Most employees will have caregiving responsibilities at some point in their lives and/or a need to pay for long-term care (LTC) for themselves or a loved one. Employers are increasingly realizing the challenges created by caregiving and LTC for both their employees and their businesses.

In her article “Long-Term Care and Caregiving: Issues for Employers” in the first quarter issue of Benefits Quarterly, author Anna M. Rappaport discusses the current LTC environment and considerations for employers, highlighting research from the Society of Actuaries (SOA). Rappaport suggests that employers may have a role in helping employees plan for LTC and accommodating caregiving responsibilities.

“Employers can explore several actions by studying the issues raised in this article,” Rappaport writes. “The article can help them identify the business impact of LTC and caregiving, potential areas for inclusion in financial wellness offerings, areas where employees need flexibility to manage caregiving responsibilities as well as possible areas for advocacy and community partnerships.”

Challenge 1: Financing LTC

Rappaport explains that there is no organized LTC financing system available to everyone, and although a minority of people face major LTC expenses, these costs are substantial. LTC can be financed either privately or through public financing, although public financing is generally limited to individuals with little to no assets.

Private financing options include:

• Paying LTC expenses out of pocket. Given its potential cost, most people cannot finance a significant LTC event solely in this manner.
• Buying an LTC insurance policy.  Only about 10% of individuals have purchased an LTC insurance policy. Insurance premiums have increased dramatically, making it more suitable for middle- and upper-middle-income households.
• Using home equity. Private homes can be sold to finance LTC or converted to income with a reverse mortgage. A reverse mortgage can also be used to help pay premiums for LTC insurance.
• Entering a continuing care retirement community (CCRC). CCRCs offer various life care contracts, including prepayment for LTC.

Individuals with limited financial resources may qualify for LTC benefits through Medicaid, though coverage differs by state. While Medicare provides some in-home health care and hospice services, it generally does not cover LTC, a common misperception.

Challenge 2: Planning for LTC

Rappaport points out that although employees may have high awareness of future LTC needs, few do much planning for longer term risks beyond acute health care needs, with many people seeming to believe that an LTC need won’t happen to them.

Factors contributing to poor LTC planning include:

• Misunderstandings about Medicare: Many people overestimate how much Medicare will cover. While Medicaid covers substantial nursing home care, it only does so once an individual’s assets have been depleted. These misunderstandings indicate that many individuals do not understand the financial challenges they will face in a significant LTC event.
• Over-optimism about LTC costs: Many people think they are very prepared to handle significant LTC expenses.

Challenge 3: Integrating LTC With Retirement Planning

There are many risks to consider when planning retirement, and LTC is a major risk area for which most people are uninsured, Rappaport writes. Planning for LTC varies based on life stages and personal circumstances. 

LTC factors that should be considered with retirement planning include:

• Declining physical and mental capability
• Potential loss of friends and family for support.
• Where to live. Some living arrangements accommodate limitations, while others do not. Specific options even integrate support services into the living arrangements. Location determines access to health care, transportation and proximity to family or friends who can provide help.
• Gender differences. For example, women tend to have longer life expectancies and are more likely to live alone in old age.

Challenge 4: Impact of Caregiving on Employees

Rappaport highlights the following impacts of caregiving on employees.

• Caregiving often requires time off from work, involving a mix of predictable and unpredictable absences. Depending on the situation, this could range from occasional short absences to reduced workhours or even a leave of absence.
• Family members frequently juggle work and caregiving responsibilities, navigating care decisions while maintaining employment. Many cover caregiving costs out of their pocket or leave the workforce prematurely, impacting their retirement security.
• In addition to the physical and mental strain, caregiving can significantly impact a caregiver’s career and earning potential. Work accommodations for caregiving can lead to reduced earnings, fewer benefits, lower retirement income and decreased Social Security benefits.
• It is difficult for caregivers to plan for caregiving expenses because they don’t know how long the responsibilities will last or what impact it will have on their career.

Next Steps for Employer Response

Rappaport suggests that employers looking to define their organization’s role in supporting caregivers and assisting employees and retirees with LTC challenges—whether as caregivers or recipients—may want to consider the following questions.

• How does employee participation in caregiving affect our business? How do family needs for LTC affect our employees?
• Should we help employees and retirees pay for LTC? If so, what approach should we take?
• Should we incorporate LTC information into our financial wellness and planning offerings?
• Should our workplace flexibility, leave and time-off policies account for the needs of caregivers?
• Should our organization participate in societal efforts to address unmet caregiving needs? Should we participate in public policy debates, form community partnerships or support nonprofits providing community services?