How to Get Employer Sponsored Long Term Care

Prudential Study Finds Employees Desire Employer Sponsored Access to Long Term Care Insurance
Complementing access with education is critical

— When selecting employee benefits, American workers now rank the importance of long term care insurance equal to that of group life insurance, according to Prudential Financial Inc.’s (NYSE:PRU) 2003 LTC Insurance Employee Benefit Study (see chart 1). “The rapidly increasing importance of long term care insurance to American workers and their interest in having this coverage available have interesting implications for many employers,” said Ed Baird, president of Prudential’s Group Insurance business.

The 2003 LTC Insurance Employee Benefit Study signals an opportunity for employers to enhance employee financial safety and confidence by adding long term care insurance to the palette of employee benefits.

Notable survey findings include:


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  • Long Term Care Insurance is becoming a primary employee benefit
    Long term care insurance is now as important to workers as life and disability insurance. At first glance, it may seem surprising that a relatively new product like long term care insurance is now as important as the much more established and venerable group life product. However, this finding may not be unexpected given that the need is now so well recognized; virtually all Americans have been touched by a family member or friend making the often difficult financial decisions and sacrifices needed when long term care assistance becomes necessary.
  • Access to Long Term Care Insurance through the employer is preferred
    Sixty-two percent of workers said they would consider long term care insurance as a voluntary benefit if their employers offered it. An overwhelming 82 percent would consider buying coverage if their employer subsidized a portion of the cost (see chart 2). The importance of employer contribution to at least some of the expense is demonstrated by employees who would “definitely” buy LTC insurance doubling from 14 percent when the coverage is not employer subsidized to 30 percent purchase intent with employer financial assistance.
  • Employees need better information and education to determine if LTC insurance is right for them
    Today, 56 percent of consumers are not familiar with the benefits and features of long term care insurance. In fact, only 14 percent feel very familiar (see chart 3). As yet, too few (only 30 percent) have talked with any financial professional to better understand whether this product is right for them. The lack of knowledge is compounded by misperceptions. In Prudential Financial’s survey, two-thirds (62 percent) of middle class and affluent Americans believe or are unsure whether government programs would cover the cost of a nursing home care or a home healthcare aide, if they were no longer capable of caring for themselves (see chart 4).
  • Workers are beginning to connect the benefits of Long Term Care Insurance to protecting their retirement assets
    The annual bill for nursing home care averages $56,0001 or higher in urban metropolitan areas, and that could wipe out a lifetime of retirement savings in a matter of a year or two for many workers. Long term care insurance complements American workers’ efforts to save for their retirement by protecting their retirement assets for themselves and other family members.

“Believing the government will pay for your long term care needs is a mistake,” said Malcolm Cheung, vice president, Group Long Term Care at Prudential. “People don’t realize that Medicare does not necessarily pay for custodial care. And, in order for Medicaid to pay for such care, a person must ‘spend down’ his assets and impoverish himself, and this is not effective financial planning,” Cheung continued. “It is encouraging that workers are beginning to make the connection between growing their retirement savings and protecting these assets from the financial drain of long term care expenses.”

Prudential’s Financial’s 2003 LTC Insurance Employee Benefit Study, clearly identifies the urgent need to educate the workforce about the importance of having long term care coverage. “People need to know about the limitations of government programs for long term care and why a long term care insurance policy makes financial sense,” said Ed Baird, president of Prudential’s Group Insurance business. “The financial industry and employers have a real opportunity to educate a maturing population about the benefits of long term care insurance.”

Prudential Financial polled 300 individuals who are 25 – 65 years of age; employed full-time or part-time by companies with 500 or more employees; and reporting an annual household income of $40,000 or more. The survey was conducted in March 2003 to determine employee familiarity with and interest in having long term care insurance. The Prudential Insurance Company of America, a Prudential Financial company, underwrites and distributes a full range of group life, disability, long term care and related insurance products through employers and other groups in connection with employee and member benefit plans. Prudential’s resources, financial strength and stability allow it to honor long term commitments to employers and employees alike.

Prudential Financial companies, with approximately $550 billion in total assets under management and administration as of March 31, 2003, serve individual and institutional customers worldwide and include The Prudential Insurance Company of America, one of the largest life insurance companies in the U.S. These companies offer a variety of products and services, including life insurance, property and casualty insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, banking and trust services, real estate brokerage franchises and relocation services.

1 AARP, “Beyond 50”, May 2000, p.3

Produced for Prudential Financial June 2003 (Newstream)


Dawn Kelly, Prudential
(973) 802-7134

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