The Real TRUTH about Group Long Term Care Insurance


Employer-sponsored group coverage for LTCi brings up some thorny issues which can be easily softened. Basically, while some group plans can be Godsends for folks with certain, otherwise-disqualifying health conditions, in most cases LTCi coverage is best customized and purchased though an independent broker. But why?

Due to the amount of risk that group plans take on (unhealthy people), group plans may often be more expensive than individual plans, particularly if you are older. Many group plans entice younger, healthier people to enroll by offering them lower rates, but these rates may still be higher than an individual policy might cost. Group plans typically have have less selections in benefit choices and less amount of home care. Group plan "advisors" also may not explain the absolute importance of compounded inflation protection (particularly for the younger employee).

Remember, people needing care spend an average of 3 years at home before entering a nursing facility. Most of the time, people prefer staying at home, even over entering comfortable assisted living facilities. In the health care sector, inflation has been rising 6% per year. So, unless you have loads of money to supplement your LTC insurance policy, both home care and inflation protection are crucially important parts of long term care coverage. Don't be misled. Do your homework, compare your options and don't use price as your main decision factor when buying long term care insurance.

Generally speaking, if a person has "substandard" health, it might be wise to enroll in a group plan. There is usually no medical underwriting if one applies during the initial open enrollment period. In most cases, when a person is in general good health, it may make more sense to go with an individual plan through an independent broker specializing in LTCi.

Let's look at a comparison chart on some of areas of difference between common group coverage types and individual plans:

TYPE
of
PLAN
TRUE or LARGE GROUP Plans MODIFIED Guaranteed
Issue Plans
INDIVIDUAL
Plans (May have group discounts of 5%-15%)
GUARANTEED ISSUE - with No Disqualifying Health Questions and No Medical Underwriting No medical underwriting, but one or more disqualifying questions are asked to eliminate very sick or disabled employee Involve medical underwriting
A SELECT SET of Identical Benefits A SELECT SET of Identical Benefits 100s of benefit options
OTHER BENEFITS available through medical underwriting OTHER BENEFITS available through medical underwriting 100s of benefit options
VOLUNTARY - No Employer Contributions VOLUNTARY - No Employer Contributions VOLUNTARY - No Employer Contributions
RATES Higher rates as compared with individual plans to compensate for the fixed cost of installing and maintaining the plan - Higher rates are also necessary as sick or disabled employees are most likely to enroll Less than true group rates Premiums for identical benefits may be as much as half the cost of true group plans
Can be converted, at the same prevailing group cost, to an identical individual plan when the employee leaves the group Employee can keep the policy and rates when he or she leaves the group

Click here for info on the Federal Employee Group plan