As a group, they understand that the burden will eventually fall to them
by Brian HarringtonMr. Harrington is distribution leader and head of group long term care insurance at Genworth. Visit www.genworth.com.
Millennials may not come to mind as a group ripe for group long term care insurance, but they have proven to be an effective gateway for sales of long term care insurance to their parents, even if they aren’t yet in the market for long term care insurance themselves.
Most group long term care insurance programs allow relatives of employees, including spouses, parents, grandparents and adult children to take advantage of the group pricing, even if the employee chooses not to enroll. The only difference is underwriting requirements are generally more stringent for relatives of employees.
So what’s behind millennials’ interest in long term care coverage for their parents? As part of Genworth’s proprietary generational planning study, we discovered that millennials recognized their parents were not planning for their long term care needs, realized the burden was going to fall on them and wanted to be part of the solution. In fact, 71 percent of respondents 39 and under said they are likely to look into purchasing long term care insurance for their parents or loved ones if given the opportunity.
In another study, potential group long term care applicants cited three reasons for sharing group long term care insurance information with their parents – reasons that offer additional clues about their concerns as future caregivers: not being able to afford to take time off work to care for them, the difficulty of coordinating care among siblings, and living too far away from their parents to take care of them.
Millennials as caregivers
Millennials are right to be worried about their future caregiving responsibilities. According to the AARP’s “Family Caregiving and Out-of-Pocket Costs: 2016 Report,” millennials (age 18-34) account for 19 percent of caregivers. And this demographic is “spending the greatest share of their annual income (on average, 27 percent) on caregiving, suggesting a sizable population of Americans balancing (or choosing between) family formation and/or caregiving,” the report said. Millennials spent an average of $6,785 on caregiving, primarily for household, legal and travel expenses, according to the report.
These statistics also have ramifications for employers. According to the 2015 report, “Caregiving the U.S.,” six in 10 caregivers reported being employed at some point in the past year while caregiving. Twenty-five percent were millennials and half were under the age of 50. Among them, 56 percent worked full time. Six in 10 caregivers reported having made a workplace accommodation as a result of caregiving, such as cutting back hours, or having received warnings about performance or attendance.
One of the lesser-known benefits of long term care insurance is care coordination and caregiver support services, which can be invaluable to younger employees who are caring for older family members long distance or just don’t know where to turn to for guidance in a crisis situation. If the insured is eligible for long term care benefits, they have access to care coordination services. It’s usually part of the claims process and involves a licensed healthcare practitioner providing a range of services, from helping with initial claims paperwork to creating an individualized plan of care. Caregiver support services can also help the family identify care resources, such as home care agencies, community care, assisted living facilities and nursing homes to address the insured specific needs.
LTC recipients also trending younger
While long term care is typically thought of as a concern for older people, our Beyond Dollars Study found that long term care recipients are actually getting younger. The age of care recipients 65 and older fell from 81 percent in 2010, the first year of the study, to 60 percent in 2015. That means 40 percent of people requiring long term care services in the study are under the age of 65. That same survey also found, surprisingly, that the reasons for needing long term care are shifting from illness to accidents.
It’s important to note that long term care insurance can be used by people of all ages who are permanently or temporarily unable to perform at least two activities of daily living or who suffer from a cognitive disability.
Although the vast majority of claims are paid to older policyholders when they need in-home care or care in a nursing home or assisted living facility because of a medical condition or cognitive disability, we find that a number of people do access their long term care insurance at a younger age, primarily as a result of an accident, such as a skiing or auto accident, or a temporarily disabling medical condition from which they eventually recover.
Long term care services can be expensive. According to Genworth’s 2016 annual Cost of Care Study, 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 $3,813 and $3,861, respectively. The national median monthly cost of a private nursing home room is $7,698; assisted living, $3,628 per month; and adult day services, $1,473 per month.
Group LTC insurance benefits
In addition to family coverage, group long term care insurance offers several important advantages over individual long term care insurance. In an internal survey of consumers, we found consumers most valued these benefits:
- Full portability
Consumers viewed being able to take the coverage with them when they change jobs or retire as the most attractive feature 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 we surveyed liked the idea of being able to 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.
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.
Employers benefit, too
No matter whether their employees are millennials thinking ahead about their role as caregivers for parents or grandparents, or baby boomers planning ahead for their own care, employers have an opportunity to provide them with a unique benefit: a financial tool that can help pay for expensive supportive services for themselves and their families.
There’s also a financial incentive for employers to offer long term care insurance in the workplace. When employees are consumed and distracted by their obligations as caregivers, productivity can suffer.
With group long term care insurance, benefits advisors are in a unique position to present a solution that provides as many benefits for employers as it does for their employees. ◊
1. Genworth’s “Long Term Care: A Generational Discussion Omnibus Survey,” 2015
2. Genworth’s “Dialing Into Group LTC Insurance 2016”
3. AARP’s “Family Caregiving and Out-of-Pocket Costs: 2016 Report,” Chuck Rainville, Laura Skufca and Laura Mehegan, Nov. 2016.
4. Executive Summary: Caregiving in the U.S. 2015,” National Alliance for Caregiving and the AARP Public Policy Institute, June 2015
5. Genworth’s “Beyond Dollars Study,” July 2015
6. Eating, bathing dressing, toileting, transferring and continence
7. Genworth’s 2016 Cost of Care Study, May 2016
8. longtermcare.gov, U.S. Department of Health and Human Services (Accessed on May 9, 2016)
9. Genworth’s Group Long Term Care Insurance Market Study, January – July 2016