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Elder care is expected to replace child care as the No. 1 dependent-care issue by '05, encouraging more employers to offer long-term-care (LTC) insurance to their workers. The federal government will lead the way, beginning next year.
"Demand is growing as workers, especially baby boomers, wake up to the costs of long-term care," says Winthrop Cashdollar, an expert at the Health Insurance Association of America (HIAA).
The idea is to make LTC insurance more affordable by offering coverage at group rates and to make it available not only to employees but also to employees' family members, including parents, grandparents, in-laws and others. LTC insurance helps to cover the costs of various types of elder care, ranging from in-home and community-based programs to assisted-living facilities and nursing homes.
For employers, it's a productivity issue, as more and more workers find themselves taking care of aging parents. A recent survey done by the U.S. Chamber of Commerce found that nearly half of its members' employees took time during work to help tend to the daily needs of an elderly relative. "Providing quality long-term care for a rapidly growing number of seniors is taking a heavy personal and financial toll on America's workers and businesses-especially small businesses that struggle with lost worker productivity," says Chamber President Thomas Donohue.
The federal government is setting up a program, approved by Congress last fall, that will allow federal civilian employees and retirees, as well as current and retired military personnel, to buy LTC insurance at group rates. The program is set to begin in '02, and since the potential market is 20 million people, including retirees, the government expects to offer coverage at prices 15% to 20% below open-market prices.
Currently, group rates for LTC coverage are only marginally lower than those available on the open market. The average premium is $1,677 a year, although it varies widely, depending on a person's age when the policy is taken out.
The U.S. Chamber, in partnership with MassMutual, has announced it will offer an LTC insurance product to its members. Again, because of the size of the pool, the insurance, known as SignatureCare, will be offered at a discount of up to15% to employees and their families. The Chamber represents 3 million businesses with more than 100 million workers.
So far, employers who offer LTC insurance do not help cover the cost. However, as the benefit catches on, look for more companies to subsidize premiums. Under the Health Insurance Portability and Accountability Act of '96, LTC policies are treated the same as health insurance policies for tax purposes-employer contributions are fully deductible.
Various bills containing incentives to buy LTC insurance are pending in Congress, and during his presidential campaign, President Bush endorsed such tax breaks. A bill (
S. 627) introduced by Sen. Charles Grassley (R-IA), chairman of the Senate Finance Committee, would allow individuals a tax deduction for the cost of LTC insurance premiums and would give individuals or their caregivers a $3,000 tax credit to help cover long-term-care expenses. A House companion bill (H.R. 831) is sponsored by Rep. Nancy Johnson (R-CT), chairwoman of the House Ways and Means Subcommittee on Health.Similar proposals passed the last Congress as part of a larger tax bill, but were vetoed by President Clinton. There's a good chance they'll get President Bush's signature this year in a tax bill or patients' rights legislation.
Researcher-reporter: Nicole Bonnell
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