Voluntary benefits, for which employees pay the entire premium cost but at a discounted group rate, have grown in popularity as the workforce has become increasingly diverse. Among the benefits that can be included in a voluntary benefits menu, long-term care insurance offers coverage that is suitable for a wide range of employees. Though many perceive this coverage as suited only for older individuals, the need for long-term care is not always tied to age. Additionally, a substantially lower premium will apply if the coverage initially is obtained at a younger age.
The fact that long-term care costs continue to rise adds to the reasons to consider the coverage. According to an annual survey on this issue from MetLife Mature Market Institute, long-term care costs have trended higher over the past three years—
- Nursing home care, average rate for a private room:
- 2005: $203 per day, $74,095 per year
- 2004: $192 per day, $70,080 per year
- 2003: $181 per day, $66,065 per year
- Nursing home care, average rate for a semi-private room:
- 2005: $176 per day, $64,240 per year
- 2004: $169 per day, $61,685 per year
- 2003: $158 per day, $57,670 per year
- Home health aid:
- 2005: $19 per hour
- 2004 and 2003: $18 per hour
Long-term care can encompass a range of services that provide assistance with the activities of daily living, such as bathing, dressing, eating, toileting and ambulating. According to the MetLife survey, for example, 95% of nursing home residents required assistance with bathing, 87% with dressing, and 51% with eating. Half of nursing home residents required help with five of the activities of daily living, and 24% required help with four of these activities.
According to data from the Georgetown University Long-Term Care Financing Project, about 10 million Americans need long-term care services, and over the next 15 years, the number in need is expected to increase by 30%. An aging population and longer life expectancies both contribute to these figures.
Currently, the largest spenders for long-term care are government programs (Medicaid and Medicare, accounting for 64%), but 21% of spending comes from out-of-pocket payments by people receiving long-term care, according to data from the Georgetown University project. This out-of-pocket figure understates the role of—and cost to—families of individuals with long-term care needs, who might provide hours of informal or unpaid care and also incur indirect costs, such as those associated with missing work.
Long-term care insurance can be of great assistance to individuals who find themselves in need of securing long-term care services for themselves or a family member. Policy terms will vary, and those buying coverage typically choose from a number of daily benefit options.
Currently, private insurance accounts for only 10% of the national spending on long-term care, according to the Georgetown University project. However, the data cited above make a strong case for adding long-term care insurance to a voluntary benefits package. By helping employees meet their long-term care needs (or those of a spouse or parent), you can improve employee loyalty and morale, increase productivity, and reduce absenteeism.