Dr Gerard Lalande, Human Capital Alliance Senior Adviser explores executive long-term care benefit programs.
Today’s global competitive environment has quietly spawned a new senior executive health care benefit that provides long-term care coverage in a continuously aging society.
As companies grow and prosper, a critical sustainability element is ensuring their corporate benefit plans continue to attract and retain key employees.
I recently discovered that several North American insurance companies are selling long-term care insurance coverage as an additional benefit for key executives.
Many companies now realize that key employees highly-value this type of insurance.
Long-term care insurance
Long-term care insurance plans offer health benefits that provide financial security in the event of death, disability or retirement.
These company-sponsored insurance plans pre-fund long-term care and protect senior executives’ retirement incomes from potential enormous nursing home and related medical costs.
Automatic cost-of-living increases and most importantly the availability of long-term home health care benefits also provide executives and their dependents additional security.
Everyone living longer
Most executives today expect to live well beyond their 80s. Long-term-care insurance coverage is now perceived as a valuable perk at a time when medical care costs are skyrocketing and elderly people require more assistance as they age.
These benefits address a potential future problem that many senior executives are currently facing with their own aging parents and some cases grandparents.
Consequently, some companies are finding that long-term care insurance is a cost-effective high-value-added benefit that not only enhances an executive’s peace-of-mind but can also improve overall company morale.
A recent US U.S. Department of Health and Human Services report said individuals aged 65 or older have a 40% chance of entering a nursing home some time in their lives. “And the need for long-term care isn’t limited to the elderly; fully 40% of people receiving these services are between the ages of 18 and 64.”
Can become very expensive
Individuals, the report said need long-term care when they no longer can perform daily activities including bathing, dressing, eating and toileting or suffer from cognitive impairment.
Today, this type of care is provided in a variety of settings, including nursing homes and assisted living facilities, or through in-home patient care.
Most importantly, while most normal health insurance policies cover acute medical problems, chronic old-age care or disabilities are usually excluded.
A recent Insurance Association of America reports showed that the average annual cost for home care in the US is $20,000 (Bt660,000). Other studies show the annual cost of a nursing home stay is $50,000 (Bt1,650.000) or more in certain metropolitan areas.
Specialized care can cost $200,000 (Bt6.6 million) or more.
Although medical care costs in Asia may currently be lower, our world’s fastest growing economies may mean these costs will be continually rising.
For additional comfort, many long-term care plans in the US for senior executives also cover their dependents.
Traditional long-term insurance plans normally reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with activities of daily living such as bathing, dressing or eating.
The premium cost to the current employer will depend on the executive’s (and dependents) age and the maximum amount that a policy will pay per day and the maximum amount per day times the number of days determines the lifetime maximum amount that the policy will pay.