Why Is There Not More Employer-Sponsored LTC Insurance?

The years since 1996 have seen a remarkable interest, both in the insurance industry and on the part of consumers, in LTC insurance. Even so, there has been little employer involvement in providing this insurance to employees.

Admittedly, the upward pressures on health insurance costs across the board have tended to cause employers to display little interest in expanding coverages for employees. Indeed, many employers are actively searching for ways to reduce regular health insurance for employees or to shift more of the cost to the employees themselves.

Nevertheless, where LTC insurance is concerned, employer involvement is the most efficient method to provide this essential insurance to the average American.

Statistics about the need for this coverage are grim. The problem is a national one, and if the country is to have a solution for the future, we believe it must be addressed at the place of employment. We further believe the solution requires greater government involvement. We will explain both points.

The time to acquire LTC insurance is while the worker is still actively employed and, in most cases, in good health. The cost for such insurance, when spread over a large employee base should be far more affordable than is the cost for individual LTC insurance, which is usually purchased only after the insured has reached an age where the need for such coverage has become obvious.

HIPAA demonstrated that the federal government is aware of the social needs presented by the LTC problem. The states have followed suit with insurance statutes and regulations of their own; these enable insurers to offer effective products that qualify for favorable tax treatment.

Despite these advances, greater employer involvement is necessary. To make that happen, we believe the insurance industry needs to become more actively involved in obtaining more liberal tax policies that provide employers with incentives to provide LTC coverage.

The industry also needs to take a hard look at its products to make sure they are cost-effective and contain more than the minimum features required to qualify for preferential tax treatment. The objective should be to afford dignified LTC solutions, not merely the minimums required by law. Moreover, the products need to have the flexibility to enable insureds to adapt coverages as their needs change.

LTC insurance is still in its infancy. It can satisfy a social need that can supplement the nations health care system. It needs a partnership of government, insurers and employers to make sure the products, the delivery system and the financial basis for the program are effective.

Norse N. Blazzard, JD, CLU, and Judith A. Hasenauer, JD, CLU, are principals in the Ft. Lauderdale, Fla., law office of Blazzard, Grodd & Hasenauer, P.C. You can e-mail them at [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, January 20, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.