Currently, there are over 2.6 million group long-term care certificate holders in the United States. Many are unaware of the differences between group and individual policies and the benefits they are entitled to.
Long-term care insurance plans are meant to provide funds to cover the cost for long-term care, covering the cost for things like assisted living facilities, hospice care, nursing homes, and even covering the cost for in-home health services. It is a great insurance policy to protect your savings account from quickly dwindling if you require this kind of long-term care and it also prevents you from having to depend on your children or dependents to help pick up the bill for the care.
People who need care spend an average of three years at home before entering a nursing facility. If people have a choice, they always prefer staying home rather than entering an assisted living facility or nursing home, which is what long-term care insurance is for. To prolong the need to leave your home, you will need a substantial amount of personal money.
When shopping for long-term care insurance, you will have the choice between group coverage and an individual long-term care insurance plan. Employer-sponsored group coverage for Long-Term Care can be a savior for people with certain otherwise-disqualifying health conditions, but for some Long-Term Care insurance is best customized and purchased independently.
With group coverage, there is a high amount of risk because the long term care insurance company takes on a large number of people, and thus has a higher chance of covering unhealthy people. Because of this risk, group plans may often be more expensive than individual plans, especially if you are older in age. With group policies, there are often higher rates for individuals to compensate for the fixed cost of maintaining the group plan. The higher rates are also a result of because sick or disabled employees are most likely the ones who will enroll.
On the flip side, true and large group plans may offer a five to 15 percent discount for individuals. Many group plans are appealing to younger, healthier people, because of the low rates, but these rates may be higher than an individual policy.
In general the cost comparisons between group and individual long-term care insurance police is not easy. It is a case-by-case scenario that is dependent on the group policy and the individual’s health. Your local independent insurance agent should be able to help you with your specific situation to help save you money where you can.
The bullet points below demonstrate a comparison done by the American Association for Long-Term Care Insurance (AALTCI). Researchers examined current rates for a 55-year-old needing coverage for themselves and their spouse. Looking at similar coverage plans from a top insurance agency, the total costs for both spouses combined were as follows:
- True group coverage: $1,877 per year with a 50% home care benefit
- Voluntary worksite (employee pays all costs): $1,351 per year with a $100 home care benefit
- Individual policy: $1,422 per year with a $100 home care benefit
Group plans often have less benefit choices and less home care offerings. When considering your employer’s or group long-term care insurance coverage, you should talk to your local insurance agent to compare the coverage and the prices of group coverage to an individual policy.
Other Aspects to Consider
If you have poor health and would likely fail a medical examination for an individual plan, then signing up for your employer-based group insurance is your best bet. For example, those under the Federal long-term care insurance plan with diabetes, AIDS, a history of stroke, or a history of drug and/or alcohol addiction were accepted. Purchasing an individual plan with one of these medical issues would either be unlikely or cost you a lot more. The reason group plans accept most applications is that their plan is to spread the monetary risk to a larger number of people.
Nursing home benefits are covered in full based on the daily benefit selected for the group LTC policy. However, assisted living, the preferred option for many people, is usually less than 100% coverage. Typically, it is 60 to 75% of the nursing home benefit for your group plan. The costs that are associated most with in-home assistance are those that fall under the six activities of daily living (ADLs): bathing, eating, dressing, toileting, transferring (bed to wheelchair, for example), and continence.
If you own a small or medium-sized company, having a group LTC plan for your employees helps you to stand out from the competition. Additionally, many insurance providers will offer you a 5 to 10 percent discount for individuals that sign up for the group plan.
Speak to an Agent
Your local insurance agent will be able to help you decide between a group and a individual long-term care insurance policy, but as a general rule of thumb, if you are a person of substandard health it might be wise to enroll in a group plan. If a person is in good health than it may be more logical to go with a individual long-term care insurance policy. When your company offers you a group plan option, be sure to compare it to individual policy rates and benefits in order to get the best coverage possible.
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