The problem that long-term care poses is different for employers than it is for employees. This section addresses not only the problems that may occur for the employer when their employee needs care, but also the problems that may occur when the employee becomes a caregiver for a family member.

Problems Employers Face

When one of your employees needs long-term care, or must provide long-term care for someone at home, it may put your business at risk because it can have a great impact on your bottom line. You may not notice the cost immediately, but over time it may really add up. If an employee is providing care for someone at home it is almost as if they have another full-time job. It may affect your business in the following ways:

• Decline in productivity
• Decreased willingness to relocate or travel for work
• Not able to work full-time or must leave job altogether
• Motivation and morale are compromised
• Interruptions during the day to handle phone calls or emergencies
• Absenteeism
• Increased stress which could result in health-related problems
• Replacement costs if employee needs to finally resign

Common Misconceptions

My employees and their family members are already covered for long-term care through their health insurance or their disability insurance!These types of coverage do NOT pay for long-term care. Health insurance pays for short-term medical care, and disability insurance only replaces a portion of their income. It does not also give them additional money to pay for long-term care.

Problems Employees Face

Financial Ramifications:  When an employee must provide care to someone at home it could end up costing them more money than they ever imagined. A study of caregivers over age 45 was recently conducted by the National Center for Women and Aging at Brandeis University and the National Alliance for Caregivers. The study focused on 30 people who had provided unpaid care for over eight hours per week. Based on their detailed financial records, the average LOSS over their lifetime in wages, pension, and Social Security benefits was $659,000. "Financial Gerontology." Journal of Financial Service Professionals, March 2000. Health Stress: Employees that are caregivers could end up compromising their own health because providing care can result in health-related problems such as stress or even depression. Young People Need Long-Term Care: You may think that your employees are too young to need long-term care and that only older people need it. The following pie chart shows that 40% of the people that need long-term care are under the age of 65! When Caring Isn't Enough - American Academy of Actuaries, January 1999 Percent of Working-Age Adults Needing LTC

You may be wondering why you should go through the trouble of making additional insurance available to your employees. That's a fair question and we would like to answer it. There can be benefits to both the employers and employees.

Benefits For Employers

Favorable Tax Treatment: Recent health care legislation makes qualified LTC insurance policies more tax advantageous for both employers and employees. Employers that pay for long-term care insurance may be eligible for favorable tax treatment. (The exact tax consequences vary depending on the structure of the business; i.e. sole proprietor, partnership, LLC, C-Corporation, etc.)

• Employer-paid LTC premiums for employee, spouse, and retiree coverage may be deducted as a business expense.
• Employers can cover defined classes of workers, making it possible to offer the benefit to only higher-paid employees, such as an executive carve-out.
• Employees with medical and dental expenses exceeding 7.5 percent of adjusted gross income may be able to also deduct eligible LTC premiums they pay.
• Premiums are not classified as taxable income to employees.
• Benefits are not considered taxable income to the insureds or their families (even if the employer paid the premium.)
• Benefits are 100% tax-free to the employees whether the employee or the employer pays the premium.
• Premiums currently cannot be included in a Section 125 "cafeteria" plan.

Long-term care insurance is generally available through groups and to individuals. Group insurance is typically offered through employers, and this type of coverage is becoming a more common benefit. By the end of 2002, more than 5,600 employers were offering a long-term care insurance plan to their employees, retirees, or both. America's Health Insurance Plans, 2004

Benefits For Employees

When an employer offers long-term care insurance to their employees it helps provide the following benefits:

• Financial security, responsibility and freedom
• Preserve retirement accounts and savings
• Ability to keep job
• Employer-paid premiums not taxable as income
• Employee-paid premiums may be deductible as a medical expense
• Long-term care benefits are not taxable
• The coverage is fully portable
• Receive high quality care for themselves and/or family

Two-thirds of employees who responded to the 1999 National Council on Aging/John Hancock Survey agree that LTC is the greatest threat to their standard of living in retirement.

Employer Options

As an employer you have several options regarding offering long-term care insurance to your employees.

1. You can offer long-term care insurance to all of your employees on a voluntary basis only.
2. You can offer a "base" plan only. "Base" meaning a very basic plan that has limited benefits. Then, if the employee is interested in additional coverage they can "buy up" and purchase more coverage.
3. You can offer an employer-paid comprehensive long-term care insurance policy to all employees.
4. You can do an executive carve-out. You can legally carve-out classes within your employees and only purchase long-term care insurance for them. For example if you only wanted to pay the premiums for your senior management you could do that.

With some carriers, when you offer long-term care insurance to your employees they will receive discounted premiums. Often, these discounts are available to the extended family members (parents, in-laws, grandparents) of your employees as well. This is important because if your employees' family members have long-term care insurance this allows your employee to stay on the job rather than having to miss work, or worse, quit work to become a caregiver.

Implementation

Before taking applications on the employees, a series of educational efforts need to take place to encourage employee participation. One on one meetings are also needed to meet the employees and their family members to encourage them to apply for the long-term care insurance.  

Jodi Anatole, vice president of MetLife Long-Term Care, explains that because LTC is subject to so much regulation, brokers need to bring all the necessary information, much of it supplied by the carrier, to the worksite, and the employers need to commit themselves to their employees' LTC education. Much of the time, the light bulb does not go off for the worker unless she knows someone who has been through the kinds of problems associated with long-term care. However, Anatole notes, that segment of the workforce population is there - and growing."The key is education," she says. "The more the employer allows the benefit to be put in front of people, the more successful it is... There should be information that focuses on what long-term care is and what it costs because the numbers are pretty startling. Unless employees have lived through it, they don't have any conception." Karen Lee, Employee Benefit News - January 2005