Understanding the Importance of Long-term Care Insurance
Jan 02, 2024
Understanding the Importance of Long-term Care Insurance

The American workforce has gotten older, with people staying in school longer and others delaying retirement. According to the U.S. Department of Health and Human Services, nearly 70% of 65-year-olds will need long-term care (LTC) in their lifetimes. As such, LTC insurance has become a crucial component of financial planning, offering a safety net for individuals facing extended periods of health care and assistance needs. As the workforce ages, employers should recognize the importance of offering comprehensive benefits.


This article explores the significance of LTC insurance, outlines the potential benefits and drawbacks of offering such coverage as a sponsored benefit, and offers best practices for employers to consider when incorporating these policies within their voluntary benefits offerings.


Overview of LTC Insurance

LTC refers to a wide array of medical care, personal assistance and social support services for people who are physically or mentally unable to independently care for themselves for an extended period. This care can be provided in a nursing home, an assisted living facility or one’s home. Individuals needing LTC usually require assistance performing basic activities for daily living or have severe cognitive impairment. Generally, the conditions that necessitate LTC are caused by accidents, illnesses or advanced age.


Unfortunately, LTC often carries substantial costs. That’s where LTC insurance can help. Such coverage can protect individuals against incurring large out-of-pocket expenses for LTC in the future through affordable monthly premiums now. There are two different types of LTC insurance policies available, including the following:


  • Individual LTC insurance


  • Group LTC insurance


Individual policies are generally purchased by people whose employers do not offer group policies, or by those who feel they need to supplement their employer-provided policies to obtain the most coverage possible. On the other hand, some employers and associations offer LTC insurance to employees in the form of group policies. In these cases, such coverage may not offer the same level of protection afforded by individual policies. Before purchasing group policies, comparing the level of protection offered and the level of protection guaranteed in comparable individual policies is wise. LTC insurance policies should also clearly state whether they are individual or group policies.


Pros and Cons of LTC Insurance

More employers are expanding their voluntary benefits offerings, including LTC insurance. This coverage augments a medical plan and helps protect employees’ retirement savings. Employers can offer LTC insurance to their employees as a voluntary benefit, allowing them to choose to enroll in the plan and pay the premiums themselves. Alternatively, some employers may contribute to the cost of LTC insurance premiums as part of their benefits packages.


If employers are considering offering LTC insurance as a sponsored benefit, they may start by weighing the pros and cons of doing so. Employee benefits have the potential to impact staff attraction, retention and well-being. As the workforce ages, employees are placing greater importance on benefits that address long-term health and financial security.


Specific advantages of providing LTC insurance as a sponsored benefit include the following:


  • Financial security—LTC insurance can help protect employees’ assets and savings from being depleted by the high cost of extended health care services. This financial security can contribute to a more stable and engaged workforce.


  • Tax advantages—In some cases, both employers and employees may benefit from tax advantages associated with LTC insurance premiums. Employers should explore these potential tax incentives to make the benefit even more attractive.


  • Workforce support—With many employees delaying retirement, employers are faced with an aging workforce. LTC insurance can be a proactive solution for companies looking to support the changing needs of their employees and foster a culture of care and concern.


There are also potential drawbacks of offering LTC insurance as a sponsored benefit, such as the following:


  • Cost concerns—One of the primary drawbacks for employers may be the cost associated with offering LTC insurance. Striking a balance between providing valuable benefits and managing expenses is crucial. Employers should assess their budgetary constraints and explore different insurance options for the most cost-effective solution.


  • Employee misunderstanding—LTC insurance can be complex, and employees may not fully understand its importance. Employers should invest in educational resources and communication strategies to ensure employees grasp the value of this benefit.


Employer Best Practices

When providing LTC insurance as a sponsored benefit, employers should note that employee education is critical. Simply offering LTC insurance as a voluntary benefit isn’t enough to encourage employee enrollment. Benefits, and insurance policies especially, are complex and require some education so employees can better understand these offerings and determine which ones are a good fit for their lives and budgets.


Here are some additional strategies for employers to consider when adding LTC insurance to their benefits offerings:


  • Switch to off-cycle enrollment. LTC insurance is complex, so off-cycle enrollment (outside the annual open enrollment period) can give employees more time to review this benefit and understand how it could meet their health care and financial needs.


  • Offer educational opportunities. When employees understand the risks associated with LTC, they may be more willing to start planning for this care and purchase coverage at a younger age. Educational workshops, seminars, team lunches and emails can help educate employees about the significance of LTC insurance. Bringing in insurance experts to explain the intricacies of this coverage and answer employees’ questions can demystify the process.


  • Personalize the experience. Personalized consultations with insurance representatives can help employees make informed benefits decisions based on their unique needs. A one-on-one approach can address specific concerns and boost employee confidence in chosen coverage offerings.


  • Communicate clearly. Employers should provide clear and concise communication materials, including brochures, FAQs and online resources, to help employees understand the key features and benefits of LTC insurance.


Employers should keep in mind that some states have begun mandating LTC insurance, so it’s best to consult with legal counsel before making any benefits changes.


Summary

Employers have an opportunity to make benefits offerings convenient and economical for their employees, and that includes offering LTC insurance as a voluntary benefit. LTC insurance can provide employees with a sense of security, knowing that they have a financial cushion in place should they require extended medical care. This can contribute to reduced stress levels and improved overall well-being, positively impacting productivity and job satisfaction. However, group LTC insurance, like any type of offered benefit, may not be the right choice for all employers.


Contact Simco for more information about LTC insurance.

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DOL Announces Final Overtime Rule Increasing Salary Levels for White-collar Employees

30 Apr, 2024
On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule to amend current requirements employees in white-collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA). The final rule will take effect on July 1, 2024. Increased Salary Level The FLSA white-collar exemptions apply to individuals in executive, administrative, professional, and some outside sales and computer-related occupations. Some highly compensated employees may also qualify for the FLSA white-collar overtime exemption. To qualify for this exemption, white-collar employees must satisfy the standard salary level test, among other criteria. This salary level is a wage threshold that white-collar employees must receive to qualify for the exemption. Starting July 1, 2024, the DOL’s final rule increases the standard salary level from: $684 to $844 per week ($35,568 to $43,888 per year); and $107,432 to $132,964 per year for highly compensated employees. On Jan. 1, 2025, the standard salary level will then increase from: $844 to $1,128 per week ($43,888 to $58,656 per year); and $132,964 to $151,164 per year for highly compensated employees. Automatic Updates The DOL’s final rule also includes mechanisms allowing the agency to automatically update the white-collar salary level thresholds without having to rely on the rulemaking process. Effective July 1, 2027, and every three years thereafter, the DOL will increase the standard salary level. The agency will apply up-to-date wage data to determine new salary levels. Impact on Employers The first salary level increase in July is expected to impact nearly 1 million workers, while the second increase in January is expected to affect approximately 3 million workers. Employers should become familiar with the final rule and evaluate what changes they may need to adopt to comply with the rule’s requirements. Legal challenges to the rule are anticipated, which may delay the final rule’s implementation.

New York Passes Prenatal Leave, Sets End Date for COVID-19 Leave

29 Apr, 2024
The recently enacted New York budget for fiscal year 2024-25 includes provisions mandating paid prenatal leave for the state’s workers, beginning Jan. 1, 2025, and repealing the New York COVID-19 sick leave law, effective July 31, 2025. Paid Prenatal Personal Leave The budget amends the state sick leave law by adding what is being touted as a first-in-the-nation requirement that all employers provide their employees with 20 hours of paid prenatal personal leave per 52-week period, starting Jan. 1, 2025. The amendment does not require employees to accrue the new leave, nor does it impose a waiting period before employees may use the leave; the full 20 hours must be made available on Jan. 1, 2025. Employees on leave must be paid their regular rate of pay or minimum wage if the applicable minimum wage is higher; however, employers are not required to pay out unused prenatal personal leave when an employee separates from employment. Permitted Uses of Prenatal Personal Leave Prenatal personal leave may be taken for health care services received by an employee during their pregnancy or related to the pregnancy, including physical examinations, medical procedures, monitoring and testing, and discussions with a health care provider related to the pregnancy. The new provisions do not require advance notification or documentation after the fact for using leave. Interaction With Paid Sick Leave and FMLA Leave The new requirement is in addition to the annual sick leave the law already mandates, which ranges from 40-56 hours and may be paid or unpaid, depending on the employer’s size and income. The amendment does not indicate that the leave runs concurrently with any federal Family and Medical Leave Act (FMLA) leave taken for prenatal care, meaning the state prenatal personal leave would be in addition to any FMLA leave taken for this purpose. Sunset Date for COVID-19 Leave The budget also establishes July 31, 2025, as the expiration date for New York’s COVID-19 employee sick leave law . The law took effect at the beginning of the COVID-19 pandemic, on March 18, 2020, and requires leave of up to 14 days, depending on the size and income of the employer. As with the regular sick leave law, whether leave must be paid also depends on the size and income of the employer. The sunsetting of the law comes in the wake of expired states of emergency and changed recommendations for isolation and quarantine. Steps for Employers New York employers should prepare for the start of paid prenatal personal leave in January 2025 and watch for any agency regulations and guidance implementing the new leave entitlement. Employers should also train managers and supervisors about the new requirements and make sure employee policies and handbooks are up to date. Employers should continue to allow COVID-19 sick leave when it applies and keep in mind that other leave requirements, such as paid sick leave, may allow employees to take time off from work for illness, including COVID-19.

FTC Announces Rule Banning Noncompetes

25 Apr, 2024
On April 23, 2024, the Federal Trade Commission (FTC) voted to issue a final rule that would ban noncompete agreements in virtually all employment relationships. The final rule has not yet been filed in the Federal Register, but is scheduled to take effect 120 days after such filing. Final Rule The final rule defines a noncompete clause as a term or condition of employment that prohibits a worker from, penalizes a worker for or functions to prevent a worker from: (i) Seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (ii) Operating a business in the United States after the conclusion of the employment that includes the term or condition. Such terms or conditions include employee contracts or workplace policies, whether written or oral. Subject to very limited exceptions, the final rule provides that: The use of noncompete clauses will be banned as of the effective date; Any existing noncompete clauses (other than those entered into with senior executives) will be invalidated; Employers must notify all employees (other than senior executives whose existing noncompete agreements will remain enforceable) that their existing noncompete agreements will not be enforced. Currently, the enforceability of noncompete clauses is determined by state and local legislatures and courts. The FTC rule would instead govern the enforceability of noncompete clauses at the federal level and supersede any less restrictive state laws or judicial interpretations. Legal Challenges On April 24, 2024, the U.S. Chamber of Commerce sued the FTC, seeking to block the final rule. The complaint was filed in the U.S. District Court for the Eastern District of Texas and argues that the FTC lacks the authority to issue rules that define unfair methods of competition. Additional legal challenges are likely, so employers should monitor for updates and anticipate potential uncertainty in the coming months. Next Steps for Employers Employers may consider reviewing existing employee agreements or form agreements (such as new hire paperwork) to determine whether any contain noncompete clauses that would be invalidated under the rule. Employers may also begin preparing revisions to such agreements and consider whether to use alternatives to noncompete clauses (e.g., nondisclosure clauses) to protect competitive business information.

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