Product Overview > Group Plans > Long Term Care

Why is Group Long Term Care Insurance important?

Today in America, millions of people of all ages need a type of assistance known as long-term care (LTCI). This means they need help with Activities of Daily Living (ADL's) such as bathing, dressing, eating, toileting, continence, and transferring. The need for care can arise out of illness, injury or advancing age. The assistance may be provided by friends or family members, or by professionals, at home or in a facility). Increasingly, long term care is provided at home and not just for seniors. Forty percent of Americans receiving long term care are under the age of sixty-five¹. At home and in the workplace, long term care issues affect everyone.

The Benefit of the Future

Long term care insurance is expected to become the most sought-after benefit during this next decade. And the reasons go to heart of the workplace. As our population ages, more and more of today's employees are stepping into the role of caregiver for a disabled family member, parent, an older relative or a friend. This creates problems for the workers who face time and financial pressures, and issues for employers who suffer lost productivity. Fortunately, your company can be part of the solution. By incorporating LTC insurance into your benefit program, you can help employees remain productive on the job. Employers who take the initiative today to create a forward-focused benefit program stand the best chance of attracting and retaining valuable employees tomorrow.

A Growing Need

The age trend isn't the only factor driving the need for LTC insurance. Changes in federal policy have shifted the burden of long term care costs from the government to individuals and their families. Tax incentives are now available to businesses offering group long term care programs.

You have the opportunity to partner with your employees to meet the need for long term care. In a highly competitive world, the companies who rise to this challenge will become the employers of choice.

A Threat to Retirement Security

Employers today invest significantly in programs such as 401(k) TSA's or defined benefit plans to help employees meet their retirement goals. Many fail; however, to help their employees protect the nest egg they've been encouraged to build. When a long term care need arises, it does not take long for a lifetime of savings to disappear.

• The cost of long term care in a nursing home for an individual can be as high as $80,000.²
  
  
• Bringing a health care professional into the home three times a week can cost $12,000 a year or more.³
  
  
• Over 70% of single individuals in a nursing home and 50% of couples with one partner in a nursing home are impoverished within one year.⁴

Whether your employee is a caregiver or one of the millions of Americans actually receiving care, the financial burden can be extremely heavy.

Who really pays the Bills?

Nationwide, caregiving families spend $2 billion per month of their own money providing care to family members.⁵ Neither government programs nor ordinary health insurance plans provide adequate coverage for most Americans. For example, Medicare paid for just 12.3% of nursing home costs in 1997.⁶ Without insurance protection, LTC costs could easily and quickly deplete one's life savings.

Who are the Caregivers?

Family members provide about 80% of care to in-home patients.⁷
Today, 22.4 million families, almost one quarter of American households, are providing informal long term care to a friend or relative.⁸

One study shows that the average caregiver now devotes 18 hours a week to helping elderly loved ones.⁹ To balance the demands of work and home, employees often miss business meetings, decline transfers or business trips, come to work late, reduce their hours or take unpaid leave.

Increasingly, employers are feeling the financial impact: annual productivity losses from eldercare are estimated to exceed $29 billion per year nationwide.¹⁰ When employees are absent, employers must train temporary workers or assign duties to co-workers, causing disruption and added stress in the workplace. As America ages, the burden will grow: within the next 25 years, one in three workers will provide some type of long term care.¹¹ The time is right for long term care in the workplace.

LTC Insurance: The Right Employee Benefit at Any Age

It's important to remember that LTC insurance is not just for the elderly. In fact, 40% of LTC recipients are under the age of 65. LTC insurance is a smart benefit choice for employees at any age. When you sign up for LTC insurance, you lock in the rates at your age bracket. This means that if you sign up as a 40 year old; you will always pay 40-year-old rates. Furthermore, the younger the applicant, the lower the cost over the life of the policy.

Waiting to buy not only creates a higher annual cost but your employee also pays more for a shorter period of coverage. The first employee has fifteen more years of coverage then the third employee.

The Tax Advantages of Group Long Term Care Programs

The Health Insurance Portability and Accountability Act of 1996 (HIPPA) provides some very attractive benefits for employers who offered qualified long term care plans and the employees who purchase them. Since Group Long Term Care meets HIP AA 's standards, all of the following benefits apply:

• Employers can deduct all expenses associated with offering a group long term care plan, including any premium they pay on behalf of employees
  
  
• Employees who itemize deductions may claim long term care insurance premiums as a medical expense
  
  
• Claimants receive long term care insurance benefits tax-free
  
  
• Employees who itemize may deduct long term care expenses not covered by insurance

In addition to these federal tax advantages, many states now offer tax credits or deductions for residents who purchase long term care insurance. The number of states offering tax incentives continues to expand rapidly.

NOTES:

1. "LTC's Huge Untapped Potential," National Underwriter, December 7, 1998
2. Testimony Before the Special Committee on Aging, General Accounting Office, US Senate, March 9, 1998.
3. HIAA Guide to Long Term Care Insurance, 1999
4. Business and Health, January 1997.
5. Karen S. Petersen, "More Spend Time Caring for Elders," USA Today, March 18, 1997, p. 1D.
6. "LTC Insurance Could Play Role in Saving Medicaid Woes," National underwriter, January 11,1999.
7. "Challenges for Long Term Care Insurance in a Rapidly Changing World," Journal of Financial Service Professionals, January 1999.
8. Karen S. Petersen, "More Spend Time Caring for Elders," USA Today, March 19,1997.
9. Ibid.
10. AARP National Caregivers Survey, National Alliance for Caregiving, 1997
11. Margie Barrie, "Group Long Term Care Insurance: It's Not Just for the Elderly," Broker World, May 1997, p.54.

How to learn more:

Your Kistler Tiffany Benefits representative will focus on the important elements of Group Long Term Care Insurance plan to find the program that is best suited to your situation.

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