Businesses are feeling the impact of employees' long-term care obligations, yet are slow to add Long-Term Care insurance to their employee benefits offerings. Because productivity can suffer when employees struggle to meet their long-term care obligations, as well as when they worry about how they'll someday pay for their own long-term care needs, employers should consider Long-Term Care insurance as an affordable and appreciated enhancement to a benefits program; see The Importance of Long-Term Care Insurance for Employees.
Studies document the cost of long-term care, the personal toll long-term care obligations can take on an individual, and the impact of this on workplace productivity. Nursing home rates now average $183 per day (semi-private), with Medicare-certified home health aide services averaging $46 per hour and residence in an assisted living facility at $2,825 per month; for more on care delivered at home, see Long-Term Home Care Coverage.
As to the effect of caregiving obligations on the caregivers themselves, the Evercare Study of Family Caregivers, conducted in collaboration with the National Alliance for Caregiving, found a relationship between a caregiver's out-of-pocket spending in fulfilling caregiving obligations and the extent to which the caregiver reported adverse emotional and physical effects of caregiving. These adverse effects included starting or increasing a bad habit such as smoking, alcohol abuse or prescription drug misuse; experiencing new or worsening health problems; having trouble sleeping; feeling depressed or hopeless; gaining or losing weight; feeling increased anxiety or stress; and being unable to set or keep necessary personal medical or dental appointments.
When employees undergo any of these physical or emotional effects, work performance can suffer. Caregivers under such strain are more likely to be absent due to personal illness or a caregiving crisis, and when at work they may have attention lapses, make mistakes, and show overall lowered productivity. One study using the Work Productivity and Activity Impairment (WPAI) Scale found working caregivers experienced a 21.2% work productivity loss due to their caregiving role, combining missing 5.4% of work time with being about 80.8% productive while at work.
And the actual cost of these losses to employers is substantial. A study from the MetLife Mature Market Institute estimates the cost to U.S. businesses due to the lost productivity of working caregivers ranges widely into the billions each year.
Yet businesses have been slow to respond to such data. A study of companies with 10 to 1,000 employees found that employer misconceptions have resulted in a reluctance to offer Long-Term Care insurance despite a perceived employee need. Although many surveyed employers thought employees were concerned about affording long-term care, only one-fifth of businesses offered a Long-Term Care insurance plan as an employee benefit; among those not offering coverage, perceived cost to implement a plan and a perceived lack of employee interest were commonly cited—topics discussed in Rising Long-Term Care Costs and Employment Considerations.
The long-term care market is evolving, with traditional standalone Long-Term Care insurance plans and hybrid products that combine life insurance or annuities with Long-Term Care insurance. Products are available to meet a variety of individual needs at a range of costs, and if offered on a voluntary basis the employer may incur minimal or no cost. To evaluate options and how they might fit your workplace, talk to an agent.
Frequently Asked Questions
Who is most likely to benefit from employer-offered Long-Term Care insurance?
Employees who are caregivers, have aging parents, or who want to protect retirement savings from care costs typically benefit most from such coverage.
Can employers offer Long-Term Care insurance with little or no cost to the company?
Yes; many employers offer voluntary Long-Term Care plans where employees pay the premiums and the employer's administrative burden and cost are minimal.
Do Long-Term Care policies only cover nursing homes?
No; many policies also cover home health care, assisted living, and other forms of long-term support services, depending on the policy terms.
How should an employer gauge employee interest in Long-Term Care benefits?
Employers can survey staff, review workforce demographics, and consult with benefits experts to determine likely interest and appropriate plan options.