When offering health insurance coverage options to employees, employers are often "darned if they do and darned if don't". This gray area refers to companies' ambivalence in deciding which types of coverage to offer as employer-sponsored plans, and what level of financial responsibility they should assume where employees' policies are concerned.
At the forefront of this ongoing debate is whether employers should include long term care insurance (LTCI) in the repertoire of benefits they make available to employees. In order for agents to rebut employers' objections to providing employees with sponsored LTCI plans, the major points to address include projected costs, amount of time and energy required for the introductory rollout phase, perceived value to the employee and the notion that these types of plans are tax-deductible if the employer pays some or all of the costs.
With respect to the core issues of cost and assistance needed, once employers understand they do not need to pay a dime (unless they opt to) for this type of policy and that their involvement can be minimal as it is a turnkey program, they may be more inclined to sign on.
When presenting LTCI plans, agents should be primed with the answers to three pertinent questions in order to close the deal.
1) Are employees more inclined to purchase LTCI through their employer?
Based on statistics from America's Health Insurance Plans (AHIP), more than 2 million plans have been sold via 5,600 employers nationwide. This makes employer-sponsored plans the fastest growing segment in the entire LTCI lineup of products.
Another significant idea to put in the minds of your employer clients is that, without offering LTCI plans in the workplace, employees would not even begin to think of purchasing this type of coverage until much later in life, making the premiums far more expensive. In fact, the average age of an employer-sponsored LTCI purchaser is 45, compared to age 60 outside of the corporate setting.
2) Have employees who are years away from retirement begun to show an interest in LTCI?
Granted, it is not necessarily the duty of an employer or HR manager to educate employees about the health care provisions they should have. However, agents can communicate that offering LTCI demonstrates the employer's concern for their employees' post-retirement welfare and financial health. It makes sense for the employer to hold introductory seminars explaining the merits of LTCI policies.
Results of a 2003 MetLife survey showed that pre-retirees neither clearly understood the realities of their life expectancies nor were they accurately able to calculate the amount of money they will need in retirement. A mere 37 percent knew that a person who reaches the age of 65 has a 50 percent chance of living beyond their life expectancy age, which today stands at 85.
By the same token, less than one quarter of pre-retirees understood the greatest financial risk they face upon retirement is that their extended life expectancy will exhaust their amassed assets. Not fully aware of the amount of money their prolonged mortality will cost them (upwards of $150 per day for at-home or facility nursing care, and projected to go higher in the future), they appear to be ill-prepared both in the areas of knowledge and resources to adequately deal with their pending retirements.
According to financial expert Terry Savage, "The ideal time to buy long term care insurance is when you are in your early 50s and in good health. At that point, premium costs are lower, and you're less likely to have pre-existing conditions that dis-qualify you."
3) What is the ideal climate in which to approach employees with respect to LTCI plans and what specific features hold the greatest appeal?
Employee hesitation to purchase LTCI may stem from a lack of knowledge. In order to maximize your efforts when offering LTCI plans, it is best to approach companies whose workforce skews slightly older (30s, 40s and 50s), as well as those who have an average annual income of over $40,000. With this target prospect, agents have a fair chance of connecting with their priorities and mindsets.
Specific stand-out features of LTCI plans include extended family coverage which gives parents, in-laws and other relatives identical benefit options as those offered to the employee who purchased the policy. It's also a great benefit to offer company retirees because it makes them feel like their former employer still cares about them. Also highly recommended is the inflation rider, as it will stabilize the premium rate for many years to come.
And lastly, portability is another highly-praised feature of LTCI. You may have read about how one airline's recent pension loss ignited outrage among employees. What many do not realize is, in the process, these individuals also lost their health (and possibly life insurance) coverage, as well. Since LTCI carries the inherent benefit of portability, had those airline employees been offered this coverage and voluntarily opted to purchase it, they would remain protected by LTCI regardless of their employment or provisional status.
In short, by highlighting these benefits along with areas such as policy comprehension, increased payouts ($8 billion at the end of 2002, according to AHIP) and more consumer-driven offerings, employers will surely come to see the rewards to be gained and minimal risks to be ventured by sponsoring an LTCI plan.
Murray Gordon, president of MAGA Ltd., is a nationally recognized long term care insurance specialist. MAGA is a member of the National LTC Network. Mr. Gordon can be reached at 800-533-MAGA. Visit his Web site at www.magaltc.com.
