A retirement readiness benefit that addresses the financial challenges of aging

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With financial readiness emerging as a major theme in benefits, attention is turning to an often overlooked aspect of retirement planning: helping employees address the financial challenges of aging — namely long-term care, an expense that can quickly wipe out the best-laid retirement plans.

To help employees and their families protect their hard-earned savings from these potentially devastating costs, more employers are offering group long-term care insurance as part of their financial readiness benefits.

Group long-term care insurance helps cover the cost of supportive services that people need when they can no longer care for themselves, either because of an accident, illness or cognitive disorder. These services provide help with activities of daily living, such as eating, bathing, dressing and transferring, whether living at home or in an assisted living or nursing facility, or attending an adult day center.

Long-term care costs are generally not covered by Medicare or health insurance, and they can be substantial. According to Genworth’s 2018 annual Cost of Care Survey, the cost of long-term care continues to rise year over year in most care settings, but especially for services in the home, where most people choose to receive care.

Nationally, the median monthly costs for the services of a homemaker or an in-home health aide for 44 hours a week are $4,004 and $4,195, respectively. The national median monthly cost of a private nursing home room is $8,365; assisted living, $4,000 per month; and adult day services, $1,560 per month.

Long-term care insurance is a voluntary benefit that consumers not only want the option of buying at work, but actually prefer purchasing through their employer versus an agent, according to an omnibus survey Genworth conducted to gauge consumers’ knowledge about long-term care insurance. Four out of five respondents (82%) said they want their employer to offer LTC insurance as an optional benefit, and 68% said they would prefer to buy it from their employer.

This was true across all generational groups, but was especially pronounced among millennials and Gen Xers. That’s likely because younger employees realize they may ultimately be responsible for caring for their parents, and encouraging their parents to buy LTC insurance coverage (or buying it for them) can take some of the worry as well as the financial and physical demands of caregiving off their shoulders.

Through the years, across myriad studies, consumers have told us part of the appeal of purchasing long-term care insurance through their employer is the comfort of knowing that their employer has vetted the issuing company on their behalf and the assumption that the process of purchasing the coverage online would be more convenient than in the individual market through a financial professional.

Another advantage of group long-term care insurance over individual long-term care insurance is the ability to offer coverage to spouses/partners, parents, grandparents and adult children under the group plan. While underwriting requirements are generally more stringent for relatives of employees, they may also be able to take advantage of the group pricing, even if the employee chooses not to enroll. In fact, 87% of respondents said they would share the opportunity to purchase LTC insurance with immediate family members.

Not convinced yet? Other benefits of group long-term care insurance include:

· Full portability. Employees can take the coverage with them when they change jobs or retire, one of the most attractive features of group long-term care insurance.
· Fewer underwriting requirements. Because group long-term care insurance is, in part, underwritten at the group level, fewer underwriting requirements are needed at the individual level for employees during initial enrollment.
· Online enrollment. Consumers can learn more about long-term care insurance, estimate costs and apply online.
· Easier payment options. Employees can pay premiums by payroll deduction, if offered by the employer, or via electronic funds transfer or direct bill.
· Affordability. In most employer group plan designs, employees can start small, buying a modest amount of long-term care insurance, then add to their coverage over time as their budgets permit.

While long-term care is typically associated with advanced age, long-term care can impact employees as care recipients and caregivers at any time in our lives as a result of accidents, illness or cognitive disorder.

Genworth’s Beyond Dollars 2018 Study found that caregivers and care recipients are getting younger. More than half (58%) of today’s caregivers are between the ages of 25 and 54, with an average age of 47, down from 53 in 2010. The age of care recipients has also been coming down: In 2010, 62% were older than 75; in 2018, the average age of care recipients was 66.

Because many people serve as informal caregivers while holding down a job, long-term care insurance can be viewed as a significant benefit to employers as well.

Employees who are dealing with caregiving crises may not be focused on their jobs, and that can lead to lost productivity and perhaps even the loss of talented employees who are forced to pause or change careers to be able to attend to family members who need extended care.

Half of respondents reported that their caregiving responsibilities affected their careers: 70% reported missing time at work and 46% reported cutting back their hours.

By being able to offer long-term care insurance to their extended families through their group plan, this voluntary benefit can help alleviate the financial as well as emotional and physical stress of caring for a loved one.

By purchasing long-term care insurance for themselves and their partners, employees are helping ensure that, should they need care, they have the resources to receive that care when and where they wish without having to worry that they will deplete their savings.

Considering the strong likelihood that most of us will be touched by long-term care, either as a recipient of care or as a caregiver, employers are in a unique position to help employees address these real-life challenges of aging in a meaningful way through this often-overlooked, but much appreciated financial readiness benefit offering.

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Retirement planning Retirement benefits Retirement income Retirement readiness Financial planning Financial literacy Financial stress Long-term care Health insurance