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Benefits in the News > By Subject >Long-term care |
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Weighing the Costs and Benefits of Long-Term Care Insurance Excerpt: "Spending five minutes a day inverted is said to help prevent Alzheimer's, a condition that may result in the need for long-term medical care. So, to help your employees with long-term care issues, buy inversion tables for them and give them five minutes a day to use them. Not exactly practical. A better solution is to consider providing group long-term care insurance as an addition to your employee benefits program." (Employee Benefit News; free registration required) State Governments Have the Greatest Incentive to Offer True Group Long-Term Care (PDF) 1 page. (Milliman) Young Workers Must Face Realities of Long-Term Care Excerpt: "MOST of the nation's 78 million baby boomers are watching their parents grow old. While investigating caretaking options for their parents, they should also be thinking about their own old age and planning how they will pay for nursing homes or home health aides for themselves, experts say. With life expectancy steadily rising, the odds are that they will eventually need some help with basic functions, like dressing or walking, maybe for decades." (The New York Times; free registration required) Long-Term Care Insurance and Tax Planning - Make the Most of Tax Rules for Premiums and Benefits Excerpt: "The number of baby boomers in or near retirement is rising, and so too is the demand for long-term care (LTC) insurance. Depending on the age of the insured, such coverage can be expensive, but fortunately for them, Congress and some states have provided income tax incentives for the purchase of certain LTC insurance policies -- called 'qualified' LTC contracts -- in IRC § 7702B." (American Institute of Certified Public Accountants) New Long Term Care Insurance Tax Break on Table Excerpt: "A bill recently was introduced that would provide a tax credit for long term care insurance premiums. Introduced by Sen. David Vitter, R-La., and called the Long-Term Care Family Accessibility Act, S 3365 joins a handful of others seeking tax deductions for the costs associated with long term care." (Investment News; free registration required) Long-Term Care Insurance and Tax Planning Excerpt: "The number of baby boomers in or near retirement is rising, and so too is the demand for long-term care (LTC) insurance. Depending on the age of the insured, such coverage can be expensive, but fortunately for them, Congress and some states have provided income tax incentives for the purchase of certain LTC insurance policies -- called 'qualified' LTC contracts -- in IRC § 7702B." (American Institute of Certified Public Accountants) Average LTC Costs Hikes More than Double Excerpt: "The average rate of increase for cost of long-term care has seen a sizable jump in the last 24 months from 5% to 13% depending on the type of service, according to a Prudential Financial study." (PLANSPONSOR.com; free registration required) Report: Long-Term Care Insurance: Oversight of Rate Setting and Claims Settlement Practices (PDF) 41 pages. Excerpt: "GAO reviewed information from the National Association of Insurance Commissioners (NAIC) on all states' rate setting standards. GAO also completed 10 state case studies on oversight of rate setting and claims settlement practices, which included structured reviews of state laws and regulations, interviews with state regulators, and reviews of state complaint information. GAO also reviewed national data on rate increases implemented by companies." (U.S. Government Accountability Office) Testimony: Long-Term Care Insurance: State Oversight of Rate Setting and Claims Settlement Practices (PDF) 23 pages. Excerpt: "This statement focuses on oversight of the LTCI industry's (1) rate setting practices and (2) claims settlement practices. This statement is based on findings from GAO's June 2008 report entitled Long-Term Care Insurance: Oversight of Rate Setting and Claims Settlement Practices (GAO-08-712)." (U.S. Government Accountability Office) True Group Long-Term Care Insurance As Part of an Employee Benefit Plan Excerpt: "A rich long-term care benefit with full vesting, no waiting period, and in which the employer makes all contributions could represent a significant cost to the employer. We estimate that a rich plan would increase the total cost of compensation by about 3% to 4%. However, long-term care is a benefit where the payout is expected a long time after employees are hired. Vesting and waiting period rules for group long-term care benefits would allocate full benefit dollars only to the most loyal and experienced employees, thereby keeping costs down." (Milliman) Fidelity Study Shows $85K Needed for Long-Term Care Insurance Costs for a Couple Excerpt: "A 65-year-old couple needs $85,000 on average to cover insurance costs for long-term care such as nursing home stays in retirement, according to a study to be released Thursday by Fidelity Investments." (AP via The New York Times; free registration required) How Can We Improve Long-Term Care Financing? Excerpt: "While experts generally agree that the existing system is inefficient and ineffective, they disagree on how it should be reformed. This brief . . . will review several options for change. These options include enhancing private long-term care insurance, replacing the current welfare-based system with a public social insurance program, and introducing a hybrid public-private system. None of these alternatives is optimal, but each has significant advantages over the current system." (Center for Retirement Research at Boston College) The Strains and Drains of Long-Term Care (PDF) Excerpt: "The financial, emotional, and physical costs of providing long-term care often overwhelm families; unpaid family members supply most of it, struggling to balance these duties with work and other responsibilities. The most common alternative to home care is a nursing home, but a year's stay averaged about $78,000 in 2007 [2], and public assistance is not generally available until the residents have exhausted all of their financial resources. As the nation grows older, it's time to find a better way to care for those who need help as they age." (American Medical Association via Urban Institute) BS&K NYC Attorneys Publish Article on Employee Free Choice Act in NYS Health Care Providers Newsletter Excerpt: "Unionization has been an important issue in the New York home care community for the past several years. In this article, two management labor lawyers and partners in HCP Associate Member Bond, Schoeneck & King, PLLC's New York City office examine the provisions and impact of the proposed Employee Free Choice Act." (Bond, Schoeneck & King, PLLC) Long-Term Care Insurance: Partnership Plans and the Impact of Other Legislation Excerpt: "Why is true group long-term care so important? Many Americans will have no way to pay for long-term care services when they are needed. Insurance for long-term care will not become widespread if only available on an individual basis, which means that the change will need to come first from employers. Group coverage needs to include employer contributions to make it affordable to employees and vesting to make it affordable to employers." (Milliman) Structure and Importance of Reserve Transfer Provisions in the Case of LTC Insurance Excerpt: "For employers who offer group LTC benefits to their employees, one of the greatest risks is becoming contractually locked into one insurer. If the insurer decides to exit the market, elects to raise rates, refuses to lower rates, or provides poor service, the employer is then left without the ability to change carriers. To protect themselves, employers should work to include a clear reserve transfer provision within their group long-term care contract, specifying their right to change LTC carriers and how the accumulated reserves will be transferred to the new carrier." (Milliman) Consumer-Preparedness for Long-Term Care (PDF) 4 pages. Excerpt: "There are no magic bullets to address the issues of long-term care provision or financing, but it is clear that as more individuals are affected it will become an increasingly important issue for society. Consumers need to continue to receive reliable information about available long-term care services, as well as alternative financing mechanisms." (AcademyHealth) Chart of State and Local Government Workers' Access to Quality-of-Life Benefits Excerpt: "Long-term care insurance was offered to 26 percent of State and local government workers in September 2007. Such insurance was the quality-of-life benefit most commonly offered to employees of State and local governments." (U.S. Bureau of Labor Statistics) [Opinion] Group Letter Supporting Long-Term Care Affordability and Security Act (PDF) 1 page. Excerpt: "We are writing regarding the Long-Term Care Affordability and Security Act of 2007 (H.R. 3363, S. 2337), an important, bipartisan measure that encourages Americans to plan for their long-term care and retirement security needs. The bill has generated support from a broad crosssection of the long-term care community, because it makes long-term care insurance more accessible and affordable for working Americans and provides enhanced consumer protections." (American Benefits Council) New Long-Term Care Cost Bill Floated Excerpt: "Introduced by Rep. Adam Putnam, R-Fla., and called the Long-Term Care Retirement and Security Act of 2008, HR 5559 would create tax deductions for eligible long-term-care insurance premiums for a taxpayer and that person's spouse and dependents . . . ." (Investment News; free registration required) Pricing an Employment-Based Long-Term Care Plan Excerpt: "Given an employer's limitations regarding cost, how can an LTC plan be designed to provide the best protection against future catastrophic losses for as many employees as possible? In fact, implementing self-funded LTC program with several true group features can result in employer costs very similar to a dental benefit." (Milliman) [Guidance Overview] IRS Addresses Long-Term Care Policies Provided as an Investment and Benefit Under 401(k) Plan Excerpt: "IRS recently ruled that the payment of premiums on long-term care policies held by a 401(k) plan for the benefit of electing participants would run afoul of the qualification requirements. IRS reasoned that such payments would be considered taxable distributions and, therefore, would violate the restriction imposed by IRC § 401(k) which permits distribution only on account of severance from employment, death, disability, plan termination, age 59-1/2, hardship, and a qualified reservist distribution. IRS Private Letter Ruling 200806013 (November 15, 2007)." (Deloitte via BenefitsLink.com) The Outlook for Spending on Health Care and Long-Term Care (PDF) 15 pages. Presentation to the National Governors Association's Health and Human Services Committee, February 24, 2008. (Congressional Budget Office) [Guidance Overview] IRS Rules Against Qualified Long-Term Care Insurance in 401(k) Plan (PDF) 2 pages. Excerpt: "In PLR 200806013 (November 15, 2007), the IRS ruled that the payment of premiums on qualified long-term care insurance by a 401(k) plan would be treated as a taxable distribution in violation of the distribution restrictions of section 401(k)(2)(B)." (Sutherland Asbill & Brennan LLP) More Employers Sponsor, More Employees Buy Group Long Term Care Insurance Excerpt: "In 2007, nearly 10,000 employer groups offered long term care insurance to their workers and their families. These policies covered slightly more than 2 million individuals, according to a study from the American Association of Long-Term Care Insurance (AALTCI). The study was published in the AALTCI's 2008 LTCI Sourcebook." (Wolters Kluwer Financial Services) Costs of Federal Government Benefits for Seniors Rise 24% Above Inflation Rate Since 2000 Excerpt: "The cost of government benefits for seniors soared to a record $27,289 per senior in 2007, according to a USA TODAY analysis. . . . Medical costs are the biggest reason. Last year, for the first time, health care and nursing homes cost the government more than Social Security payments for seniors age 65 and older." (USA TODAY) [Opinion] The Case for Cash LTC Insurance Products Excerpt: "Criticism has recently targeted innovative benefit designs such as so-called 'cash' products. Cash products pay eligible insureds cash based on standard benefit triggers, versus the standard model of reimbursing paid services. Some believe cash products cannot be actuarially sound." (National Underwriter; free registration required) Long Term Care Insureds Keep Their Coverage, Buy It At Younger Ages Excerpt: "Purchasers of long term care insurance policies seem to value the coverage and are keeping those policies longer than previously thought, according to a recent study by Schaumburg, Ill-based Society of Actuaries (SOA)." (CCH Benefits) Moving Beyond Retrospective Testing for LTCI Reserves Excerpt: "It has long been accepted among actuaries that retrospective -- or 'retro' testing -- is a blunt tool when it comes to establishing the ongoing adequacy of claim reserves for blocks of long-term care insurance. . . . Retro tests have a number of weaknesses. To begin with . . . ." (Milliman) Finding a Solution for Retiree Health and Disability Benefits in the Public Sector Excerpt: "In valuing these benefits, actuaries will be making assumptions for benefit costs (pre 65 and post 65 retiree benefits), health care cost inflation (trend) rate, interest discount rate, retirement rates, turnover rates, disability rates, mortality rates, aging assumptions (age/sex factors), asset return on investments (if any of the entities are funding benefits), salary increases if benefits or funding is based on salary (e.g., life insurance), plan participation percentage (some individuals may opt out) and actuarial cost methods. . . . Some of the approaches taken [to mitigate these liabilities] include: . . . ." (The Actuary Magazine) LTC Claims Doubled from 2001 to 2005, Society of Actuaries Finds (PDF) 2 pages. Excerpt: "Long term care insurers are developing extensive experience in managing claims and policies, developing more details on claims exposure, claims paid, and termination rates, a new study shows. The Long Term Care Experience Study by the Society of Actuaries, Schaumburg, Ill., found voluntary lapse rates by policy holders dropped to 5.5% in the period 1985 to 2005, the time covered in the study, from 7.4% in 2002, when the society issued a similar report on the experience of U.S. LTC insurance carriers up to that point in time." (The National Underwriter Company via Society of Actuaries) Primer on Long-Term Care and Long-Term Care Insurance Excerpt: "Evaluating and comparing LTC insurance policies is more complex than with other forms of coverage. Fortunately, the National Association of Insurance Commissioners has written an informative booklet, 'A Shopper's Guide to Long-Term Care Insurance,' which is a very straightforward but comprehensive overview." (Employee Benefit News; free registration required) Study Shows Healthcare Costs Are Looming Concern for Pre-Retirees Excerpt: "Among pre-retirees, 63% are concerned about paying for long term care, and 69% are concerned about paying for adequate health care. But only 17% of pre-retirees and 28% of retirees who participated said they have bought LTC insurance, and only 23% of the pre-retirees and 9% of the retirees said they intend to buy LTC insurance in the future, researchers report." (National Underwriter) Bill Would Allow Tax-Exempt Long-Term Care Insurance Premium Payments Excerpt: "A bipartisan group of senators on Tuesday introduced a bill that would allow employees to pay long-term care insurance premiums with pre-tax dollars, CQ HealthBeat reports. Under the Long-Term Care Affordability and Security Act -- sponsored by Sens. Chuck Grassley (R-Iowa), Blanche Lincoln (D-Ark.), Olympia Snowe (R-Maine), Debbie Stabenow (D-Mich.) and Gordon Smith (R-Ore.) -- employers could offer long-term care insurance under so-called cafeteria plans, which allow employees to select from a number of tax-exempt benefits, as well as flexible spending accounts." (Kaiser Family Foundation) Boomers Unprepared for Long-Term Care, But Employers More Willing to Help Excerpt: "More than 90% of employers offering LTCI think the benefit is important enough that they're ready to help pay for it, according to a recent study from Unum. This is a 'dramatic shift' from earlier years, when the market generally required 100% employee-paid long-term care coverage, Unum notes." (Employee Benefit Advisor; free registration required) AHIP Long-Term Care -- Key Survey Findings 9 pages. Excerpt: "One in four Baby Boomers erroneously believe they have coverage for long-term care expenses, according to new survey data released today by America's Health Insurance Plans (AHIP). The survey found that many Baby Boomers have misconceptions about who pays for long-term care services and have not thought about long-term care insurance." (America's Health Insurance Plans) From the Employers Council on Flexible Compensation: Text of Extensive Comments on Proposed Cafeteria Plan Regs (PDF) 37 pages; filed November 5, 2007. Very well-written: clear, precise; includes explanation of issues and a detailed suggested revision for each issue. (Employers Council on Flexible Compensation) Tax Breaks Sought for Long-Term Care Insurance Premiums Excerpt: "A bill recently introduced would exclude from gross income certain retirement plan distributions paying for long-term care insurance premiums." (Investment News; free registration required) Workers Miscalculate the Cost of Long-Term Care Excerpt: "Most Americans realize they may need day-to-day care because of physical or cognitive impairments as they get older. However, many fail to grasp the cost of long-term care services, reports John Hancock Life Insurance Co." (Employee Benefit News; free registration required) Overview: IRS Issues 2008 Inflation-Adjusted Limits for Pre-Tax Transportation and Other Fringe Benefits Excerpt: "In general, IRC § 132(f) allows employees to exclude from their gross incomes, the value – up to certain limits – of 'qualified transportation fringe' benefits provided by their employers. 'Qualified transportation fringe' benefits include – transportation between home and work in a 'commuter highway vehicle;' mass transit passes; and 'qualified' parking." (Deloitte via BenefitsLink.com) Risks in Self-Funding Long Term Care -- Other Than Morbidity Excerpt: "A common reaction to the option of self-funding long-term care benefits is that it seems too risky. There are three important elements that drive the cost of long-term care benefits. These are the cost of the benefits, the investment earnings on the fund, and the lapse rates of employees dropping their coverage. Variation in each of these items represents risk to a self-funded plan. There are additional key elements of risk, which are the risk of adverse selection and changes in legislation or tax rules." (Milliman) Long-Term Care Insurance Buyers Younger Excerpt: "Long-term insurance is appealing to an increasingly younger cohort of clients, a survey conducted by the American Association for Long-Term Care Insurance reported." (Investment News; free registration required) Worksite Combo Coverage Policies: Can Two Insurance Plans Coverage Be Better Than One? Excerpt: "Some experts believe employees do not have to settle for just one of the three insurance products. Instead they are exploring the possibility of providing a combination of two types of coverage as a possible alternative. The most likely worksite combo coverage is LTCi with CII or LTCi with DI." (InsuranceNewsNet, Inc.) Financially Speaking, What's Troubling Americans? Nothing Dominates, But Economic Uncertainty and Retirement Savings Register High Excerpt: "The largest category of responses is macroeconomic in nature -- consisting of things largely outside of individual Americans' control. Chief among these are healthcare and health insurance costs, which 9% of Americans name as a current concern, and 13% as a long-term concern. But taken together, sizable numbers also mention inflation, housing costs, the possibility of a downturn in the stock market, taxes, the possibility of recession, rising interest rates, gas and home heating prices, and long-term care." (Gallup, Inc.) Overview: Key IRS Benefit Plan Limits for 2008 (PDF) Excerpt: "The IRS has issued a press release announcing the retirement plan limits for 2008, and Revenue Procedure 2007-66, which contains 2008 limits for qualified transportation fringe benefits, adoption assistance programs, long-term care products, and medical savings accounts." (Buck Consultants) Voluntary Self-Funded LYC Lapse Rates Less Than Group Excerpt: "There are three core risk concerns when considering self-funding voluntary or employer-sponsored group long-term care insurance for employees. Two of the three -- investment earnings and benefit costs -- threaten both voluntary and group programs equally, the third -- lapse rates -- poses a greater risk to employer-sponsored programs according to Jon Shreve, Milliman's group LTC guru." (Employee Benefit News; free registration required) |
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