BIP Winter 2024

Industry Innovation

Why long-term care needs to be part of

the benefits conversation With LTC programs gaining traction, brokers can help employers stay ahead of legislation and enhance their benefits portfolio.

LTC advocacy NABIP’s Long-Term Care Working Group is working the advocacy angle to engage relevant congressional committees on the importance of financing long-term care. Specific focus areas include IRS Section 125 reform to include long-term care as a pre-tax benefit and Fix SECURE 2.0, a bill that would provide penalty free and tax-free withdrawal of funds from retirement accounts to pay for long-term care insurance. The Working Group also emphasizes keeping members updated on the long-term care discussions happening in state legislatures But even in states that aren’t considering legislative action, there is a huge market opportunity for long-term care. With only 19% of the U.S. population using a financial planner, the employer is the de facto benefits and financial planning resource for most workers. “I’m getting my disability, I’m getting education on my 401(k), besides all the typical health insurance benefits [from my employer],” Martin as more states consider mandatory programs.

One in four: That’s the number of working Americans who are caregivers. And with hundreds of billions of dollars at stake in caretakers taking unpaid time off, the economic and societal impact of long term care is causing some states to take action. “The planning conversation is absolutely important for young people,” says Lynn Lewis, a member of NABIP’s Long-Term Care Working Group. “People quite often think, ‘Oh, why do I need to think long-term care? I’m only in my 30s.’ But the planning stage is right now. It’s not a conversation for tomorrow.” It’s a conversation that’s front and center in Washington state, which implemented a mandatory long-term care insurance program called the WA Cares Fund. It’s funded through a payroll tax, but residents can opt out if they have existing coverage. “[The action in Washington] started group long-term care insurance plans coming back into the marketplace,“ says Lori Martin, chair of NABIP’s Long Term Care Working Group. “I have a Boeing employee who’s 22 years old. I can’t even find a plan for him because he’s too young. But he wants a plan because he wants to opt out of that payroll tax, and group LTC plans offer coverage to young employees.” Martin says many states — including California, Michigan, Illinois and Minnesota — are considering long-term care programs for employees. And employer groups are taking notice. “Employers are saying, ‘Maybe there is going to be a payroll tax, maybe not,” Martin says. “But this is a great benefit to offer our employees. A lot of them are caregivers now, or they certainly know the consequences of providing care and not being able to work.”

Visit NABIP’s Long-Term Care portal for LTC resources and education at nabip.org/ membership resources/ltc portal.

10 bip magazine Winter 2024