The Modern Long-Term Care Plan:
Ever wonder what a modern long-term care plan looked like?
Group Long-Term Care plans were the hottest and most appreciated benefit program of the 1990s - offered by the most benefit centric Employers. While many of these plans remain grandfathered in place, the GLTC marketplace had collapsed by 2012 with all GLTC companies freezing new business. The culprit? Products were underpriced due to a lack of credible actuarial data for this “new” product, fierce competition, and higher than expected utilization rates. Add to this, an aging workforce, and you have the perfect storm.
New, modern Long-Term Care plans leverage a life insurance base, which is much more predictable from an actuarial standpoint, and provides 2-in-1 benefits (Life and Long-Term Care benefits). These “hybrid” benefit plans are quickly becoming the most sought-after employee benefit in the past 12 months -18 months, and will become, if not already, on every Human Resource Benefits Managers agenda.
What is Driving this Trend?
More than half of all Americans will need long-term care services at some point in life.
The cost of care in the Northeast, averages $10,000/month in a Nursing Home, with the average duration of care lasting 3.5 years. The resulting cost of $420,000 on average could be financially devasting to a household, given that health insurance and other forms of insurance generally do not pay for long-term care services.
With the heightened awareness of the financial exposure long-term care services present to their employees, in part due to the widespread exploration of State LTC Payroll Tax Legislation, Employers are quickly offering Modern Day Long-Term Care Insurance.
Modern Day Long-Term Care Plans leverage Universal Life Insurance that includes Long-Term Care Benefits, referred to as “hybrid” Life/LTC Benefits. The Long-Term Care portion can be used at any time, to help pay for long-term care services at any age. The benefit remains at the same level throughout the employee’s life, so the full amount is always available when needed most.
Plan Overview – What a Modern Plan Might Look Like:
One Time Guarantee Issue – Employees enrolling during their initial enrollment period and within the guaranteed issue limits can’t be turned down.
Universal Life (UL) Insurance – Provides permanent life insurance protection with rates that don’t change as you age and builds cash value.
Long-Term Care (LTC) Protection included – Provides a monthly LTC benefit equal to 4% of your death benefit. Example: a $100,000 UL policy will pay $4,000/monthly LTC benefit for up to 25 months totaling $100,000 in LTC benefits.
Extension of Long-Term Care Benefits – This extends long term care benefits up to 25 months, allowing the insured to receive long term care benefits for a total of 50 months.
Cash Value – Builds cash value providing a helpful safety net if needed.
Death Benefit Restoration included – As the monthly LTC benefit is paid out, the death benefit is restored back to its original value, ensuring your beneficiary receives the full value of the life insurance proceeds.
Benefit for Terminal Illness – Use 75% of your death benefit when life expectancy is 24 months or less to help manage costs if you’re diagnosed with a terminal illness.
Permanent and Portable – Take this policy with you when you leave employment or retire at the same cost and same benefits.
Introducing a Modern Plan to Your Employees:
Given the uniqueness, misconceptions, personal preferences, and emotion involved with long-term care, the introduction of the modern plan requires a well-thought-out education and enrollment approach. This benefit isn’t a basic new term life benefit or dental plan… and therefore shouldn’t be enrolled as such.
Designing an education centric, personalized enrollment approach with a Partner that specializes in Long-Term Care programs will result in a new benefit offering with high employee satisfaction, and strong participation results.
Navis Benefits Group specializes in traditional GLTC and Modern LTC Benefit Programs. Let us help you design, educate, install, and administer your current GTLC plan, or install a Modern LTC Plan.
