Elder Care

Elder Care

Many now argue that elder care is quickly replacing child care as the family issue of most significance to employees. It’s a matter of demographics.

Employees today in their 40s and 50s represent the hefty Baby Boom segment of the population. These folks are in their working and income-earning prime, they are raising children or are finishing up that process, and their parents are aging into their 70s and 80s.

Significantly, advances in medical treatments are creating a rapidly growing post-85 age group. These Baby Boomer parents are now surviving many of the diseases that used to be fatal. While they are living longer, however, they are not necessarily living without disability.

And the Baby Boomers are feeling the pressure. Elder care issues, they’re discovering, are more complicated that child care issues. Stepping into a caretaking role with a parent involves a difficult role reversal, often means helping from out of state, and is simply not yet culturally accepted as the natural order of things.

The more common culturally accepted vision for life in your 50s goes something like this: finish off college costs, maximize income-earning through age 65, and move into a post-child-rearing, pre-retirement stage full of creative expression, travel, and self-actualizing activity.

The reality for many Boomers, however, is not about self-actualization but about exchanging one form of caregiving for another—as childcare ends, parental caregiving begins. And employers can begin to build assistance on this front into their benefits plan. Why? Employees who are distracted by the difficulties of caregiving are, on average, considerably less productive. They are also more likely to decline promotions, shift from full- to part-time, or leave their position.

What can employers do?

• We can help you sponsor a long term care insurance program for employees and family members. It’s critically important to promote its value, especially for relatives. E.g. Hold a family night long term care insurance seminar specifically for relatives of employees.
• We can also help you purchase long term care insurance for key employees and their spouses.
• Make sure your Employee Assistance programs cover elder care, and make sure they’re providing quality assistance. E.g. Ask for voluntary feedback from employees using the service.
• Read up on long term care issues and worksite trends related to elder care.
• Share your creative ideas with others. E.g. We’re looking for creative thoughts on how employers can reward employees for helping an older family member to buy long term care insurance.

Sponsoring a LTC Insurance Program

Businesses and organizations are in excellent position to introduce LTC insurance to their benefit package—on behalf of all employees or just a select class. Talk with us about how we can help!

Good for the employee

• LTC insurance is more affordable when purchased at a younger, working age.
• Younger applicants are also more likely to be in good health and able to qualify for LTC insurance coverage and preferred health ratings (i.e. lower premium cost).
• People are accustomed to acquiring discounted health insurance through their employer.
• On behalf of some or all employees and their family members, companies frequently offer to sponsor LTC insurance at a discounted rate for its employees and their family members.

Good for the employer

For C-corporation owners and key employees and their spouses, company-paid tax-qualified premiums:

• are fully deductible business expenses
• are not considered taxable income to the employees
• benefits paid during claim are tax-free

For S-corporations, partnerships and sole practitioners, company-paid tax-qualified premiums for partners or employees and their spouses:

• Can be fully deductible business expenses
• are not considered taxable income to employees
• a portion can be deducted as a self-employed health insurance cost by partners
• benefits paid during claim are tax-free

A company helps to retain the productivity of its employees when its employees’ family members—especially key employees’ family members—are protected by LTC insurance.

Disclaimer: This tax-related information is not a complete explanation of LTC insurance tax information, and should not be used as financial advice. Please contact your tax advisor for full details.

How to add a Long Term Care Insurance Benefit:

Executive Carve Out (ECO)

ECO is an arrangement that allows LTC insurance to be purchased specifically for the benefit of the business owner, spouses and select key management and their spouses. Because LTC insurance currently does not require discrimination testing, HIPPA 1996 Tax Legislation allows for company-paid LTC insurance to be provided by class of employee.

A popular company-paid LTC insurance arrangement uses Accelerated Premium Payment Options enabling policies to be entirely "paid-up" over installment periods of 10, 20 years or to age 65. Some policies even provide single premium payments.

Company-sponsored and Association Group programs

LTC insurance is presently offered on a voluntary employee pay-all basis by many larger employers and associations. Although these employers aren’t in a position to pay employee premiums, they can secure discounts for their employees and employee’s family members by sponsoring a LTC insurance voluntary offering.

A combination of the above two options

This approach involves carving out key employees, secure the sponsored group participation requirement in the process, and offer a discounted LTCi voluntary option to the rest of the employees and their family members.

Firms and Organizations Implementing These Programs:

• Non-profit organizations
• C-corporations
• S-corporations
• Sole Proprietorships
• Banks and Credit Unions
• Unions and Trade Organizations
• Limited Liability Companies (LLC)
• Limited Liability Partnerships (LLP)
• Voluntary Employee Benefit Associations (VEBA)

Increasingly, benefits managers need to provide direction and assistance to employees regarding Medicare and Medicare Supplement Insurance, but are often not sufficiently knowledgeable on that complicated subject. For example:

• A nearly retired 64-year old employee has questions about transitioning to Medicare.
  
• An employee considering early retirement has questions about what to do until age 65.
  
• An employee working past 65 seeks advise on coordinating Medicare options with the company group health plan.

For these reasons, we are available to our clients as a resource on Medicare-related issues. Often, they simply refer employees to us. Sometimes we sell these employees Medicare Supplement Insurance. Other times, we simply offer them advice. For more formal consulting, we charge a fee for our services.

Increasingly, employers are no longer able to afford the continuation of post-retirement medical insurance for their employees. To fill this void, attention is now focusing on an older tool called a VEBA—voluntary employee benefits association. This back-in-vogue plan is essentially a trust. An employer places a portion of the funds otherwise headed to the employee’s retirement account into this trust to fund future medical expenses. Contact us if the VEBA interests you.