Say what you will about the Patient Protection and Affordable Care Act (PPACA), but it is having a positive effect on the voluntary worksite marketplace.
The majority of Americans seem to feel that health insurance coverage will never be the same and that future coverage will be less comprehensive and more costly. This would continue a decade-long pricing trend where employers passed more of the premium responsibility for health coverage on to the employee even as deductibles and out-of-pocket costs were increasing.
1. Talk about tax breaks
One of the best ways to generate interest in worksite LTCI is to discuss the many tax advantages of the offering, especially if the employer contributes premium to the plan.
The tax consequences of long-term care insurance were clarified by the Health Insurance Portability and Accountability Act (HIPAA) in 1996. This law established Internal Revenue Code 7702(b) for long-term care, created tax-qualified long-term care insurance, and paved the way for both the tax deductibility and the tax-free distribution of these insurance benefits.
2. Sell it as a “free” benefit.
Today’s economic climate could affect the course of this conversation. Without question, the Great Recession has had an impact on businesses and employee benefits (and it continues to do so). Money that might ordinarily be available to purchase high-quality individual long-term care insurance is typically not there now.
This does not mean that employers are trying to cut back on their benefit packages. In fact, they are looking to strengthen their benefit offerings as a means to retain and reward trained employees. Although unemployment rates remain high and qualified employees may be readily available, savvy employers are trying to retain employees because of the costs associated with acquiring and training new talent.This presents an opportunity for financial advisors to explore a different approach to bringing long-term care insurance to the worksite.
3. Pitch LTCI as a cure for presenteeism.
There is yet another card to be played. Many employers today are dealing with employee absence caused by caregiving demands. Businesses that offer long-term care insurance at the worksite may reap a more productive workforce as a result.This is how.
Concern about long-term care in the workplace is not only about employees becoming disabled. It also involves the loss of an employee due to caregiving chores. An employee who is not at work is clearly not productive that day. Whether the absence is because of physical problems or caregiving obligations may not matter to an employer. Either way, the person is absent.
The growth of the voluntary long-term care insurance worksite marketplace has been the driving force behind increases in sales in year-over-year measurements of the last decade. Analysts say that employer cost shifting and increased consumer awareness are the main reasons for the upsurge in voluntary benefits.That’s a bandwagon worth jumping on.
Every employee who decides to buy long-term care insurance at the workplace is potentially one less applicant to the Medicaid program. With attention focused on Medicaid because of budget constraints, there is an opportunity to pass meaningful legislation that permits this method of buying long-term care insurance.But there may be more ahead for employers to consider. In the years following the passage of the HIPAA legislation, the insurance industry has pressed hard for the inclusion of long-term care insurance in Section 125 plans. Many businesses, large and small, have this type of employee benefit program, which allows employees to purchase supplemental products with pretax dollars. This also has the effect of reducing payroll, consequently saving the employer money on taxes, unemployment compensation, workers’ compensation, and the like.