Benefits

Will Employers Respond to Long-Term Care Concerns?

By Jill Cornfield editors@plansponsor.com | February 06, 2014
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February 6, 2014 (PLANSPONSOR.com) - As the population ages and long-term care is a greater concern for retirement, long-term care insurance may become a more widespread employee benefit offering.

Long-term care insurance companies paid nearly $7.5 billion in claim benefits to 273,000 individuals in 2013, a rise of 13%, the American Association of Long Term Care Insurance reports. According to Jesse Slome, director of the national trade group, historic low interest rates for a long period of time drove the marketplace to its current state. “The vast majority of long-term care insurance is now sold on an individual basis,” Slome tells PLANSPONSOR.

Just one insurer, Genworth, is still focused on the employer-sponsored market to a significant degree, Slome says. Genworth is the provider serving some 270,000 federal government employees as well as employees of CalPERS, the California Public Employees’ Retirement System. Transamerica Life Insurance Company is another provider in the industry.

At the moment, long-term care insurance is not experiencing much growth, Slome says. Over the past two or three years the industry has seen a drop in employer-sponsored use, which used to account for about one-third of the industry. Small and mid-size plans are likelier to offer voluntary plans or plans that are partially employer paid.

Fewer than half the employers (43%) in Aon Hewitt’s database of more than 1,700 employers offer a group purchasing arrangement for employees and spouses to obtain long-term care insurance, according to Rob Austin, director of retirement research for the benefits provider.