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Benefits and Pensions Monitor

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Time Has Come For Long-term Care

Often In Home

Long-term care occurs most often in the home and to a lesser degree in a long-term care facility or similar healthcare facility.

Benefits from LTC coverage are usually paid out after a waiting or elimination period (0, 30, 60, 90, or 180 days) in daily, weekly, or monthly benefit amounts. Benefit periods range from one year up to lifetime depending on the product and underwriting considerations.

The financial benefits of the coverage are paid in addition to any government-provided benefits for long-term care. As already noted, a significant portion of the direct and indirect costs for long-term care are not funded by provincial governments in Canada.

So what are the benefits to an employer offering LTC coverage as part of their benefits package?

• A meaningful LTC benefit can be used to attract and retain valued employees. It provides a number of significant benefits to the spouse, children, and family of an individual who needs long-term care.
• As LTC is a generational concern, consideration should be given to making the parents of current employees aware of the need for LTC coverage and working with your insurer to see if a marketing arrangement can be established.
• For employers providing post-retirement benefits to retired employees, LTC can be a viable offering to enhance benefits, even if it is employee-paid.
• A meaningful post-retirement benefit can help protect a former employeeʼs assets from depletion.
• LTC coverage should ideally be structured in a similar way as pension planning in that younger employees fund a significant future risk – with relatively small premium contributions over a long period of time – so that coverage can be available in post-retirement years when it is most likely to be used.
• This coverage ultimately gives individual employees facing long-term care dignity and choices, while maximizing independence.
• Long-term care insurance can be an important supplement to long-term disability benefits for employees in their working years since LTC may cover the cost of care for severe disabilities that can occur during an employeeʼs prime earning years.

Employers are already faced with the cost of LTC whether they realize it or not. In fact, Statistics Canada estimates that there are more than 2.8 million Canadians providing care to people with long-term healthcare problems.2 Many of these caregivers are also employees who are stretched to the limit, often taking care of their own families in addition to their aging parents. Employees are facing the stressful emotional and financial burdens of care giving and it is likely that a great number of these individuals will have a future need for long-term care as well. The lost productivity and added health burden on employers and employees is enormous. Adding this product to a benefits program can go a long way toward helping employees manage the competing demands of work and life – immediately and into the future. ■

Greg Pearson is the national long-term care insurance consultant for RBC Insurance.

1. Canadian Senior Years – Ken McNaughton, CFP, CLU, CH.F.C 2. Citizens for Mental Health – Canadian Mental Association, January 2004 The findings, interpretations, and opinions expressed in the published materials are those of the author of the work only.

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