LTCi: Not Your Average Voluntary Benefit

Selling long term care insurance in the workplace requires a unique strategy

by Brian Harrington

Long term care insurance holds the distinction of being so different from other voluntary benefits offered by employers that it requires a different approach to selling to the workplace – one centered around education, multiple touch-points and a dedicated enrollment period.

No ordinary voluntary benefit

To begin with, long term care insurance is a product that is not well understood. Many employees mistakenly think long term care insurance is long term disability insurance or they think they don’t need it because their health insurance will cover the costs.

Because of the confusion and lack of knowledge about long term care insurance, we’ve found that it takes time to educate employees about the product and the important role it plays in helping protect their retirement assets from being depleted due to an expensive long term care event.

Another difference is that the premiums are higher than other voluntary benefits. And because employees are purchasing a benefit they may not use for 15-20 years down the road, it’s easy for them to procrastinate and put off purchasing coverage. That’s why it’s important to make sure employees understand that long term care insurance is most affordable when they’re younger and healthier.

All of these differences underscore the need for employers to take the time necessary to educate employees about the product and how it can help protect their retirement assets. We recommend providing multi-touch communications throughout the enrollment period, including an opportunity for employees to attend an onsite meeting or webinar to understand how the benefit works and to ask questions.

It’s also important for employers to demonstrate their support of the program.

In our experience, the most successful enrollments occur when an employer makes full use of communication resources, branded with the employer’s logo, such as internal announcements, newsletters, webinars, onsite informational meetings, and reminder emails. In many cases, customized employer websites can be a great source of valuable information for employees.

Finally, because of the need for intensive education, we advocate for a long term care enrollment period outside of the normal annual benefits enrollment cycle. We’ve found that it’s import to engage employees on the subject of long term care without the distraction of other benefits or enrollment deadlines.

Why employers should care about LTC insurance

Chances are good that at some point in their lives, most people will come face to face with the need for long term care, either as a recipient of care or as a family caregiver. It’s an expensive proposition that most families are ill-prepared to meet financially. Long term care expenses can rapidly eat into retirement savings for care recipients and caregivers alike. Employees distracted by their caregiving responsibilities affect productivity at work.

Group long term care insurance benefits employees by helping them address these real-life challenges and it benefits employers by contributing to a competitive benefits package and helping to prevent lost productivity.

Group long term care insurance helps fill a hole in benefit packages that no other benefit can 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 services are very expensive and health insurance does not pay for these services over an extended period of time. This realization often comes as a shock to individuals and families who haven’t planned ahead. According to Genworth’s 2016 annual Cost of Care Study,¹ the cost of long term care continues to rise year over year, especially for services in the home, where most people choose to receive care.²

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.

While employers might question the need for long term care insurance for younger employees, 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 living3 or who suffer from a cognitive disability.

Beyond Dollars

In fact, our Beyond Dollars Study⁴ 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.

Long term care is also touching younger people as caregivers. Our Beyond Dollar Survey showed that 60 percent of caregivers are between the ages of 25 and 54. In fact, the average age of caregivers has decreased from 53 to 46 since 2010.

Why is this important to employers? According to the 2015 report, “Caregiving the U.S.,”⁵ 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. The bottom line is, when employees are consumed and distracted by their obligations as caregivers, productivity can suffer.

Some group long term care insurers also allow employees’ family members to apply for long term care coverage under the plan, even if an employee doesn’t have coverage. This lifts some of the worry and physical demands of caregiving off the shoulders of the employee, who can now focus on providing emotional support.

Another important advantage of group long term care insurance for companies whose employees span multiple states is that they can offer one plan that employees can then customize no matter where they are located, as opposed to constantly having to adapt their benefit plans to new products being introduced state by state throughout the program.

Benefits to buying LTC Insurance at work

• Group long term care insurance offers several important advantages over individual long term care insurance. In an internal survey of consumers,6 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.
• Family coverage – Depending on an employer’s requirements, employees’ spouses, parents, grandparents and adult children can often apply for long term care insurance 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.
• 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.
• 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.

Long term peace of mind

By offering group long term care insurance, employers have a unique opportunity to give their employees a benefit like no other: a financial tool that can help pay for expensive supportive services for themselves and their families, and provide more choice and control over how and where they receive those services. With a long term care insurance solution in place, they can protect their retirement savings that they’ve spent their entire career diligently setting aside.

Group long term care insurance is easy to purchase and add to over time, and employees can rest assured that it has been vetted by their trusted employer. ◊

Endnotes
1. Genworth’s 2016 Cost of Care Study, May 2016
2. longtermcare.gov, U.S. Department of Health and Human Services (Accessed on May 9, 2016)
3. Eating, bathing dressing, toileting, transferring and continence
4. Genworth’s “Beyond Dollars Study,” July 2015
5. “Executive Summary: Caregiving in the U.S. 2015,” National Alliance for Caregiving and the AARP Public Policy Institute, June 2015
6. Genworth’s Group Long Term Care Insurance Market Study, January – July 2016