When it comes to addressing employees’ caregiving needs, there’s a perfect storm brewing on the benefits horizon – and turbulence in the long-term care forecast.
That’s because employers face a looming crisis that combines an aging employee population with a growing need for long-term care, a workplace plagued with increased demands on employees who serve as caregivers, and skyrocketing health care costs in the U.S. that have hit $4.3 trillion annually.
Related: America’s caregiving crisis and what employers can do
Despite these challenges, brokers have an opportunity to advise employers on how to best deliver feasible, effective long-term care solutions – and help them determine what combination of plans and services can fill in critical gaps in coverage.
The growing caregiving conundrum
The majority (61%) of Americans are working while serving as caregivers for loved ones, many of whom are aging parents or grandparents who didn’t have a solid plan in place to cover changes in their medical, financial, or legal situations. Should these employee caregivers continue to neglect their own potential long-term care needs as they age, their children may one day face the same caregiving reality.
This vicious cycle will continue unless we help today’s employees become better prepared for the future. And the clock is ticking. By 2050, there will be a whole new generation of individuals with long-term care needs, as an estimated 30 million people will require long-term care services. Despite the ominous forecast, it’s not an issue that’s top of mind for most employees. In fact; 63% of consumers who have received long-term care did not consider the need for it beforehand.
However, this growing need for caregiving and long-term care solutions is at the forefront of employers’ concerns. In fact, according to a Care.com “2023 Future of Benefits” report, 43% of employers cite senior care benefits as the main benefit they’re prioritizing this year, and with good reason. The impact on employees’ mental, financial – and possibly legal – wellbeing, as well as a lack of preparedness, comes at a cost. According to the Rosalynn Carter Institute for Caregiving, employees lose up to $3 trillion in wages and benefits, while employers lose $17-33 billion each year due to absenteeism and turnover. And nearly one-third of senior caregiver employees have voluntarily left a job to meet their senior caregiving responsibilities.
The search for long-term care solutions
Marina Tsitselyuk, a voluntary benefits consultant at Mercer, has kept her finger on the pulse of several recent long-term care developments, ranging from the rising cost of stand-alone LTC plans to pending state legislation that impacts employers’ abilities to offer LTC benefits. The clients she consults with absolutely feel the impact of the caregiving crisis – and are searching for solutions for their employees. “While LTC state legislative conversations have driven some of the narrative, we’ve also seen clients focus on the value and protection LTC solutions provide.” She adds, “With caregiving situations growing in our personal lives, along with more conversations at the employer level, the need continues to be heightened. Many employers want to act in the best interest of their employees, so evaluating LTC options available now affords them negotiating power, as well as avoiding a flooded marketplace, in the event we see more LTC state legislation pass.”
She contends that navigating a complex long-term care marketplace remains challenging, especially as data and consumer demand continue to point toward the growing need. “Many traditional LTC carriers have exited the group market and are now only offering fully underwritten individual policies, which would not be inclusive of those employees who have underlying and serious health conditions. Today, life insurance with LTC is where the LTC marketplace is shifting.”
Tsitselyuk notes, “The primary appeal of these life with LTC products is protection and flexibility, as they help ensure employees will use the coverage in some form through a dual benefit structure, whether via life insurance upon death or by a living benefit allowance triggered through a qualifying LTC event (and in some cases, cash-value at product surrender). Other key features of life with LTC solutions include stability of carriers, flexibility of plan design, potential access to LTC on a guaranteed issue basis and less complex underwriting than traditional LTC plans.”
See which other benefits pair well with LTC
There are a number of things employers can do to better understand and support elder care needs, such as exploring other benefits that can help cover long-term care expenses and providing ancillary services that address related issues that come with long-term care. This could include flexible work options, an employee assistance program that offers financial or mental health counseling, or a legal plan that gives employees access to legal counsel and related services.
A long-term care plan helps protect the assets an employee has accumulated over their career, but it’s only half of the equation of addressing caregiving needs for planning for the future; a legal plan can help employees create the right legal documents to ensure their decisions and wishes are protected. Tsitselyuk notes, “Both life with LTC plans and a legal plan help safeguard employees against the financial strain that comes with certain life events – with these benefits intersecting at caregiving. For example, a legal plan can help an employee outline a power of attorney, which carries importance as we consider different scenarios regarding aging parents, relatives or ourselves, and the possible medical/financial decisions involved.”
Also: Yet another reason to offer voluntary benefits: Retiree long-term health needs
“We’re also starting to see how legal plans are now allowing employees to add their parents under their legal plans, expanding the types of life stages and circumstances they’re facing.” She adds, “Personally, my husband’s grandmother is 91 years old and needs 24-hour, in-home care. In addition to her care needs, we also need to obtain power of attorney privileges to ensure her estate is in order. Having both plans could lead to a smooth elder care experience for employees and their families, including mine.”
While there’s no simple solution to the long-term care challenge, you can help clients look through their benefit toolbox to see what complementary benefits may pair well with a long-term care solution – and highlight their commonly missed synergies, so employees see the value — at little-to-no incremental cost.
Tim Weber, a long-time voluntary benefit veteran, serves as Vice President, Group Sales and Client Management at ARAG, overseeing ARAG’s core sales business – group sales, sales operations, client management, product development and client support services.