LTCI fills the gap in employee coverage

In today's economy, LTCI can play a significant role in every company's benefits package with its ability to help employers attract and keep valued employees. In general terms, LTCI provides several highly desirable benefits for individuals:

• Helps to protect a retirement plan – Well-informed and financially savvy people understand the dangers that an LTC episode can present to their financial portfolios.

• Gives people a choice about care – Although Medicare and Medicaid pay for LTC costs, coverage might be limited.

• Eases the burden on family members – LTCI lets family members be involved in the caregiving process without being the primary provider.

For Group LTCI, many carriers are using their individual LTC plans and making them available in the worksite with premium discounts, unisex rates, and underwriting concessions. Currently, there is one "True Group" plan offered for employers with 500-plus eligible lives.  Additionally, we have seen several group life insurance products offer qualified LTC riders or accelerated death benefit/critical illness riders. 

Another strategy for offering LTCI benefits is to purchase an executive carve-out plan. The ECO plan lets the employer extend LTCI to select employees based on specific criteria, such as tenure, title, or salary, all of which are pre-determined by the employer. The ECO benefits the employer as well as the executive and can benefit all other employees by offering a voluntary plan during an open enrollment period.

Advantages in a nutshell

The need for LTC planning has not changed even if the landscape for providing it has. LTC insurance continues to be a popular, in-demand product in the pre-retirement marketplace. While this article does not provide an exhaustive discussion of all the possibilities, it is important to know that Group LTCI plans can include the following: 

• Premium deductibility

• Premium not counted as income

• Benefits that are income tax-free

• Ability to carve-out specified employee groups

• Simplified issue coverage

• Unisex rates

• Corporate discounts

• 100 percent portability

• Ease of enrollment

As for those 76 million aging baby boomers, there is a growing recognition for the need to prepare for healthcare costs in retirement — and more are turning to their employers for help.

By understanding the issues and the evolving nature of the industry, brokers have the opportunity to present group LTC coverage as a viable and highly desirable option for their corporate clients, and one that will resonate as a true benefit to their employees.

IRS Code Sections: 7702B, 162, 213, 106, Treasury Regulation 1.105-5 and IRS Notice 2004-50, Q and A 41.

Steve Cain is Principal, National Sales Leader at LTCI Partners, a brokerage general agency specializing in long-term care insurance. Email Steve at [email protected] and visit www.ltcipartners.com for additional information.