With the emergence of financial wellness within the workplace, employees are now looking to their employers for financial guidance both during and after their working years. The concept of financial wellness should not only address “here and now” financial expenses but should also address financial expenses an employee might face during his/her retirement years. One of the largest potential expenses during our retirement years is healthcare.

With the continuous rise of healthcare costs, planning for healthcare expenses during our retirement years is now financially prudent. According to a recent PwC Employee Financial Wellness Survey, being able to afford healthcare costs are baby boomers’ highest retirement concern. 

Advancements in the medical field means Americans are living longer than previous generations. The longer we live the higher likelihood we may need some help doing everyday activities such as dressing, eating, bathing…etc. These types of everyday activates are known as the Activities of Daily Living. When we can no longer perform some of the Activities of Daily Living -- Long-term care services are required. According to the US Department of Health and Human Services, 70% of American over the age of 65 will require some type of long-term care services.

One of the biggest threats to employees’ retirement income is a long-term care event, which in 2017, cost between $47,934 - $97,455 annually (depending on the type of care received). The unfortunate reality is that many individuals may not be financially prepared to handle a long-term care event – which is why LTC planning is so important.

As employee’s look at their overall financial wellness - it’s important for them to know exactly what will cover long-term care expenses and what will not.

3 myths about how employees pay for long-term care expenses 

Myth #1: Your health insurance will cover you

Both employer based health insurance or individually bought health insurance do not cover any long-term care expenses. Using your health insurance to pay for long-term care expenses is not an option.

Myth #2: Medicare covers assisted living and home (custodial) care.

According to Forbes, many seniors think Medicare is the solution for all their health care needs, but this couldn’t be further from the truth. Medicare will cover some skilled nursing facility care, nursing home care (only if it is not exclusively for custodial care) and some home health services. The fact is that Medicare doesn’t cover assisted living or custodial care. In fact, Medicare has a whole list of expenses Parts A and B don’t cover.

Myth #3: Your disability insurance will cover you

Many individuals confuse Long Term Disability and Long-Term Care Insurance. It may be because they both are triggered by health related causes. However, these two insurance plans serve vastly different purposes in helping you manage the financial risk in your personal life. Long Term Disability Insurance is used to help protect your future earnings. It is designed to replace a portion of your income when you are not able to work due to a debilitating illness or disabling accident. The short answer is Disability insurance is not designed to pay for long-term care services.

Since health insurance, disability insurance, and Medicare will not cover long-term care services; employees are left to either qualify for Medicaid, self-fund, or purchase long-term care insurance.

How can employers help their employees be long-term care ready?

It’s relatively easy for employers to offer their employees long-term care insurance coverage. Employer sponsored group long-term care insurance offers reduced medical underwriting and discounted pricing. Offering a voluntary program through the workplace offers many advantages to employees and is FREE to implement. A voluntary long-term care insurance program is a cornerstone of any employer sponsored financial wellness program since long-term care insurance helps protect your employees’ retirement income.

For more information about employer sponsored long-term care insurance --download the essential guide to group long-term care insurance.