What is long term care insurance today?

Long term care insurance is designed to cover services and supports for people who suffer an extended, disabling health event. Benefits are triggered on a long term care policy when an individual needs help with their activities of daily living (bathing, dressing, eating, toileting, transferring, continence) or suffer from a cognitive impairment.

How common is the need for long term care?

Over 70 percent of people over the age of 65 need long term care during their lifetime. More than 40 percent will spend time in a nursing home (US Administration on Aging 9.21.18).

What does long term care insurance provide?

Long term care policies offer monthly benefits to the insured once they are disabled as determined by their personal physician. Benefits can reimburse actual costs incurred or be distributed in a monthly amount regardless of actual cost.

Where can I receive care?

The policy will allow the insured to receive at home or in a community-based or private facility. Licensed care providers may be chosen by the insured and family.

Do these policies just provide money?

Today’s long term care insurance carriers provide much more. Trained specialist help the insured and their family develop a plan of care with their doctor; arrange for in-home assessments; helps to find the best qualified care providers; and monitors the delivery of services. Some policies even provide care giver training for family members as well as respite care benefits for family members helping the insureds.

Doesn’t Medicare pay for long term care services?

Medicare Part A covers up to 100 days of care in a nursing facility only after a prolonged hospital stay. Medicare does not pay for custodial care which accounts for 80% of long term care administered (US Administration on Aging 9.21.18).

I have enough assets to pay care, why should I insure?

Today’s long term care policies have cash value as well as a death benefit so the insured is merely repositioning an asset on the balance sheet. If long term care is never needed, the death benefit is always equal to or more than the premium paid. Long term care carriers also provide families with concierge care coordinators that help navigate and monitor ongoing claims.

Can I pay for a loved one’s policy?

Absolutely. Payments to a long term care policy may be flexible as well. Single premium plans as well as those paid up in 10 years or at age 65 are available in addition to traditional life-pay scenarios.



Potential Tax-Free Benefit

Within the array of employer-provided benefits, very few are perfectly leveraged from a tax standpoint. The first benefit that would come to mind is medical insurance. The employer pays the premium on behalf on an employee, the premium is not included in the employee’s income, and the benefit is received tax-free. The same dynamic holds true for the first $50,000 of group life insurance benefits. Long term care benefits, purchased on behalf of an employee (and C-corporation owner/employees), are also deductible as a regular business expense and the benefits are received free of tax. Unlike group medical and most life insurance, employer-provided long term care contracts are portable for the employee and retain the discounted cost.


What are the advantages of providing long term care at the workplace? The answer varies based upon employer contribution and the size of the group. At a minimum, policy discounts begin at as few as two lives. Additionally, almost all employer sponsored plans offer unisex rates. For women, that results in nearly a 30% savings before the group discount. With 10 or more participating lives, underwriting concessions are available. Typically, a carrier will reduce the number of medical questions when compared to an “individual” application. At times, employee physician statements may be ordered to elucidate medical history, but  the carrier never requires a medical exam or detailed phone interview. Group sponsored long term care underwriting yields a 92 % acceptance rate compared to 70% for individually marketed applicants*. If true “guaranteed issue” policies are sought after, the number of participants required increases to 100.

52% of Americans turning 65 today can expect to incur $138,000 or more in long term care costs**. And, as more and more employees are turning to their employer-sponsored options for insurance protection, it is no wonder that long term care insurance is one of the fastest growing benefit plans. We are happy to help you develop a program that rewards valuable employees with a tool to protect their retirement savings.



*MasterCare America Inc. underwriting stats 2018
**Health Insurance Marketplace ASPE Issue Brief Feb 2016