Many employers now offer long term care insurance as another valuable employee benefit. These group long term care insurance plans are very similar to what you can buy individually, but there are several key differences to keep in mind when considering buying long term care insurance through your employer.
Group Long Term Care Insurance Plan Advantages
- Simplified Underwriting – Many group plans make it easier to health qualify for long term care insurance. Unlike individually written policies, employees typically do not have to pass any medical requirements to qualify for the long term care insurance plan.
- Extension of Benefits to Family Members – Many employers allow the parents of the employees to buy into the group long term care insurance policy. Never the less, the parents will have to pass medical screeing to qualify for these long term care benefits.
- Portability of Coverage – Employees may keep their long term care insurance policy even if they leave their employer through continuation of coverage or conversion options.
- Cheaper Premiums – Since group long term care insurance plans may include many, many empoloyee partcipants, insurance companies often provide lowered premiums (basically a bulk discount)
Group Long Term Care Insurance Plan Disadvantages
- Restricted Plan Options – Many group long term care insurance plans have limited options to choose from. Basically, you either buy the plan design they offer or you don’t get it all. Benefit periods are often restricted not providing for adequate coverage. Many group plans don’t even provide inflation protection. This alone is probably the greatest disadvantage to participating in a group long term care insurance plan.
- Higher Premiums – There is no individual medical underwriting to qualify for a group long term care insurance policy, so the group plan accepts almost everyone who elects to participate in the plan. As a result, premiums for healthy individuals are often higher than with individually underwritten long term care insurance policies. In effect, the healthy plan participants are paying more to make up for the cost of the unhealthy participants accepted into the plan.
- Administrative Costs – Group long term care insurance plans require more adiministration and the cost for this is often passed along to policyholders.
There are many advantages and disadvantages to participating in a group long term care insurance plan. As a general guideline, if you and/or your spouse have good health, then buying an individual long term care insurance plan will provide you with better rates and many additional coverage options including cash benefits, shared care, and more. On the other hand, if you or your spouse have a pre-existing health condition that would disqualify you from buying private coverage, then participating in a group long term care insurance plan might be your best option for getting this valuable coverage.