Long Term Care: A Big Financial Risk for Your Employees

Long term care is really expensive.  I know from first hand experience, but Genworth’s Cost of Care Survey from 2019 shows the following for national median costs:

  • In home care:  $4290-$4385/month
  • Community and assisted living:  $1625-$4051/month
  • Nursing home:  $7513-$8517/month.

In Massachusetts, these numbers can be up to 55% higher.

In 2018, Morningstar estimated that 52% of people turning 65 will need long term care services at some point in their lifetime.  The high cost and high probability of needing care make long term care one of the biggest risks your employees and management team face.  If we design benefits plans to help employees with substantial financial issues (saving for retirement and the financial protections of insurance plans), shouldn’t long term care be one of those things we include?

The long term care insurance industry has gone through a lot of changes in the last several years.  True group products used to be readily available, even for small employers, but that’s changed.  There are still products available, but they don’t have the same pricing discounts and “guaranteed issue” underwriting that used to be easy to find.  Employer groups, even fairly small ones, can still get some discounts and underwriting concessions if they look hard enough.

In addition, long term care insurance isn’t the only solution to the problem.  Here are a few other possibilities that are worth consideration:

  1. Ignore the risk completely (unadvisable, but it seems to be a pretty common approach)
  2. Self-insure the risk
  3. Plan to “spend down” your assets to take advantage of public options like Medicaid
  4. Hybrid life insurance policies with long term care riders
  5. Hybrid life insurance policies with critical illness riders (sounds the same as #4, but there are key differences)
  6. Annuity with a long term care rider

The bottom line is if you are trying to design a benefits plan that addresses some of the bigger areas of financial exposure, you should at least consider long term care in your thought process.

If you’d like to discuss how long term care planning can be added to your overall or executive benefits plan, give us a call at (866) 724-0008 or click the link below.


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