Long Term Care insurance assists employees with the cost of providing custodial care for chronic physical or mental conditions. LTC coverage can be offered to the employee family members – spouses, parents/grandparents and dependent children.

Typically, LTC policies provide benefits in the event of loss of two or more “Activities of Daily Living” or ADLs. These ADLs consist of bathing, toileting, continence, dressing, eating, and transferring. Services covered by LTC plans include Nursing Home Care, Assisted Living Facilities, Adult Day Services, Home Health Care and Respite Care.   

As you can see from the following table, the probability of requiring such care is significant – the probability is greater than disability or premature death while employed. 

Source:  The New England Journal of Medicine

And the costs are substantial – according to a study published by the American Council of Life Insurers, by 2030, the average annual cost of nursing home care is expected to exceed $190,000. Medicare coverage simply will not pay for most required services; LTC should be a consideration and part of sound financial planning.

Fulfilling this need is unlikely if purchased by individuals rather than through an employer sponsored plan. According to a recent survey by the International Foundation of Employee Benefit Plans, 80 percent of employers sponsor a voluntary, employee pay-all LTC program. Unfortunately this survey also indicates that the take-up rate for these voluntary plans is less than 10 percent.

Additional Resources:
State of Michigan - “A Shopper’s Guide to Long-Term Care Insurance”
U.S. Department of Health and Human Services – National Clearinghouse for Long-Term Care Information
America’s Health Insurance Plans (AHIP) - “An Employer’s Guide to Long-Term Care Insurance”