Financing long-term care: employee needs and attitudes, and the employer's role

Because of increasing life expectancies, high costs for nursing home and home health care, declining levels of informal family care, and the stated policy of the federal and state governments to foster self-reliance, individuals are increasingly exposed to the risk of financial ruin from long-term care (LTC) expenses. Yet, because of psychological barriers and aversions, particularly to thinking about residing in a nursing home, most individuals have not purchased LTC insurance. Hence, it may be the responsibility of employers to provide education to employees about LTC and to sponsor either individual or group plans of LTC insurance. Educational efforts may be particularly effective at the time of retirement when employees are in a more serious mood to consider the contingencies of retired life. A formal and perhaps more economical response for employers would be to offer combined life annuity and LTC insurance benefits through the retirement plan, provided certain regulatory and tax barriers can be removed.