Imagine an employee lunch room of a small manufacturer. Employees are eating pizza and attending a mandatory meeting to hear about a new voluntary benefit. The head of Human Resources (HR) is announcing it now.
"Thanks for coming, everyone. We are here to announce a new long-term care insurance benefit for everyone on the payroll. You don't have to do anything to enroll - enrollment is automatic and there is no underwriting, the plan is guaranteed."
With no interruptions, HR continues, "Starting next month your paycheck will be reduced by the amount of the premiums, about $65 per month, and this deduction will increase with inflation annually. If you need long-term care, the plan will pay a benefit of $50 per day, or if you are severely impaired, $100 per day, also increasing with inflation. Unfortunately, if you need care in the first five years you are out of luck - the plan has a five-year wait period."
"Any questions?"
Stunned, the audience sits quietly. Then the hand of a 25-year-old machine shop operator goes up. "Are you saying my paycheck is going to be $65 less per month? Is there any way to not sign up?"
Fiction to fact?
The above scenario is fiction, but this worksite long-term care program could become reality if health care reform bills include the Community Living Assistance Services and Support Act provisions - a government sponsored long-term care program. The creators of the bill have good intentions - get savings into an "independence fund" that will pay for the boomers' long-term care needs.
But recently published findings from the American Academy of Actuaries shows that the math doesn't add up just yet. Instead, in all likelihood, the program would be primarily utilized by people who know they'll need care and benefits, and the program will struggle to keep "premiums" down. Odds are that the CLASS act will remain a proposed bill and not law anytime soon.
Good news
There is good news, however. In recent years, there has been a large expansion in the number of carriers offering terrific worksite long-term care programs. Features that previously were only available to the largest groups, such as Web enrollment, simple underwriting, and customized marketing material, are now part of small-and mid-size corporate offerings. The products themselves are simpler to explain to employees. And organizations, such as long-term care brokerage general agencies, are now available to make the process smoother.
Increasing urgency
So what can be done to increase urgency and bump up enrollment? Here are several ideas that will work:
1. There must be a "C-Level" corporate commitment.
Sure, HR may be excited about the plan and allow for smooth communication and implementation. But unless the CEO or CFO gets in front of the group and shows commitment to the program, stating why they think employees should sign up, results will be disappointing. These executives need to understand that long-term care puts at risk two of their company's big benefit expense items health care plan contributions and contributions to 401(k) plans. They don't want to see those dollars wasted.
In addition to verbalizing passionate support for employee participation, the company can get behind the plan by making a contribution to premiums through the purchase of a "starter" plan for everyone, with the option to buy up.
2. The plan must be communicated to the female in the household.
While LTCI is rated with unisex rates, actual claim data shows that women receive vastly more in benefits than men. So when men claim they don't need it, listen to them - they are partially right. If there is a female spouse or companion at home, make sure communication materials are being sent to the home as well as available at the workplace.
3. Have a physical presence at the employer to answer questions.
The best enrollments include the opportunity for employees and spouses to meet at an office setting to discuss the purchase of LTCI. This can either be done by the benefit advisor or in conjunction with another partner, such as a BGA or carrier. In addition, producers who specialize in long-term care can also be utilized.
4. Have the enrollment period at a different time than open enrollment.
LTCI should not be part of the normal open enrollment period for a group. Moreover, it shouldn't be added to a list of other voluntary benefits available. Long-term care needs to be its own program, not mixed in with others.
5. Communicate the importance of the initial enrollment period.
Many plans do not offer annual open enrollment, and in such cases easy underwriting is only available during the first 30 or 60 days of the plan. Make sure the deadline is well publicized and communicated often.
6. Focus on the cost of waiting.
For those who think they can wait, demonstrate that it makes sense to buy younger as the premium curve increases at a progressively steeper rate as employees get older.
It's also important to remember that when discussing an LTCI plan, everything should be kept simple and put in terms that demonstrate a great value. As an example, instead of saying that an employee is buying a plan that pays for $150 per day in a nursing home for three years, express that they are buying a benefit pool of $164, $250 to pay for long-term care. Stress the pay period premium costs instead of annual premiums. Additionally, when facilitating group meetings, try and incorporate the stories of employees who have had experience with family members and long-term care. You'll know who these people are because they'll be some of the earliest attendees.
It is difficult for people to envision the need for long-term care, and it's very easy to delay planning and just hope for the best, with disastrous consequences both financially and in health terms. But with careful preparation and genuine guidance, a voluntary long-term care plan can be a great benefit for the employer, the employee, and benefit broker.
