When it comes to benefits, most employees turn to their employers first to see what is available. They trust them to offer reliable options that both protect their families and their future savings.
That includes traditional healthcare benefits, but also supplemental options like long-term care solutions. With the rising cost of care, long-term care planning is becoming an important part of their overall financial wellness plans.
Many small businesses assume that long-term care solutions are too expensive and that they’re only feasible for large companies. However, there are flexible options available for employers of all sizes, allowing you to better customize your benefits portfolio to meet your employees’ needs without breaking your budget.
Why Long-Term Care Planning Matters for Small Businesses
Without proper planning, long-term care costs can create a major financial burden for employees, business owners, and their families.
Many individuals are left wondering how they will afford care, while others will be forced to step away from their jobs entirely to care for a loved one. In fact, a recent report by AARP shared that almost 70 percent of family caregivers struggle to balance their careers and caregiving responsibilities.
Offering access to long-term care solutions can help provide employees with more options while providing significant benefits to the business, including:
- Stronger total rewards package for employees, including a more comprehensive benefits package.
- Improved employee retention, providing solutions that better meet your team’s emotional and financial needs.
- Deeper commitment to employee well-being, offering enhanced coverage to help employees care for their whole selves.
When you demonstrate how you care for your team, they will often reward you with high performance and loyalty, which will yield long-term benefits for your business.
Can Small Businesses Offer Long-Term Care Insurance?
Small businesses can offer long-term care solutions as part of their overall benefits package. There are options for the type of long-term care solutions they can provide, and a long-term care insurance professional can help you understand which is right for you.
The structure of your LTC benefits may vary based on the company size, budget, employee interest, and carrier options. For example, some employers may choose to contribute toward coverage, while others may provide access to plans that employees can voluntarily enroll in and pay for themselves.
There is no right or wrong way to offer long-term care insurance as long as it is available to your associates to take advantage of.
Option 1: Traditional Long-Term Care Insurance
Traditional long-term care insurance operates similarly to a traditional health insurance policy. You pay a monthly premium, and when you qualify for care, you will have access to a pool of funds that you can use to pay for it.
Traditional long-term care insurance helps cover in-home care, assisted living, adult daycare, and nursing home care. These policies allow you to control how and when you receive care.
Traditional policies may be a strong option for employees who want dedicated LTC protection. They don’t want to roll policies together to maximize benefits. It is important to note that premiums, age, health, and underwriting can all affect your eligibility and cost.
Not all associates who are seeking a long-term care insurance policy may qualify.
Option 2: Hybrid Life Insurance With Long-Term Care Benefits
Hybrid insurance policies bring the best of both worlds under one policy. They combine life insurance with long-term care benefits.
Employees can tap into their life benefits to help cover the cost of care for qualifying expenses (like nursing home care, in-home care, etc.). Any remaining funds not used will be paid out as a death benefit, just as a regular life insurance policy.
Hybrid LTC and life insurance policies can be appealing to employees who aren’t confident they will need care later in life. As a result, they’re hesitant about paying for traditional LTC insurance. Instead, hybrid policies allow them to claim some form of benefit, even if long-term care is never needed.
Option 3: Voluntary Employee-Paid Long-Term Care Benefits
Long-term care insurance options don’t have to be automatically offered to employees. Instead, small businesses can offer them as a voluntary benefit. The employee can choose whether or not to enroll in the benefits, and they will pay for some or even all of the premium.
This is often the most practical option for smaller companies. It gives employees access to long-term care planning resources without the company taking on a large, ongoing expense.
The employee still realizes many benefits from this approach, even if they have to pay for it.
- Lower premiums: The employer may be able to negotiate a lower group rate with the insurance provider than the employee would have been able to secure on their own, making long-term care insurance more accessible.
- Simplified finances: Voluntary benefits can be part of the normal payroll deduction process, so there are no surprise bills.
- Save time: You bring the long-term care options to the employee, so they don’t have to spend time researching options – unless they want to.
This approach can be a win-win for all parties. It allows employees control over their benefits, while providing employers with the flexibility of offering benefits without taking on high costs.
Are There Tax Advantages for Offering Long-Term Care Solutions?
From a financial perspective, offering long-term care insurance may yield tax advantages for business owners and employees.
The biggest tax advantage is that the premiums you pay may be tax-deductible as a business expense. Normal IRS deduction limits for long-term care insurance premiums, which are broken down by age, should not apply.
It is critical to work with a tax professional to understand the full extent of your tax benefits. How much you may qualify for depends on the policy structure, business type, and who is paying the premium.
Each business is set up differently, so consulting with both a tax and long-term care insurance professional can ensure you can claim maximum tax benefits.
What Should Employers Consider Before Offering LTC Benefits?
There are many factors that employers should consider before offering long-term care benefits to their employees. Consider the following questions as you explore providing LTC solutions to your employees.
- Financials: What is the company budget? Will it be employer-paid, voluntary, or a mix of both?
- Employees: What are your employee demographics? Is there interest in LTC benefits? Younger employees may not be thinking about their future long-term care needs, while older employees may be more expensive to cover.
- Minimum requirements: Is there a minimum participation rate you need to offer the benefits? What are the eligibility requirements?
- Type of policy: Will you offer traditional LTC benefits? Hybrid coverage options? Both?
- Policy fit: Does it make sense to offer long-term care as an employee benefit?
It is okay if you don’t have all the answers right now. Navigating benefit packages can be complex for small business owners. Discussing your options with an insurance professional can help you explore your options and provide solutions that work for you and your business.
How LTC Benefits Can Support Employee Retention
Employee benefits are no longer just about health insurance and retirement plans. Many employees are looking for more. They want additional resources to help them feel more financially secure and supported by their employers.
Long-term care planning is an important part of that, especially with the rising costs of care. Providing LTC insurance as an employee benefit helps provide employees with peace of mind and supports employee retention.
- Reduced financial stress: With LTC insurance, employees know that if they need care, it will be covered. They won’t stress about how to afford it. Reduced stress can improve employee performance.
- Improved culture: Employees who feel like their financial, emotional, and overall physical well-being needs are being met are more likely to stay at a company because of the healthy culture.
- Increased flexibility: Employees want to choose what benefits are offered to them. They don’t want to be forced to pay for services they don’t want.
Small businesses often need every competitive edge when it comes to attracting and retaining top talent. Having a strong reputation as a company that cares for its employees and offers thoughtful benefits can help set you apart from larger companies.
How to Structure a Long-Term Care Solution Without a Major Financial Burden
Long-term care insurance can feel like another financial burden for small businesses, but it doesn’t have to be. Employers don’t always have to fully fund coverage to make LTC planning available.
Options include:
- Voluntary enrollment allows the employee to choose to enroll and pay the premium.
- Partial employer contributions, splitting the cost of the premium between the business and the employee.
- Executive carve-out plans provide specialized or enhanced coverage for select individuals at your company.
- Individual policy plans, offering more customized care to employees.
Educating your employees on what plans are available and what they include will be critical to ensure only the people who want long-term care insurance enroll in the plan.
Get Guidance on Long-Term Care Planning
Choosing the right long-term care solution for your business is a personal decision. It depends on the business, employees, budget, and long-term planning goals.
Lavine LTC Benefits has decades of experience helping families and business owners explore long-term care insurance options. Our experienced team can help you compare available solutions so you can feel confident about the decisions you make for your company.
Long-term care insurance is about protecting your future, so reach out today for personalized guidance on the best options for you and your business.
Frequently Asked Questions
Can small businesses offer long-term care benefits?
Small businesses can offer their employees long-term care solutions as part of their total benefits package. They can be voluntary, employer-funded, or a hybrid approach where both pay part of the premium.
Are there tax benefits to offering LTC benefits?
Employers may be able to deduct the amount spent on LTC premiums from their taxes as business expenses. It is best to consult with a tax professional to understand the complete tax implications.
What are the benefits to employees of employer-offered LTC benefits?
Businesses are often able to secure more favorable group rates, making LTC insurance more accessible to some. Additionally, it is automatically deducted from their paycheck, so there are no additional payments or surprise charges.