation, [where] the money's [also] going the other way."
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Helping employees plan for LTC needs
Waterlily, a financial technology company, uses AI to predict future LTC needs and associated costs that can assist people in developing a personalized plan for themselves or their loved ones. Employees fill out an intake form including basic social, demographic, financial and medical information. Following AI analysis, results including at what age care is likely to begin, how long it will be necessary, projected costs and how much they can save by having LTC coverage, are sent to them by the platform.
Users can enter additional factors like where they would like to receive care, such as their home or in a facility, whether they plan to have a family caregiver and how they plan to finance any care. These details also get included in their cost projections, and the results can be used to help them, their family and a financial adviser lay out the most appropriate course of action such as new insurance options, adjustments to current insurance and increased savings.
"It's primarily used as a preparation tool," says Lily Vittayarukskul, the platform's co-founder. "This is a very core risk to any sort of wealth-accumulation plans, [and] … oftentimes you see [people] aged 40 to 60 think about it [as part of] their retirement plan and financial goals. We also see the sandwich generation use it to anticipate what the needs of their parents or inlaws will look like as well, because that [can] also [be] another massive financial disruptor."
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Why this matters for employers
Better protection through benefits
Waterlily is available as a voluntary, group, or executive benefit. By offering it to employees, employers can help them make more informed decisions about other benefits that may save them money in the long run, such as life or LTC insurance. The platform assists benefit leaders with marketing the offering to employees, and nearly 45% those who use Waterlily sign up for a new policy or annuity after receiving their projections.
Impact on bottom line
When employees are hit with LTC costs and responsibilities, especially for loved ones, it often impacts their ability to work at full capacity. For instance, according to the CLTC and UMass Boston study, those without LTCi insurance were more likely to retire early, reduce work hours, or make personal sacrifices to attain care. Having a plan in place can not only assist them financially, but professionally as well.
"When a loved one had long-term care insurance to help pay the bills and help navigate the system, the family caregivers didn't have to leave work earlier than they had planned or cut back," says Tell. "They had more of a work-life balance; they were still really involved in the care … [and] it didn't impact their retirement."
Helping employees understand the prevalence of LTC needs as they and their loved ones age, and helping them forecast this at an individual level, can set them up for a much more confident future.
"This is a form of retirement planning," Vittayarukskul says. "It's about financial education that then becomes financial and health wellness. Once you have that financial peace of mind, you are enabling a quality of care for employees and familial relationships, as well as a quality of life that they can anticipate in return."
