Group Long-Term Care Insurance Plans are designed for the workplace and enable employees to purchase guaranteed issue coverage. Group policies guarantee a certain amount of coverage to all employees regardless of age. Group Long-Term Care Insurance plans offer three or four different plan designs with a wide range of benefit amount and benefit duration options.
The Importance of “Guaranteed Issue” Coverage
New employees are Guaranteed Issue for coverage without questions about their medical history or condition, provided they apply within a certain period, usually 30 days, of their hire date. This is a very valuable feature because decline rates for coverage in the non-group Long-Term Care insurance market are high.
Benefits of a Group Plan
For the employer:
Helps recruit and retain talented employees by offering a sought-after, guaranteed issue, employee benefit.
Provides that employees and their families, as well as retirees, have access to high quality Long-Term Care Insurance.
Helps avoid potentially costly business disruptions caused by family care giving responsibilities.
For the Employees:
Most coverage is “guaranteed issue,” which is critical for those employees most in need of this coverage.
Premiums for group plans can be lower than premiums for comparable policies purchased outside the group market. This is especially true for females because premiums for coverage purchased through a group are gender neutral. Premiums for policies purchased outside a group are higher for females than for males.
Group plans often include features that are optional riders with individual policies. As an example, unlimited duration coverage is only available in the group market. It is difficult to find and qualify for more than a five-year benefit in the individual market.
A group plan is available to spouses at the group premium rates, but only employees are guaranteed issue.
Policies can be continued when employment ends. The coverage remains the same, but the employee pays the premiums directly to the insurance company, rather than having the premiums come out of their paycheck.
Employer Sponsored, Long-Term Care Insurance Plans
Group Long-Term Care Insurance Plans
Group Long-Term Care Insurance Plans are designed for the workplace and enable employees to purchase guaranteed issue coverage. Group policies guarantee a certain amount of coverage to all employees regardless of age. Group plans offer a few basic plan designs with limited options to ensure a smooth enrollment and minimize employee confusion. The plans can be totally voluntary (employee paid) or be partially or fully employer funded.
Premiums for coverage in the group long-term care insurance market are generally lower than premiums for comparable coverage in the individual long-term care insurance market. Premiums are gender neutral, which is a huge benefit for females because premiums for females in the individual market are dramatically higher than premiums for males.
Premiums for LTC insurance are “issue age,” which means that your premiums will always be based on your age when you purchased the coverage. This is an important reason to continue your coverage from a group plan. If you leave the group and try to buy long-term care insurance in the individual market, your premiums will be based on your current age and you will have to be medically underwritten.
Multi-Life, Long-Term Care Insurance Plans
Multi-Life Long-Term Care Insurance Plans can be offered to groups of all sizes, but do not provide “guaranteed issue” to employees. Multi-Life Plans have reduced underwriting requirements and, like individual policies, have a broad range of policy options, and some discounts such as for preferred health risks. Multi-Life Plans can be totally voluntary (employee paid) or be partially or fully employer funded.
Executive Carve-Out, Long-Term Care Insurance Plans
Executive Carve-Out Long-Term Care Insurance Plans are essentially multi-life group plans where the employer pays for a base plan for key employees. Underwriting criteria is simplified, and a full range of policy options are available, as are certain discounts such as for preferred health risks. The employer pays for a core plan for the eligible key employees, and the employees can “buy up” to more complete benefits. There are tax advantages to employers and employees for implementing Executive Carve-Out Plans.