Health Care Reform is all over the news these days, and while there are many important ideas being batted around – the simple truth is we don’t know what will happen. The question is- how can we be proactive and prepare for the changes coming our way?
A possible answer may be found in programs that are readily available to us now. Long-Term Care (LTC) insurance and Health Savings Accounts (HSA’s) are strange bedfellows, but they both offer tax incentives, opportunities for savings, and flexible choices that may help to stave off some of the uncertainty surrounding the current Health Care Reform conundrum. Each of these benefits is designed to provide individuals, employers and employees with options to help them plan for the future.
Long-Term Care insurance has been around for years, but the complexity of the options and the cost associated can be daunting. Rather than working through these issues to find solutions, many people believe that their family will take care of them in their convalescent years, or that Medicare will be there to pay for nursing home coverage. However, what may not be clear is that Medicare only helps to pay for 12% of the cost of nursing homes, and even less for the cost of home care. Additionally, the emotional and financial burden that can be placed on a family caring for a seriously ill or disabled family member can be devastating.
According to a Georgetown University publication, 37% of people who actually need long term care today are working adults under the age of 65. This is typically due to unexpected events like car accidents, strokes, head traumas and neurological conditions such as Multiple Sclerosis or ALS. LTC offers tax free financial assistance with home care and/or nursing home care.
The trick is to buy the policy at an age that makes sense. Generally, LTC policies are more affordable when purchased when the buyer is 40 or under. Once the policy is purchased, the rate is typically locked in, and barring changes the insured may make to the plan, the policy premium does not change. LTC policies come with many options that can include coverage for home health care provided by family members.
Where Health Savings Accounts (HSA’s) come in is that contributions, earned interest and withdrawals are federally tax free. The best part of HSA’s is that the High Deductible Health Plans offered with these accounts are less expensive than traditional PPO’s and give employers the ability to offer flexible health benefits to employees while, at the same time, promoting wellness and tax free savings. Employees can use the funds to pay for LTC insurance premiums should the need arise or on an ongoing basis.
There are many ways employers can package their programs to benefit both the employees and the corporation. For example, employers can pay for the executive staff’s LTC plan and offer the group discount to employees on a voluntary basis. The key is to carefully consider all options and help prepare employees for the looming reform ahead.
Valerie Antillon, SPHR, is an HR Consultant & Account Manager for Montage Insurance. She has over 15 years of HR experience, specializing in employee benefits in the Finance and Technology industries.