The Impact of Long-Term Care on the Employer

Many employers have come to recognize that long-term care insurance can be “productivity insurance.”  Why?  Read on.

• The fastest growing cohort of the US work base is made up of employees aged 55+, people in their prime caregiving years.¹ This segment will make up one-fourth of the workforce by 2018.

• Caregiving duties have the following impact on the employee and their employer:

a)     repeated workday interruptions to handle medical visits and phone calls;

b)     increased absenteeism and leave of work to help the ailing loved one;

c)      decreased motivation and morale;

d)     increased and ongoing stress which can lead to caregiver   health problems (increasing health insurance claims as well as reducing on-the-job; productivity); and

e)      requests for part-time work or a decision to resign altogether (adding to replacement costs).

• Two-thirds of caregivers are women and 47% of workers in America are women. ^{2, 3} Some forward-thinking employers are starting to wonder what will happen to their productivity level if a large number of female employees start making adjustments to work schedules or even drop out of the work force to accommodate caregiving responsibilities.

• Caregivers whose family members have long-term care insurance are TWICE AS LIKELY to stay in the workforce as those whose family members do not.⁴

The purchase of long-term care insurance in the worksite is the fastest growing segment of the long-term care insurance (LTCI) market.  From 2008-2010, almost half of all new policies were purchased through employer-sponsored plans.⁵ The advantages for employees include the opportunity to acquire long-term care insurance at a relatively young age when it is more affordable and health is good. It is surprising how many people in their 50’s can’t qualify for long-term care insurance. Today the average employee LTCI purchaser is 48.⁶ In addition, many insurance carriers offer employees a one-time opportunity to buy long-term care insurance with limited or no health questions, even when employees pay 100% of the premium.  This “simplified underwriting” is sometimes available to spouses of employees as well.  Plans with simplified underwriting typically don’t ask about common health issues like high blood pressure or cholesterol and most don’t ask height and weight. Employees report greater levels of appreciation for LTCI plans with simplified underwriting or guaranteed acceptance.

Overall, employees buying LTCI today can help maintain the productivity of the workforce in several ways.  First, the employee has peace of mind knowing that if an unexpected and significant illness or injury should strike either the spouse or the employee, they have protection and are less likely to be a burden on their children.  Second, extended family members such as parents, siblings and adult children are eligible to apply for coverage with medical underwriting. Those who do so ultimately mean decreased distractions for the employee due to the need to care for an ailing family member.  And finally, future generations of employees will be relieved of work distractions because family members took advantage of the opportunity to insure themselves through their employer.

• As an employer, you should also know that you are not required to contribute to the premium, but there are tax incentives that favor the employer who wants to pay part or all of it.

In summary, as an employer, you can offer long-term care insurance as a voluntary plan or as an employer-paid benefit. Contributing to the employee premium makes it easier for employees to buy long-term care insurance on their spouse and other eligible family members (people they may likely be caring for down the road).   Many employers are deciding it is more cost effective to contribute to the premium for a worksite LTCI plan rather than incurring costs due to caregiver absences and distractions.

¹ “2009 NAIC Experience Reports, 2010 plus industry stats for new sales; ² Employment Projections 2008-2018”, Bureau of Labor Statistics, 12/10/09; ³ Kaiser Commission on Medicaid Facts, June 2010;  “Caregiving in the U.S. 2009”, National Alliance for Caregiving/AARP, November 2009, p. 4; ³ Table 1. Civilian labor force by age, sex, race, and Hispanic origin, 1998, 2008, and projected 2018”, Bureau of Labor Statistics Economic News Release, last modified December 11, 2009; ⁴ The Growth in Employer-Sponsored LTCI”, Center for Insurance Education, America’s Health Insurance Plans, July 30, 2008; ⁵ LIMRA LTCI Market Research; ⁶ LIMRA, Long-Term Care Insurance Sales Supplements, ongoing (received 12/10)