As the costs associated with long-term care continue to grow, long-term-care insurance has emerged as one of the fastest-growing employee benefits.
“It’s probably the hottest product we offer right now,” said Robert Leach, owner of Robert Leach Insurance Planning Agency in East Providence, which sells long-term-care insurance as well as life, disability and health insurance to small businesses and professional firms.
Interest in long-term-care insurance has swelled in recent years, primarily because many baby boomers are seeing firsthand the enormous cost of paying for services at nursing homes, assisted living centers and other providers.
“People in their early and mid-50s are becoming more and more aware of (long-term-care insurance) by virtue of caring for parents who are in their 70s and 80s,” Leach said. “They’re finding out that the government won’t pay for it.”
Long-term-care insurance helps pay a variety of sustained services for people who can’t provide for their own basic needs because of sickness, old age, or an accident – an estimated 12 million people, according to the Health Insurance Association of America.
Most policies cover services provided by nursing homes, assisted-living centers, and home health-care agencies, adult day-care centers and hospice care. Many employer-sponsored plans allow workers to extend coverage to spouses, parents and other family members.
Private health insurance and Medicare typically do not cover long-term stays at nursing homes or assisted-living centers, although experts say many people don’t realize it. Medicare usually only covers such services for the first 100 days after hospitalization.
Without long-term-care insurance, people are forced to finance long-term costs directly from their assets, which can be a tremendous financial strain. Or, if they don’t have enough money, they qualify for Medicaid.
Average nursing-home costs range between $40,000 and $50,000 a year, according to HIAA. Home health-care services cost an average of more than $15,000 annually for five visits per week. Assisted-living costs range from $25,000 to $36,000, according to Consumer Reports magazine.
“The reason many people buy long-term-care insurance is to protect their assets,” said John Finn of Braman & White, a Middletown insurer that sells long-term-care insurance to small businesses.
Finn said the average long-term-care insurance policyholder is in his or her early 60s and has accumulated a lot of wealth through retirement accounts. “They’re thinking ‘If anything happens to me and I need to go into a nursing home, I don’t want to have to sell my house or be a financial burden on my wife and kids.'”
But long-term-care insurance isn’t just for older people. Younger workers can protect themselves from the high costs of care resulting from accidents or unforeseen health afflictions that require lengthy rehabilitation.
According to Washington, D.C.-based Family Caregiver Alliance, 43 percent of people with long-term-care needs are younger than 65. And there is nearly a 50 percent chance that a person will require 24-hour skilled nursing care at some point in his or her life, according to the Long Term Care Insurance National Advisory Council.
With demand for long-term-care insurance growing, more companies are offering the benefit to employees, using it as a way to enrich benefit packages. Some pay for part or all of the premiums, while others simply make the plans available. The federal government has enticed employers to pay for long-term-care insurance by making premium contributions tax deductible in most cases.
And companies are realizing that long-term-care insurance can alleviate stress on employees who might be scrambling to care for sick or elderly family members – stress that invariably leads to increased absenteeism and lost productivity.
U.S. employers lose between $11.4 billion and $29 billion annually accommodating for employees who are caring for sick or elderly family members, according to a 1997 study by MetLife Securities Inc.
“It’s become a big productivity issue in corporate America,” Finn said. “More and more companies are realizing this and offering (long-term-care insurance), and it’s trickling down to smaller businesses.”
