With health-insurance premiums continuing their endless ascent, business owners are cutting back wherever they can. But at least one new item is being added to the benefits mix: long-term care insurance. Small companies now account for two-thirds of all employers offering such policies, according to the Health Care Insurance Association of America. The reason: Nearly a third of adult Americans provide some kind of care for an aging relative. By offering long-term care insurance now, employers can give staffers the peace of mind that they'll be taken care of in their golden years. Plus, it's one of the few inexpensive benefits left to offer.
Long-term care insurance covers all or part of the costs of a nursing home, assisted-living facility, or home-care aide for an employee or his or her family. The policies come in two basic flavors: group and individual. Larger companies -- say, those with more than 500 covered employees -- typically offer group policies, which are slightly less expensive but require more administrative work and limit the number of choices you can offer. Individual policies are a bit pricier but are more often the entrepreneur's choice. Not only does your broker help administer individual policies, but the individual plans allow you to offer more options.
As with any insurance policy, the costs vary according to a number of factors, such as how much of the premium you elect to pay and whether you're willing to pick up the tab for spouses and family members. (Keep in mind that any expenses are tax-deductible.) Most employers find that they can offer a 40-year-old employee $2,000 a month of long-term care coverage for as little as $125 a year. Some are paying even less. At Cobbs Allen & Hall, a Birmingham, Ala., insurance brokerage with 98 employees, full-timers receive an LTC plan that provides $1,000 a month toward a nursing home. The cost: just over $1 a month per employee. If employees want to add the more expensive home-care option, or add a family member to the plan, they pay the extra costs themselves. But no employee pays more than $6.10 a month for their own coverage, says payroll supervisor Teresa Sheppard. "It's a small price to pay," she says. And with the U.S. population aging, you can expect more small employers to start paying it. Says Joyce M. Roddock, a MetLife vice president in Westport, Conn.: "It's an issue for this decade that's as significant as child care was a decade or two ago."