sm ©2006 genworth financial, inc. all rights reserved. long term care insurance is underwritten by...
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©2006 Genworth Financial, inc. All rights reserved.
Long Term Care Insurance is underwritten by Genworth Life Insurance Company
35849 09/0401/01/06
LONG TERM CARE INSURANCEAS PART OF EXECUTIVE AND BUSINESS PLANNING
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What Is Long Term Care• Goes beyond medical and nursing care
• Assistance with the activities of daily living, whether at home or in a facility
• Not just for the elderly
• Accidents and illnesses can happen to anyone, and they are often without warning
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When Is Long Term Care Needed?• Activities of Daily Living
– Bathing– Toileting– Transferring – Dressing– Continence– Eating
• Cognitive Impairment– Memory– Orientation– Reasoning
• Levels of Care– Custodial Care
– Intermediate Care
– Skilled Care
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What Are the Risks?
• Dealing with long-term care needs can be an emotionally and financially significant life event. A survey done by the National Alliance for Caregiving and AARP found that 23.2% of households are involved in care giving1
• A majority of these caregivers – 64.2% - are employed, most of them full time1
1HIAA’s Guide to Long Term Care Insurance (updated June 2002), Easing the Caregiver Burden.
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What Are the Risks? (Continued)• Almost a quarter of U.S.
households – 22 million – are already involved in caring for a relative or friend who is 50 or older, according to the non-profit National Alliance for Caregiving1
• As many as 19 million are expected to need some type of long-term professional care1
1“Sons, daughters and caregivers.” USA Today. 02/18/04
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What Are Common Long Term Care Options?
• Family
• Government – Medicare/Medicaid
• Spend Personal Assets
• Transfer the Risk
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The Cost of Long Term Care
1Source: 2003 Genworth Financial Nursing Home Cost of Care Survey, Conducted by Evans Research Associates, an independent research firm.
•The cost of long term care can be high
•The National Average: $57,700/year1
0
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LA MO MS AL VA CO IL WIDE MD ND DC CT
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Low$35,900
Average$57,700
High$166,700
Nursing Home Costs1
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Future Costs of Long Term Care
• Average annual cost in 2003 $57,7001
• Potential average cost 10 years later (2013) $93,9872
• Potential average cost 20 years later (2023) $153,0952
• Potential average cost 30 years later (2033) $249,3762
12003 Genworth Financial Nursing Home Cost of Care Survey2Assuming an annual 5% increase in the cost of care
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What is Long Term Care Insurance• An insurance policy that transfers all, or part of, the
financial risk of long term care costs from the policyholder to an insurance company
• Insurance can pay for the covered care received in:– Your Home
– Nursing Home
– Hospice Care
– Assisted Care Facility
(Incl. Alzheimer’s Facilities)
– Adult Day Care
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Costs of Long Term Care to Employers• In a March 2002 Eldercare Study conducted by the US Office of
Personnel Management, 21.7% of respondents indicated that they had care giver responsibilities and that it affected their productivity at work1
• 32% of the caregivers indicated that they lost up to sixteen hours of work in an average month due to care giving responsibilities1
1”Consider long-term care insurance plans.” Credit Union Magazine. 03/03.
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Hidden Impacts of Care Giving Responsibilities• Interruptions: emergencies and phone calls
• Absenteeism, adjusted schedules– Increased need for time off
• Decreased willingness to relocate and travel
• Decreased motivation and morale
• Decline in productivity
• Increased stress, which leads to employee health-related problems and fatigue
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Hidden Impacts of Care Giving Responsibilities (Continued)
• Need to go part time or leave work force
• Temporary worker replacement fees
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Effects of Long Term Care on the Employee• Long term care can be costly, as
well as emotionally draining
• The need for an employee to tend to a loved one during key wage-earning years can take a huge toll on the financial well being and earning potential of these workers, both now and in the future
• Impacts the ability of employee to save for retirement
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Don’t My Other Plans Cover Long Term Care?• Medical plans and Medicare are designed to primarily
cover skilled, not custodial care
• Disability plans are designed to replace income, not cover long term care expenses
• Accelerated benefits under a life insurance plan reduce the death benefit. The goals of providing life insurance are not met if the death benefit dollars are used for long term care expenses
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Why Long Term Care Insurance?
• At home and in the workforce, long term care is emerging as one of the critical issues of our times, and employers have a key role to play through education
• Employers can help their employees plan responsibly for their future needs. Most Americans over the age of 44 view long-term care as an important health care issue, yet have done little or nothing to prepare for the high costs of such a crisis in their lives1
1”Americans Fail to Act on Long-Term Care Protection.” American Society on Aging: Press Release. 05/23/03.
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Why Long Term Care Insurance? (Continued)
• It is one of the newest employee benefits made available to employees by businesses to attract and retain top performers
• By extending coverage to family members, employers make it easier for workers to manage care giving responsibilities and remain productive on the job
• It is a valuable addition to any benefits portfolio
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Benefits of Long Term Care Insurance to Employer• Help reduce employee stress
over care giving
• Help reduce absenteeism and losses in productivity due to care giving
• Help recruiting and retaining of key personnel
• Help reduce recruiting and replacement costs
• “Studies have shown that employees who care for elderly or sick relatives with LTC [insurance] are twice as likely to stay in the work force as those caring for non-insured relatives”1
1California Partnership News, Winter 2003
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Benefits of Long Term Care Insurance to Employee
• Help protect hard earned assets and retirement savings
• Help reduce stress and time off or absenteeism due to care giving responsibilities
• Help allow employee to concentrate on work
• Help reduce trade offs between care giving and work responsibilities
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Advantages of Long Term Care Insurance As a Benefit• Can be offered selectively
• Long Term Care insurance is “fully portable.” An employee can retain this coverage even after leaving the company
• Some plans allow for accelerated payments of 10 years – added incentive for an employee to stay with the company
• By extending coverage to family members, employers make it easier for workers to manage care giving responsibilities and remain productive on the job
• It tells your employees that you care about them now and in the future
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Tax Benefits of Qualified Long Term Care Insurance• Tax advantages to both employer and employee
– Employer paid premiums are not taxable income to employee
• Premiums 100% deductible as business expense for C-Corporations
• Premiums are deductible for owners of S-Corporations, limited to the lesser of the actual premium paid or the eligible age-based amount
• Premiums for employees other than owners are 100% tax deductible as a business expense to the employer
Consult with a qualified tax advisor for advice on including LTCI in compensation and benefits planning
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Tax Benefits of Qualified Long Term Care Insurance (Continued)
• Self-employed, partnerships and limited liability companies can also deduct a portion of their premium
• Benefits received by the insured are tax-free
• Premiums for spouse and dependents are also fully deductible
Consult with a qualified tax advisor for advice on including LTCI in compensation and benefits planning
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Flexibility to Offer Tailored Benefits to Selected Employees
• Employer Pay All– If employer pays for the coverage, may be able to select which
employees will receive coverage (Executive Carve Out)
• Totally Voluntary– Coverage can be made available through the employer, but paid for by
the employee
– You are protecting the future of your business without any out of pocket expenses to your business.
• Split Dollar– Employer pays some based on age, length of service, etc.
See your tax advisor for specifics.
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Executive Carve Out• Employers may select or “carve out” groups of
employees where the employer pays the premiums
• Insurance benefits received by the employee are not taxable, even when the employer paid for and deducted the premium
• Participants owns their policy
• If participants leave the business, they can keep the policy. They may have to continue paying the premium depending on the premium payment option chosen
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The Time to Plan Is Now
• Considering the average cost of skilled nursing home care is $57,700 a year, long term care insurance makes a lot of sense for millions of Americans1
• Increasingly, employers are making Long Term Care insurance coverage available to their employees through their benefit programs – paid for by the company or as a voluntary benefit2
12003 Genworth Financial Nursing Home Cost of Care Survey, Conducted by Evans Research Associates, an independent research firm.2Georgia Eldercare Advisors, CPAs Specializing in Eldercare, 9-26-2003
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What to Look For In A Long Term Care Insurance Policy
Basic Policy Features– Daily benefit amount
– Elimination period
– Benefit period
– 100% coverage for home care, assisted care facilities
Policy Considerations– Inflation Protection – choice of simple or compound
– Premium Discounts – spousal and good health
– Care Coordination
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The Time to Plan Is Now• Long Term Care insurance helps address a real need
for employees planning for their financial future. Most importantly, it helps them protect the savings they have accumulated
• Offering a long term care insurance plan shows concern for the welfare of your employees and their dependents, and helps to build morale and loyalty
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Next Steps• Educate employees on the
issues surrounding long term care and the benefits of long-term care insurance
• Educational workshops are available for your employees at no cost or obligation
• Survey employees to see if there is an interest in long-term care insurance
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Next Steps (Continued)• Meet with a Genworth Life Insurance Company
representative about Long Term Care insurance plans available
• Choose which options best fit your business model
• Decide whether to contribute to premiums for some or all employees
• Find out whether your plan qualifies for favorable tax treatment
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© 2006 Genworth Financial, Inc. All rights reserved. Genworth, Genworth Financial, and the Genworth logo are service marks of Genworth Financial, Inc.
Long Term Care Insurance is underwritten by Genworth Life Insurance Company.