Long Term Care Insurance as an Employee Benefit

Companies that provide long term care insurance as a benefit are making it possible for their employees to have a secure retirement with peace of mind. It protects the one major catastrophic expense that is still not considered by many people, extended care costs. These costs can destroy a retirement plan, and ruin the quality of life for family members who are struggling to provide care. The insurance not only pays for the cost of care, but it can also provide the services of a care manager, medical equipment, and home modifications.

The other key reasons for companies to consider this benefit are:

As an employer-paid benefit

When an employer pays for all, or a part of the premiums, concessions in underwriting are available. This can allow employees who have health issues to qualify for coverage when it may be impossible to qualify for a privately purchased plan.

This insurance has become a popular benefit to key employees as part of a bonus program, or early retirement perk, and certainly contributes to successful employee retention.

Premiums for key executives can be set up so that the policy is paid-up for good in just ten years, or even one year. Taking a completely paid-up policy into retirement is a great way to reward an employee, and there are tax advantages as well.

Companies can deduct the entire cost of premiums paid on behalf of an employee or key executive.

Unlike health insurance, companies do not have to provide Long Term Care Insurance to the entire work force. It can be set up as a “carve out” to a specific class of employees, such as key executives.

Claim payments received later when care is needed, are not taxed, even if the premiums were initially provided tax free. This is uniquely different from disability insurance taxation.

As a voluntary benefit:

The insurance can be offered as a voluntary benefit to employees at a discount, and in some cases, with underwriting concessions for health issues, if combined with a “carve-out” for key employees.

Employees can have access to permanent discounts, and the plans are portable.

Most discounted small group plans are still individually-owned policies.

Employee seminars can be organized, so that employees understand the need and plan designs. Most of the time, one on one meetings can be arranged, and plans can be customized.

Other family members, such as an employee’s parent or child, can purchase the insurance through this plan at a discount. This will also protect both the employer and employee from possibly losing time from work to care for parents.

Although long term care insurance can’t be used as part of a cafeteria plan, some employers offer high deductible health plans, with health saver accounts, (HSA’s). Some of the funds in an HSA account can be used to pay for long term care premiums with pre-tax funds. The amount that can be used is based on age. Flexible spending accounts can’t be used at this time.

It has been shown that the average age of those purchasing LTC insurance through their workplace is almost ten years younger than those who purchase on their own. This is protecting people from unexpected illnesses and accidents, with much lower premiums that are more affordable over the long haul.

Purchasing LTC insurance at a younger age is actually less expensive over their lifetime than waiting ten years to purchase. For example, a 49 year-old would actually pay less from age 49 to age 79, then if they waited and paid from age 59 to age 79. This is even in the most conservative scenario. By starting earlier, at less overall cost, there can still be ten extra years of coverage in the beginning.

Basic requirements to form a small group

Small discounts and possible concessions in medical underwriting may be available if a company meets certain minimum enrollment  numbers. The minimums vary depending on the insurance carrier.