Employers and Long-term Care Insurance

Long-term care may well be the greatest uninsured need in America. Most people will need some type of long-term care services at some point, so Long Term Care Partnership insurance can be an important option to help pay for the costs. It can also be an important benefit for employers to consider.

Today employers have a wider variety of long-term care insurance options. There are traditional group products (true group) and individual products (worksite or multi-life products) offered by employers. Individual products often provide additional discounts, such as a good health or spousal discount, which is not typical of a true group policy and may also provide more customizable plan options.

Some employers offer long-term care insurance as a voluntary benefit, while other employers provide some type of subsidy. These options may include an employer contribution toward the premium payment or offering a low-cost base policy, with employees being able to buy additional coverage.

Successful Campaign

The State of Minnesota had one of the most successful employer-offered long-term care insurance outreach campaigns in the entire United States. In 2000, the State of Minnesota achieved a 20 percent participation rate in its offering of long-term care insurance to state employees. This was due in large part to the campaign that highlighted the state tax credit for those who buy tax-qualified long-term care insurance, and information that other sources such as Medicare do not pay for long-term care.

When should employers offer long-term care Insurance?

More than ever before, the increasing number of people caring for aging people or people with disabilities has impacted the workplace in terms of productivity, absenteeism, stress and morale as employees struggle with work and family caregiving. By sponsoring a long-term care insurance program available to employees and their spouse and parents, an employer can try to lessen the workplace impact of these caregiver demands.
Do employers need more accurate information?
Surveys have shown that there is a lack of accurate information available to employers about offering a long-term care insurance benefit. Data shows:
- Only 40 percent knew that coverage is portable
- Only half knew that employer-paid premiums are tax deductible as a business expense
- More than half did not know that costs to the employer of offering long-term care insurance at the workplace are minimal or nothing
- 60 percent of employers surveyed in a state with a tax credit were not aware of this tax advantage
Employers should know that long-term care insurance:
- Is portable
- Can costs the employer little or nothing
- Can have tax advantages to the employer
- Can be a benefit that attracts and retains key employees
- Has easy-to-understand materials available for employees
Do employers contribute toward the cost of coverage?
What are the tax benefits of setting up a plan for employees?

Employers can offer long-term care benefits suited to their employees at a relatively low cost. The federal tax code allows employers to deduct 100 percent as a business expense for both the cost of setting up a long-term care plan for their employees and for any contribution made by the employee, their spouse, dependents and retirees toward their tax-qualified long-term care insurance premiums.
How do employers set up a plan?
An employer may first want to gauge employee interest and raise awareness using a simple email survey. Employers shouldn't assume that if employees aren't asking for the benefit, they don’t want it. They may need some education to help them understand this product’s importance. If there is sufficient interest, employers can contact benefits consultants and insurers to determine specifics.

For additional information, see the links below. The studies and information contained in the links below were used in the development of this information.
- Understanding the Impact of Family Caregiving on Work (PDF)