|
|
Disability insurance is one of the most overlooked products in the insurance industry. No one wants to think about how different life would be if you were suddenly disabled and couldn’t work, as a result of an accident or illness.
But how about this fact: Between the ages of 25 and 65, you’re four times more likely to be disabled than to die.
Unlike life insurance, disability insurance is not there just to protect your loved ones when you are gone. Disability insurance is designed to give you monthly income to continue to pay your mortgage, rent, or car payment — even though you can’t work.
Yes, Social Security does have a disability program (SSDI). But it is notoriously difficult to access that coverage, and you might even need a lawyer to help you press your claim. The process could take years.
That’s why you need to consider buying your own coverage — even if you have some coverage at work. That employer-paid policy may not be transferrable if you leave your job, and the benefits are likely to be taxed if you need to use the policy. But if you purchase a disability insurance policy on your own, with after-tax dollars, any benefits will come to you tax-free.
Generally speaking, disability insurance is a good idea even in your twenties, and especially if you have no one else to provide for the basic costs of daily living in case you become disabled. Single parents might also have a special need for this insurance.
As you reach your late fifties, and are closer to receiving Social Security retirement income benefits, you might want to switch your premium dollars to long-term care insurance, which becomes the greater and more costly risk.
Disability coverage and costs
How much coverage do you need? Of course, you’d like to replace all your income if you are unable to work. But no insurance company is going to write a policy that gives you that incentive! Instead you will probably qualify to replace only about 60 percent of your current income, which must be documented at the time of purchase.
The higher your income, the smaller the percentage the insurance company will replace. That is, if you earn $50,000 a year, you could replace 60 percent of your earnings, but if you are a highly paid professional earning $300,000 a year, you will probably max out with benefits of $10,000 per month.
The amount of coverage and cost will also depend on your occupation. Almost paradoxically, the higher income professions such as lawyer and doctor, pay less per dollar of coverage — and get more lengthy coverage — than a carpenter or electrician, who may qualify for only five years of disability payouts. Insurance companies divide professions into classes — and the coverage and price will depend on your type of work.
One important issue with disability insurance is the definition of disability. It is more expensive to purchase a policy that pays out if you are unable to do your “own occupation.” For example, a surgeon who loses the use of one hand could still do other work as a medical professional — but it surely means she can’t perform as a surgeon. The policy will pay because she is unable to do her own profession. Make sure your coverage guarantees payment even if you are not totally and permanently disabled from any kind of gainful employment.
The annual cost should be about 2 to 3 percent of your current income to protect your future income. According to AccuQuote, a 30-year-old male who makes $40,000 a year would pay about $733 per year for coverage that replaces 69 percent of his salary.
A 40-year-old woman who earns $50,000 could replace 68 percent of her salary for an annual premium of approximately $2,000 a year. In each case the benefits would continue to age 67, at which time you could access Social Security retirement benefits. And, if you’re willing to pay slightly more, you can get additional inflation protection.
Be careful to deal with a top-rated insurance company (Guardian, Unum, for example) to make sure that you will be getting the payout without a hassle if and when the time comes to trigger your policy. Since there are so many variables in this kind of insurance, you’ll have to deal with a specialist. For quotes on disability insurance go to www.AccuQuote.com or call (800) 442-9899.
It’s worth checking out this “paycheck insurance.” You’ll never know how valuable that income is — unless you lose it for health reasons. That’s the Savage Truth.
By Terry Savage, published on www.suntimes.com
May is full of important health and wellness awareness dates, including Employee Health & Fitness Month, Disability Awareness Month and Women’s Health Week (May 13-19).
However, whether or not small businesses recognize these and other official declarations, there are two critical observations decision-makers need to make about their employees today, and consider year-round, because of their potential to directly impact business productivity and turnover costs.
First, U.S. workers are in denial about the likelihood of accidents and serious illnesses. In addition, they are not prepared to handle the financial consequences of unexpected health issues.
Workers’ Unrealistic Health Optimism
When it comes to anticipating a serious illness or accident, Americans may be overly optimistic. According to the American Cancer Society’s Cancer Facts & Figures 2012, one in three women and one in two men will be diagnosed with cancer at some point in their lives. The American Heart Association’s Heart Disease & Stroke Statistics 2012 shows that one in six U.S. deaths in 2008, was caused by coronary heart disease.
Despite these findings, the 2012 Aflac WorkForces Report revealed six out of 10 workers (62 percent) think it’s not very or not at all likely they or a family member will be diagnosed with a serious illness like cancer, and more than half (55 percent) said they were not very or not at all likely to be diagnosed with a chronic illness, such as heart disease or diabetes.
In addition, despite optimism about their physical health, the study reveals that American workers also are concerned about their financial health, and many admit they are unprepared to handle the financial consequences of a serious illness or accident in their family.
Financial Strain & Productivity Drain
Half of American workers (51 percent) are trying to reduce debt, according to the Aflac study, and nearly six in 10 (58 percent) don’t have a financial plan to handle the unexpected. In addition, only eight percent of U.S. workers strongly agree their family will be financially prepared in the event of an unexpected emergency, and 28 percent have less than $500 (51 percent have less than $1,000) in savings for emergency expenses.
These are among the personal challenges weighing on workers’ minds daily and impacting individual productivity through absenteeism and distracted work. Decision-makers are keenly aware. In fact, 63 percent of leaders at small businesses believe that productivity is lost because employees are concerned about personal issues, according to the study.
The fact that American workers aren’t aware of their medical risks and the potential financial impact of those risks is a very real concern that is only compounded when workers don’t take full advantage of available benefits options or adjust their savings strategies to be more prepared.
For example, when asked how they would pay for out-of-pocket expenses due to an unexpected illness, the study found that more than half (57 percent) of respondents said they would have to tap into savings, 30 percent would use a credit card and 19 percent—nearly one out of five people—would have to withdraw funds from their 401(k) plans to cover the costs.
Now, more than ever, American workers need to understand that well-being means more than just good health—it’s being prepared for the reality of whatever life may bring and taking the necessary measures to protect themselves and their families. A very real connection exists between health and finances—a worker’s financial stability and employment security can be threatened by an unexpected illness or accident, and conversely, the ability to obtain adequate medical care can be influenced by finances.
Many Benefits of Employer Action
Most individuals are looking to their employers to educate them about all available benefits options, not just traditional benefits changes or choices, to better understand how they can have a more secure safety net.
The Aflac study revealed that 58 percent of employees at small businesses would be likely to purchase voluntary health insurance plans if offered by their employer. Yet, small businesses are least likely to offer voluntary insurance policies (just 19 percent, compared to 41 percent of medium-sized and large companies) for various reasons, including the common misconception that these policies will increase their health care costs. Workers’ perceived lack of benefits understanding also is a limiting factor.
For example, only 19 percent of HR decision-makers at small businesses believe their employees are extremely/very knowledgeable about voluntary benefits.
However, despite these low figures, small businesses excel at putting employees’ benefits interests first. The study found that small businesses are more likely than medium-sized and large businesses to rank taking care of employees as their top objective, with 23 percent ranking it first. More small businesses are realizing that making group voluntary insurance policies available to employees has no direct cost and may reduce corporate taxes by cutting FICA tax contributions.
Additionally, savvy decision-makers are seeing the value of voluntary plans to not only enhance a company’s benefits package and competitive status versus larger organizations’ benefits programs, but they can demonstrate to employees that they matter and ultimately help avoid the high cost of turnover.
Conclusion
Once benefit options are added or expanded, it’s critical for employers to effectively communicate year-round about how new benefit options like voluntary insurance can help with high out-of-pocket expenses associated with a serious illness or accident. By doing so, businesses can not only help their workers have a better understanding of the options that are right for them, but also help reduce common mistakes made during the enrollment process, generate stronger retention, and build greater appreciation for their total compensation packages.
Published on www.businessinsider.com
Employers are showing more flexibility with their workers, a new report reveals, with more firms offering time during the day to attend to family and personal matters and flex time.
The news comes out of the 2012 National Study of Employers by the workforce think tank Families and Work Institute, released jointly April 30 with the Society for Human Resource Management.
The study’s researchers found what they called surprising increases in the numbers of employers who allowed workers to alter when they started and ended their work days, to work from home and to determine their paid and unpaid overtime hours.
Consider the findings:
• 77 percent of employers allow at least some employees to use flex time and periodically change their start and quit times – up from 66 percent in 2005.
• 87 percent allow employees to take time during the work day to tend to family or personal affairs without a dock in pay. In 2005, 77 percent of employers allowed it.
• 63 percent of employers allow employees to occasionally work from home – nearly double that of 2005, when 34 percent of employers allowed staffers to work from home.
Perhaps it’s not much of a surprise. Employers working with ever-smaller staffs are beginning to take the long view, finding more ways to accommodate and retain employees.
“It’s clear that, in order to remain competitive, employers must find ways to offer flexible work options if they want to attract and retain top talent,” said Henry Jackson, president and chief executive officer of the Society for Human Resource Management.
As a result, employees’ schedules are more malleable, researchers said, allowing employees to work longer days or shape their work hours to take care of personal responsibilities and still produce at the office, said Ellen Galinsky, Families and Work Institute president and one of the study’s authors.
“Although some may have expected employers to cut back on flexibility entirely during this economic downturn, we are seeing employers leverage flexibility as they look toward the future,” Galinsky said.
Read the complete report at www.whenworkworks.org orwww.familiesandwork.org
By Darrell Smith, published by www.sacbee.com
My column a few months back about qualifying for Medicaid drew lots of reactions. While many thanked me for the tips, others pointed out that I should have been more clear about the great variation in regulations from state to state. Still others felt that sheltering assets while depending on the state for elder care is unfair to other taxpayers.
No matter your personal position on the issue, almost everyone can agree that it would be preferable to have some kind of plan in place for your, your parents’ and other family members’ care than to have to scramble at the last minute and then spend your entire nest egg.
Nationally, spending on home health aides, nursing home and other care for the elderly is projected to triple over the next few decades. Once you turn 65, there’s a 70 percent chance that you will need some help with the tasks of daily living at some point: things like brushing your teeth, bathing, getting dressed, and taking medications correctly. Medicare and regular health plans don’t cover this type of care.
In recent years, more and more families are turning to long-term care insurance policies to cover the gaps. I spoke to Thomas Kenyon, whose firm Florida Long Term Care Planners specializes in these kinds of policies, about what you should have in mind when shopping for long-term care insurance.
1) Don’t buy too much.
The benefit on a long-term care insurance policy is generally structured as a fixed daily amount over a certain period up to a cap. You can typically start the clock on the benefit and begin to access the dollars when you have a “long-term care event” such as breaking a hip, or a stroke, where doctors expect you to need help with the tasks of daily living for at least 90 days. Kenyon says that many salespeople will try to sell you a policy designed to cover the cost of several years of nursing home care, which averaged $239 a day in 2011 according to the annualMetLife survey. However, you can get a much more affordable policy by structuring a benefit package that also includes time with a home health aide, at $19 to $21 an hour by the same survey, or adult day care. In some cases just 10 to 15 hours of respite care a week can be enough to allow people to remain in their homes.
2) Don’t wait too long.
You’ll save significantly — not just now, but likely over the lifetime of the policy — if you buy a policy when you’re under 60 and healthy. A quarter of the people who come to Kenyon have pre-existing health conditions that cause them to be denied coverage at any price.
3) Consider the “restoration of benefits” rider, and the other fine print.
A good policy should cover several types of care, from adult day care to nursing home care. You should understand exactly what standards you have to meet to trigger the benefits, and it shouldn’t exclude any pre-existing conditions you do have. One additional rider that Kenyon especially recommends is called “restoration of benefits.” Let’s say you fall down the stairs at 72. You can start spending the benefits today for a home health aide. But once you recover, the “restoration of benefits” rider allows you to stop that clock. If you stay well for six months the pool of dollars is restored as if nothing ever happened.
By Anya Kamenetz, published on www.chicagotribune.com
Rebates totaling $1.3 billion from health insurance companies should go to more than 3 million individual policyholders and thousands of employers this year because of President Barack Obama’s health care law, a report from the Kaiser Family Foundation says.
Here’s how the law works:
— Insurers covering individual consumers and small employers must spend at least 80 percent of the premiums they collect on medical care and quality improvements. The benchmark is 85 percent of premiums for insurers covering large employers.
— Insurance companies must provide rebates if they do not meet those standards.
Who gets refunds:
— Almost one-third of consumers in the individual market will get rebates averaging $127. These are consumers who are not covered by an employer and purchase their policies directly from an insurance company.
— Average amounts will vary significantly by state. The highest will be paid to consumers in Alaska (average of $305), Maryland ($294) and Pennsylvania ($243). On the opposite side of the scale, no individual market insurers in Hawaii, Maine and Washington, D.C., expect to issue rebates.
— Nationwide, rebates to individual consumers will total $426 million.
— In the small employer market, 146 insurance plans covering nearly 5 million workers and dependents will issue $377 million in refunds. Employers do not have to pass those on to workers. They can also opt for a discount on next year’s premiums.
—In the large employer market, 125 plans covering 7.5 million workers and dependents will issue $541 million in rebates.
By The Associated Press, published on http://abcnews.go.com
“For people who lose employer-sponsored coverage, the individual market is often the only alternative, but it is a confusing and largely unaffordable option,” said Commonwealth Fund Vice President Sara Collins, lead author of the report. “As a result, people are going a year, two years, or more without health care coverage, and as a result going without needed care.”
A new survey, the Commonwealth Fund Health Insurance Tracking Survey of U.S. Adults, finds that a quarter of the adult population ages 19 to 64 experienced a gap in health insurance in 2011. Nearly seven of 10 (69%) of those with a gap went without coverage for a year or more. Of those who were uninsured at the time of the survey or were insured but had experienced a gap, 41 percent previously had employer-based coverage, 18 percent had been enrolled in Medicaid, 6 percent had a plan purchased in the individual market, 7 percent had been insured through another source, and 27 percent never had health insurance. Among those who had employer-sponsored insurance prior to their gap in coverage, two-thirds (67%) cited a loss or change of a job as the primary reason; nearly six of 10 (58%) were uninsured for a year or more.
The individual market has proven to be a weak stop-gap option for families who lose employer insurance. In the survey, adults who tried to buy a plan on their own in the individual insurance market reported substantial difficulties finding affordable health plans that met their health needs. Of adults who tried to buy a plan in the individual market in the past three years, 60 percent found it very or somewhat difficult to compare the benefits covered by different plans and more than half (55%) found it very or somewhat difficult to compare premium costs. More than two of five (45%) never ended up buying a plan. Cost was the most often cited reason for not purchasing a plan.
* * *
The recession that began in 2008 revealed the degree to which health insurance coverage in the United States depends on whether people have jobs and if those jobs include health benefits. The Commonwealth Fund found that over 2008–2010, more than half of adults—an estimated 9 million people—who lost a job with health benefits became uninsured.2 Very few people enrolled in continuation coverage through COBRA or found a plan on the individual insurance market. The sluggish recovery has meant that millions of those workers remain uninsured: a record 5.3 million people have been searching for a job for longer than six months.
* * *
People who do not have access to employer health benefits and are ineligible for Medicaid are largely limited to purchasing coverage in the individual market. But the individual market for most Americans is neither affordable nor easy to navigate. People buying coverage in the individual market must pay the full premium and, under current laws in most states, are rated on the basis of their health, gender, and age. They can also be denied coverage because of a preexisting condition or have their condition excluded from their health plan.
* * *
In the survey, while nearly all (92%) adults who were continuously insured reported they had a regular doctor, doctors’ group, health center, or clinic where they usually went for medical care, those with gaps in coverage were much less likely to have a regular source of care, with rates declining with the length of time uninsured. Among adults who had been uninsured for less than one year, three quarters (76%) reported having a regular doctor. But, of those adults who had spent one year or more without health insurance, fewer than half (46%) reported having a regular source of care.
Similarly, adults with a gap in their health insurance were less likely to be up to date with preventive care tests than were those who were continuously insured. While 83 percent of adults who were insured all year had had their blood pressure checked in the past year, the rate declined to 70 percent among those who had experienced a gap in their health insurance of less than a year and to 51 percent among those who had been without coverage for a year or longer. Likewise, 70 percent of adults who had been continuously insured had their cholesterol checked in the past five years (or in the past year for those with hypertension or heart disease) compared with half of adults who had been uninsured for under a year and one-third (33%) of adults who were uninsured for a year or more.
Recommended cancer screening rates were also far lower among adults who experienced disruptions in their coverage compared with those who were continuously insured. Three-quarters (74%) of women ages 40 to 64 who were insured all year reported that they had a mammogram in the past two years. But only 28 percent of women in that age group who had been uninsured for a year or more said that they had a mammogram in the recommended time frame. Similarly, 72 percent of women who were insured continuously had a Pap test in the recommended time frame compared with fewer than half (46%) who experienced a gap in coverage of a year or longer. Colon cancer screening rates were low among adults who were insured all year, but extremely rare among adults who had long gaps in coverage. Fifty-seven percent of continuously insured adults ages 50 to 64 reported that they had a colon cancer screening in the past five years while fewer than one of 10 (9%) adults who had been uninsured for a year or more reported that they had received the test.
Written and published by www.commondreams.org
To protect against the risk of needing costly long-term care an increasing number of national insurance companies are offering protection that combines life insurance with potential long term care insurance benefits. According to the 2012 Buyer Study conducted by the American Association for Long-Term Care Insurance, these linked benefit (also called “combination”) products are gaining favor with individuals in their 40s and 50s.
The Association’s annual study of leading insurers found that 53 percent of buyers of these hybrid policies were under age 65 in 2011 compared to only 48 percent in 2010. Some 42.5 percent of male and 38.5 percent of female buyers were between ages 55 and 64 explains Jesse Slome, director of the national trade group. Nearly one in 10 buyers was between 45 and 54.
“A linked benefit policy has advantages that many pre-retirement consumers find attractive,” Slome notes. Policies can fund expenses when qualifying long-term care is needed at home or in a skilled care facility. Some linked, or hybrid products, allow unused benefits to pass to named beneficiaries income tax-free. “At a time when long-term care is increasingly top of mind, these life insurance-based solutions avoid the ‘use it or lose it’ risk associated with traditional long term care insurance,” says Chris Coudret, CLU, ChFC, Vice President, OneAmerica one of the nation’s leading insurers offering linked benefit solutions. “In most cases, people make a single payment, effectively removing the risk of future premium increases.”
The AALTCI study reported sales for the participating linked benefit insurers increased 14 percent in 2011 and the premium increased almost 20 percent. To learn more or obtain long term care insurance costs from an Association member call (818) 597-3227 or visit the organization’s website www.aaltci.org .
RELATED LINKS
http://www.aaltci.org
http://www.aaltci.org/long-term-care-insurance
About American Association for Long-Term Care InsuranceEstablished in 1998, AALTCI is the national trade organization established to create heightened awareness regarding the importance of planning for long term care. To access or read three free consumer guides outlining ways to reduce costs for long-term care insurance visit the Association website http://www.aaltci.org/long-term-care-insurance-costs/
By Jesse Slome, published on www.marketwatch.com
Imagine that you’ve taught your child everything they need to know about personal finance. Then as he’s getting ready to head off to college and applies for financial aid, he’s unexpectedly rejected for financial aid due to poor credit. Yet he’s never applied for credit in his life. Sounds outrageous, doesn’t it? But this can happen to victims of child identity theft.
Most Americans are aware that identity theft is a significant problem, and that it’s important to take measures to protect your identity. What people might not know is their children may also be targets of identity theft before they even become old enough to own a credit card. The Federal Trade Commission has identified child identity theft as a growing problem and encourages parents to do what they can to minimize the risks to their children.
How does it happen?
The most common way a criminal can steal or misuse the identity of a child is to get access to the child’s Social Security number. The perpetrator then uses the Social Security number to open credit card accounts or loans, rent an apartment, sign up for utilities like cell phone service, or even apply for a job. Credit issuers often don’t have a way to verify the age of the applicant, so if the criminal changes the age of the identity associated with your child, it’s possible that the issuer may approve them for credit, according to the Identity Theft Resource Center.
Once an account has been established in your child’s name, it’s easier for criminals to establish subsequent accounts until this fraud is discovered. If your child’s identity is stolen at an early age and the theft goes undiscovered until she reaches the age where she begins to establish her own credit, it can be very difficult to discover how the fraud first occurred.
How can you help prevent it?
Parents can take a number of steps to help prevent their children from becoming identity theft victims:
* Store your children’s Social Security cards in a safe place like a safety deposit box. Only give out your children’s Social Security number when it’s absolutely necessary, and provide alternate verification whenever possible.
* Teach your children to never reveal personal information to anyone, no matter how trustworthy that person may seem. People close to the family are often found to be perpetrators in child identity theft cases.
* If your child receives pre-approved credit card offers in the mail, you may want to check in with a credit reporting agency or Social Security. If you’ve been contacted by a collection agency regarding an account in your child’s name, there’s a possibility your child’s identity was stolen.
* Consider signing up your family members for a credit monitoring and identity protection solution such as the Equifax Complete(TM) Family Plan, which can help to protect two adults and up to four minor children. With this product, you will be notified of any changes or suspicious activity on your adult credit files; in addition, you can monitor your minor child’s identifying information for existence of an Equifax credit file and lock it, thereby preventing creditors from accessing this file while the child is enrolled in the plan.
By taking a few extra precautions to protect your children’s identities, you can help ensure they get off on the right foot as they become adults and begin establishing their own credit histories.
By ARA, published on www.jsonline.com/
Paying for long-term care is a worry for many, particularly aging baby boomers. Certified financial planner Kevin Young of Young Wealth Management in Davis, Calif., offers some advice on the topic:
Q: I’m 65 and interested in getting long-term-care coverage. My financial adviser recommends a life-insurance policy, which has a long-term-care benefit, that costs upfront about $70,000. The selling feature is that they refund your premium if you don’t use the long-term care after 20 years. A regular long-term care policy will cost $3,500 annually because of my age. My husband and I have about $400,000 in IRAs. Would it be a good move to protect these investments by buying either the regular long-term-care policy for me or the life-insurance policy that includes long-term-care benefits?
A: Health insurance and Medicare do not cover the expense of long-term care. If your net worth is mainly your IRA balance and your primary residence, buying LTCI/life insurance might not be the best use of your limited resources.
The policy being sold to you is known as a combination policy or bundled policy. It’s a life-insurance policy with a long-term-care insurance rider, which can be used to pay for long-term-care expenses. The pitch from insurance agents who sell this type of policy is that, if you don’t use the long-term-care benefit, you will have a death benefit.
The death benefit is reduced dollar for dollar when you use the long-term-care portion of the life-insurance policy. Combination policies such as this are expensive and do not offer a good value.
The drawbacks to these types of policies include high costs; couples cannot share the pool of long-term-care benefits; long-term-care benefits might be limited; and benefits might not keep up with future long-term-care costs.
By Claudia Buck
M cCLATCHY NEWSPAPERS
Many people on the verge of retirement lack knowledge about how Social Security works. Most older workers can’t identify basic information about the Social Security calculation, including how many years of earnings are factored into their payout and how much their payments will increase due to delayed claiming, according to a recent AARP and Knowledge Networks online survey of 2,053 people ages 52 to 70 who plan to claim Social Security within the next 15 years. Here is what most people in their 50s and 60s don’t know about Social Security: How many years of work are factored into the payout. Social Security benefits are calculated based on your 35 highest-paid years in the workforce, but only 7 percent of survey respondents knew this. Most older workers guessed that the five (30 percent) or 10 (21 percent) years in which they earned the highest salary would be used to calculate their benefit amount.
You can get more than 30 percent bigger payments by waiting to claim. Most people (89 percent) know that their monthly Social Security payments will be bigger if they wait until their full retirement age to sign up for benefits instead of claiming at age 62. But very few people can identify exactly how much more they’ll receive. “One thing that they generally know is that if you delay your claiming decision even a year, you will get a boost in your benefit, but when you actually ask them how much, they have no sense of what that actual amount is,” says Jean Setzfand, AARP vice president for financial security. Only about a quarter (or 29 percent) of the survey respondents were able to estimate the percentage increase within 10 percentage points of the actual increase. For the survey respondents who are between ages 52 and 70, the increase in payments for delaying claiming from 62 until full retirement age ranges from 30.5 percent to 41.2 percent. Most of the survey respondents underestimated the value of waiting to claim their Social Security benefits.
Your payments could increase by 8 percent annually after your full retirement age. The majority of older workers (62 percent) know that their monthly payments will increase even more if they delay claiming past their full retirement age. But only 34 percent of those surveyed were able to identify a percentage increase that was within 2 percentage points of the actual increase. For most people in the age group surveyed, Social Security checks will grow by 8 percent for each year of delayed claiming beyond their full retirement age, up until age 70. Most of the survey respondents overestimated the benefit of delaying claiming after their full retirement age. “If you expect to live well beyond 80, you will maximize your benefit by claiming at 70. If you expect to die at three or more years before 80, then you will maximize your benefit by claiming at age 62,” says William Reichenstein, a Baylor University professor and principal of Social Security Solutions. “You get two-thirds of 1 percent more for each month of delay. You could get 32 percent more by waiting until 70.”
The age you can receive the highest possible monthly benefit. Social Security payouts grow for each year of delayed claiming up until age 70. After age 70, there is no additional benefit to waiting to sign up. But only 29 percent of those surveyed were able to identify age 70 as the year they would max out their benefit. Many people (41 percent) incorrectly guessed that it was between ages 65 and 67.
How the earnings test works. People who work and claim Social Security benefits at the same time before their full retirement age may see a temporary reduction in their Social Security payments if they earn too much. The earnings limit is $14,640 in 2012 for people below their full retirement age, above which 50 cents of each dollar earned is deducted from Social Security payments. For beneficiaries who will turn 66 in 2012, the earnings limit is $38,880, after which 33 cents of each dollar is withheld. While most older workers (76 percent) are aware of the earnings test, 71 percent incorrectly believe the reduction in benefits is permanent. Once you reach full retirement age, your checks will be recalculated to factor in any withheld benefit and your continued work record. “Most people who work before full retirement age are going to lose much, if not all, of the benefit, but there is an adjustment later,” says Reichenstein. “When they hit full retirement age, they raise the benefit amount.” And once you turn your retirement age, there is no penalty for working and collecting retirement benefits at the same time.
Spouses can claim benefits. Only about half (48 percent) of those who are married or who have ever been married are aware that they’re eligible for Social Security spousal benefits. Spousal payments can be worth as much as 50 percent of the higher earner’s Social Security payment. Dual-earner couples who have reached their full retirement age can even claim Social Security twice by signing up for spousal payments, then later switching to payments based on their own work record. “If both members of the couple wait until the full retirement age of 66, then either one of the spouses could begin receiving a spousal benefit based on the other spouse’s record, and then continue to delay their benefit up until age 70, which would then maximize both of their benefits,” says Jim Blankenship, a certified financial planner for Blankenship Financial Planning in New Berlin, Ill., and author of A Social Security Owner’s Manual.
How to maximize widow and widower’s benefits. Almost all older workers (95 percent) know that widows and widowers can collect Social Security benefits based on the earning record of the deceased spouse. Most people (78 percent) also correctly report that the age the deceased spouse signed up for benefits affects how much the surviving spouse will get. But only 52 percent of respondents correctly reported that the age the surviving spouse claims benefits can also affect how much he or she will be paid. To receive the maximum widow or widower’s benefit, the surviving spouse must claim no earlier than his or her full retirement age. “Typically, the higher-earning spouse is the husband. The later that he waits to [receive] benefits, the higher the survivor’s benefit will be at his demise,” says Blankenship. “If he began receiving benefits early, at age 62, that would permanently reduce the amount that his wife could receive as a spousal benefit and the survivor’s benefit she could receive upon his passing.”
By Emily Brandon | U.S.News & World Report LP – Mon, Apr 2, 2012 11:39 AM EDT
Tips for Buying Long-Term Care Insurance Amid Rising Rates
Long-term care insurance rates have jumped 6% to 17% on average, compared to last year, according to the 2012 National Long-Term Care Insurance Price Index.
Long-term care insurance pays for services that aren’t covered by Medicare or traditional health insurance but are needed when you can’t care for yourself. Such services include assistance with everyday tasks, such as dressing, bathing and eating.
Most long-term policies cover a wide range of services in a variety of settings, including nursing homes, assisted living communities, adult day care programs, care centers for those with Alzheimer’s disease and your own home.
The American Association for Long-Term Care Insurance (AALTCI), which publishes the price index, analyzes what you pay for the most popular policies offered by 10 insurance companies. The average cost this year for a 55-year-old single individual who qualifies for preferred health discounts is $1,720 for benefits of $165,000 to $200,000. The same coverage last year would cost, on average, $1,480.
Low interest rates and low yields on fixed-income investments are fueling the higher rates, Jesse Slome, AALTCI executive director, said in a press statement. 40% to 60% of the dollars an insurer accumulates to pay future claims comes from investment returns, according to the AALTCI.
In addition to rising rates, the survey this year reports a wider gap between the lowest-cost and highest-cost policy. For a 55-year-old single policy applicant, the highest-priced policy costs almost 80% more than the lowest-priced policy, according to the press statement.
The association recommends comparison shopping for insurance quotes, as policy prices for some categories vary by as much as 132% and no single company always has the lowest or the highest rate.
Long-term care insurance policies include limits on coverage. There might be a cap on how much the policy will pay out over your lifetime and how much it will pay per day or per month for care. Some policies also limit the number of years they pay for long-term care. Typical time periods are two, three, four and five years.
3 key considerations when buying long-term care insurance
1. Buy early, save later. Policies vary widely in cost and coverage levels. The premium is based on the type and amount of services you want covered, your age and health condition when you buy the policy, and optional benefits, such as inflation protection. For that reason, it’s prudent to purchase coverage when you are younger, and, typically, more healthy.
2. Tax deductions. The federal government offers tax incentives for purchasing long-term care to encourage people to plan for their needs as they age. Each year, the IRS increases the federal deductibility limits to keep up with inflation, while some states also offer long-term care insurance tax incentives.
You can count long-term care insurance premiums as medical expenses and can deduct them if all your medical expenses exceed 7.5% of adjusted gross income.
The amount you can deduct for long-term care insurance rises with age. For instance, 2011 and 2012 federal tax deduction limits for individuals are as follows, according to IRS Revenue Procedure 2011-52 :
- Age 40 and younger: $340 for 2011; $350 for 2012
- Age 70 and older: $4,240 for 2011; $4,370 for 2012
3. Combo-pack policies. You can also buy a policy that folds life insurance into your long-term care insurance. The policies provide long-term care benefits and pay out a death benefit to life insurance beneficiaries if not all of the long-term care coverage is used.
The original article can be found at Insurance.com:
Tips for buying long-term care insurance amid rising rates
Compensation experts are predicting modest but steady wage growth over the next few years as employers shake off the salary freezes, layoffs and low profits brought on by the recession.
The average pay raise will be modest this year—around 3%, according to a handful of employer surveys. By contrast, raises averaged about 4% from 2005 to 2008.
Still, a recent Forbes story says 2012 could be The Year of the Employee Backlash, as workers look for greener pastures after years of corporate slash and burn.Translation: Now’s the time to review your pay structure from a retention perspective.
Twelve pay trends to keep in mind:
1. An increasing focus on pay for performance. Employees who get the best results will reap the highest annual raises. “As a result, the gap between high-performing employees and those in the lower-performing categories is widening significantly,” says a new Mercer report (see chart below).
2. Alignment of compensation with business goals. The math can be brutally simple in tight times. How much value does each employee add to the organization’s work—and bottom line?
3. Raises send a message. High performers won’t just get raises, they’ll get way better raises than others do. HR consultants are advising clients to show their appreciation for MVPs with raises as high as 10%. If that drives off disappointed low performers—who might score a 1% bump—so be it. The consultants’ rationale:That frees up jobs for more productive new hires.
4. Smaller merit-pay, larger variable-pay budgets. Hewitt Associates researchers project that the average annual merit budget 10 years from now (in 2022) will be 2%. However, variable-pay budgets will run close to 16%.
5. Creative budgeting breakouts. Mark Szypko of Kenexa says some companies are splitting pay budgets into two categories: managerial and line employees. It’s not to set up a double standard. The division prevents the top brass from dipping into employee pay budgets to line their own pockets.
Other splits might serve other purposes: Some firms divide their average 3% pay raises into two pots—2% for the whole employee pool, with an additional 1% on top for high performers.
6. Broader compensation benchmarking. More organizations will base pay systems on local and industrywide compensation surveys rather than on internal traditions. Business factors—such as recruiting and retention patterns—will be more decisive than how much a position has been worth historically.
7. More nonmonetary rewards. Work/life benefits, job flexibility, training and recognition increasingly will fill in for stingier raises. After all, research shows that “qualitative” benefits motivate many employees just as well as money.
8. Recalculation of replacement costs. Conventional wisdom says it costs between 50% and 300% of annual salary to replace an employee. Post-recession, that cost has jumped as high as five times salary, says Lena Bottos, a VP at Kenexa. Reason: To reduce turmoil in tough times, hiring managers and HR want to be absolutely sure a new hire will stick.
9. A hyper-focus on retention. Because it costs so much to replace valued talent, employers are going all out to keep their current stars. Tip: Consider “re-recruiting” your most valuable employees by offering bonuses and career advancement—just as you would when wooing an attractive external candidate.
10. Restrictions on extra pay. While some companies have stopped layoffs and furloughs, many continue to limit overtime. It’s approved only if calculations say it will reap a return on the investment.
11. Better communication with employees. After three years of pay doldrums, you may have fallen out of practice when it comes to addressing compensation. Warm up for better times to come by meeting with employees to review how your compensation system works. Even if there’s nothing new to report, it could improve employee attitudes.
12. Updated compensation policies. Left stagnant, compensation policies quickly go out-of-date. That could render your organization less competitive—especially if merit raises still dominate. Dust off your stale pay structure and job descriptions as part of your renewed focus on recruiting and retention of top talent.
|
Pay increases in 2012 based on employee performance
|
|
Percentage of workforce
|
Average pay increase
|
| Highest rated |
8%
|
4.4%
|
| Next highest-rated |
30%
|
3.6%
|
| Middle rated |
54%
|
2.8%
|
| Low rated |
6%
|
1.2%
|
| Lowest rated |
2%
|
0.4
|
|
Source: Mercer U.S. Compensation Planning Survey
|
Use online tools to benchmark pay rates
Online salary surveys offer a glimpse into what others are paying, often broken down by industry and job category. Some leading online tools:
Advice: Employees and applicants are going online to set their own expectations. Stay one step ahead by regularly reviewing web-based salary info.
Self-test: How smart is your compensation strategy?
1. Do you have a stated compensation policy? A good policy spells out a broad framework within which decisions about starting pay, raises, variable compensation and related issues are made.
2. How well do you explain benefits to employees? Do they understand that benefits comprise a significant portion of their total compensation? Make sure employees understand that benefits have value only when they are used.
3. Do employees have access to reliable information about pay practices? Take control of the rumor mill by offering concrete information about how you (and your supervisors) make pay decisions. Share the formulas you use to calculate merit increases and set variable compensation levels.
4. How much does pay depend on performance? Do employees understand what they have to do to earn a fatter paycheck? Do your merit-increase and variable-pay criteria make sense from an employee’s perspective?
Transparency will help. Make sure everyone believes that compensation is based on a rational system that rewards effort and other measurable contributions.
5. How much do variable pay plans really pay out? No surprise: Employees tend to like plans that actually reward better pay for better performance. If your variable-pay program promises bonuses every year, but no one ever seems to get a bonus, you have a credibility problem.
6. To what extent do compensation and benefits reflect your organization’s values? For example, if you say you’re a customer-driven company, your compensation systems had better reward excellent customer service. If research and development is your competitive advantage, establish bonus criteria that reward creativity and initiative.
7. How would employee dissatisfaction with pay and benefits affect your organization? The morale hit could result in poor employee performance. It could create a revolving door, launching an exodus of your best employees. Plus, if word of dodgy pay and benefits practices leaks out, you might find it harder to attract the new workers you need.
Source: Respect: Delivering Results by Giving Employees What They Really Want(Jossey-Bass, 2011)
Like what you’ve read? …Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more…
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you’d like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
” This information is proudly provided by Business Management Daily.com:http://www.businessmanagementdaily.com/29870/employee-compensation-12-trends-for-2012 ”
It’s good news that Americans are living longer, but that doesn’t mean we are doing it in perfect health. More people should be planning for long-term health care, but how they should financially prepare for coverage varies.
“The 85-plus year olds are more likely to have the greatest need for long-term care, but statistics also show a significant number of younger people need long- term care,” says Marlene Stum, professor of family economics and gerontology at the University of Minnesota. “It’s really never too early” to start thinking aboutlong term care, she says.
 Long-term care encompasses medical and non-medical care to people that have a chronic illness or medical disability. According to Medicare.gov, most long-term care is used to help people with daily living activities like getting dressed and bathing. It can be provided at the person’s home or on site in a facility.
According to a study by the U.S. Department of Health and Human Services, people who reach age 65 will likely have a 40% chance of entering a nursing home, with about 10% of them staying for five years or more.
For many families battling paying a mortgage, saving for college and getting food on table, saving for long-term care falls low on the priority list.
“Those who have planned for their care are more likely to have the ability to choose the best care possible that can significantly impact their quality of life during those final years,” says Tom Hebrank, founder of Advanced Planning solutions and a long-term care planning. “This planning can be done with insurance or by dedicating financial assets to long-term care expenses that are over and beyond what is typically planned for as retirement expenses.”
Hebrank explains that planning for this care has historically been overlooked because it was less expensive, and consumers could rely on equity from their home. When it comes to long-term care planning, Stum says people typically think about three options: prevention, insurance and saving on their own.
Prevention. Some consumers strive to stay active and healthy in an attempt to reduce the chances of needing long-term care as they age. While this is a good idea, remember there are no guarantees of staying healthy and uninjured.
Long-term care insurance. Buying this coverage can over peace of mind, but can also be left unused. According to the American Association for Long-Term Care Insurance, a 57 year old who buys $165,000 worth of coverage today will see the coverage grow to $355,000 at age 82 and pays $1,700 year. A couple will pay $2,280 a year for equal coverage for each person.
The cost to purchase long-term care insurance increases as you get older as the likelihood of you needing it also jumps. There’s even a risk that if you wait too long, you won’t qualify at all.
“While everybody is different, in general, at age 50 you should be seriously looking at long-term care insurance,” says Hebrank. He says waiting past this age can put you in a more expensive risk class or may even make you uninsurable.
Pay Out of Pocket. The final option is to pay for any care on your own, but this only works for people that have the financial means to save for retirement and put money away for long term care.
If you decide to save on your own, Hebrank advises your first step be evaluating how much of the risk you want to cover. For instance, is it enough to save for the 75thpercentile risk or would you feel more comfortable covering risk at the 90th percentile? At the 75th percentile, you might cover the cost of four years of care, while at the 90th percentile, you should save for the cost of more than six years of care, says Hebrank.
“As a rule of thumb, for each year of care you need, there is a 75% chance that you will still be needing care at the end of the following year.”
After you come up with a ballpark figure of how much the care will cost you’ll need to choose how to invest the funds you are saving. Hebrank says in general the money should be invested conservatively because you don’t know when you’ll need them.
“Long-term care is part of retirement planning,” says Hebrank. “You need to plan for this as a separate expense.”
Written by Donna Fuscaldo
Published March 06, 2012
FOXBusiness
The cost of long-term care is the big health insurance uncertainty for Americans 65 and older.
How will they pay for long-term care? The biggest shock for people entering the Medicare system is learning that it won’t pay for custodial care in a nursing home.
Let’s say you are 90 and you fall and break a hip. You go to the hospital and Medicare pays for your hip replacement. You go to a rehabilitation nursing facility and Medicare pays the full bill for the first 20 days and for all but a co-pay for the next 80 days.
But let’s say you are 90 and start suffering from dementia. You forget to turn off the stove and almost burn down your house, or you can’t bathe yourself anymore.
Medicare was designed to pay for acute illnesses and medical treatments. It won’t pay for someone to feed you or help you bathe or dress. Unless you have someone to care for you, you go into a nursing home, at about $70,000 a year, and pay for it yourself. Only when you spend all but your last few thousand do you qualify for Medicaid (known as Medi-Cal in California), which will then pay the nursing home bills.
The rules are incredibly complex; one consumer advocacy group has a 12-page flowchart for lawyers to use to help their clients qualify for help. For example, you can give away money to your spouse or children to become poor enough to go on Medicaid, but you have to get rid of it five years before you enter a nursing home.
About 1,384,000 people are living in U.S. nursing homes, down from 1,456,000 a decade ago. Old people are somewhat healthier now, and more are staying in the community. The average nursing home resident is a woman in her late 80s who needs help with four of the six basic activities of daily living: using the toilet, bathing, dressing, eating, getting in and out of bed, and moving around the house.
If you are in a retirement community or assisted living facility, you have to be somewhat self-sufficient. But if you become bed-ridden or need help with a lot of the activities of daily living, you will wind up in a nursing home — unless you have a partner, spouse, friend or children who will care for you. Millions of people are living in the community aided by some of the 52 million Americans who are unpaid caregivers.
Will there be enough of these loving volunteers in the future to care for the growing legions of aging boomers?
— Bob Rosenblatt
Compensation experts are predicting modest but steady wage growth over the next few years as the country continues to shake off the salary freezes, layoffs and low profits brought on by the recession.
Still, the average pay raise will be modest this year—around 3%, according to a handful of employer surveys. By contrast, raises averaged about 4% from 2005 to 2008, just before the economy tanked.
Wage stagnation could affect many workers’ long-term earning potential. Jeff Blair, a pay expert with the Hay Group consulting firm, predicts “employees’ pockets will likely be permanently affected by the great recession.”
Here are a dozen pay trends to consider as your organization weighs how to structure compensation in an age of diminished expectations.
1. An increasing focus on pay for performance
That means employees who get the best results will reap the highest annual raises. And it means low-performing employees will get below-average pay increases to free up more money for the stars.
2. Alignment of compensation with business goals
The math can be brutally simple in tight times. How much value does each employee add to the organization’s work—and bottom line?
3. Bigger raises—for those who earn them
High performers won’t just get raises, they’ll get way better raises than others do. HR consultants are advising clients to show their appreciation for MVPs with raises as high as 10%. If that drives off disappointed low performers—who might score a 1% bump—so be it.
The consultants’ rationale: That frees up jobs for more productive new hires.
4. Smaller merit-pay, larger variable-pay budgets
Hewitt Associates researchers project that the average annual merit budget 10 years from now in 2022 will be 2%. However, variable-pay budgets will run close to 16%. Look for extreme pressure to hold down fixed costs—that’s base pay—while variable pay goes up. Why? Because variable pay can flex along with an organization’s financial performance.
5. Creative budgeting breakouts
Mark Szypko of Kenexa says some companies are splitting pay budgets into two categories: managerial and line employees. It’s not to set up a double standard. The division prevents the top brass from dipping into employee pay budgets to line their own pockets.
Other splits might serve other purposes: Some firms divide their average 3% pay raises into two pots—2% for the whole employee pool, with an additional 1% on top for high performers.
6. Broader compensation benchmarking
Applied HR Strategies predicts more organizations will base pay systems on local and industrywide compensation surveys rather than on internal traditions. Business factors such as recruiting and retention patterns will be more decisive than how much a position has been worth historically.
7. More nonmonetary rewards
Work/life benefits, job flexibility, training and recognition increasingly will fill in for stingier raises. After all, research shows that “qualitative” benefits motivate many employees just as well as money does.
8. Recalculation of replacement costs
Conventional wisdom says it costs between 50% and 300% of annual salary to replace an employee. Post-recession, that cost has jumped as high as five times salary, notes Lena Bottos, VP of compensation at Kenexa.
Reasons: Hiring managers are sifting through more résumés these days. Organizations are looking for extremely specific skill sets. To reduce turmoil in tough times, they want to be absolutely sure a new hire will stick.
9. A hyper-focus on retention
Because it costs so much to replace valued talent, employers are pulling out all the stops to keep their current stars.
Tip: Consider “re-recruiting” your most valuable employees by offering bonuses and career advancement—just as you would when wooing an especially attractive external candidate.
10. Restrictions on extra pay
While many companies have stopped laying off or furloughing employees, many continue to limit overtime. It’s approved only after a careful calculation that returns will be worth the investment.
11. Better communication with employees
Survey after survey shows a disconnect between how satisfied employees are and how satisfied HR pros believe they are. A recent Kenexa survey, for example, showed that more than half of HR pros said their organizations’ employees feel fairly compensated. Too bad barely 35% of employees agreed.
Tip: After three years of pay doldrums, you may have fallen out of practice when it comes to addressing compensation. Warm up for better times to come by meeting with employees to simply review how your compensation system works. Even if there’s nothing new to report, it could improve employee attitudes.
12. Updated compensation policies
Left stagnant, compensation policies quickly get out of date. That could render your organization less competitive—especially if merit raises still dominate.
Tip: Dust off your organization’s stale pay structure and job descriptions as part of your renewed focus on recruiting and retention of top talent.
by THE HR SPECIALIST: COMPENSATION AND BENEFITS
WASHINGTON — Don’t have the slightest clue what your health insurance covers?
The Obama administration says that’s going to change, starting this year. Officials announced Thursday that private health plans will have to provide consumers with a user-friendly summary of what’s covered, along with key cost details such as copays and deductibles.
Just six pages long. And no fine print.
Officials are calling the summaries a “nutrition label for health care,” trying to capitalize on the name recognition of those information panels found on packaged foods at the supermarket. Consumer groups say the health care version isn’t perfect, but it’s a start.
For example, the summaries won’t include premiums. Administration officials said they ran into logistical problems trying to do that, and that premiums will be easily available anyway to consumers, either from their employer or from a health plan directly.
“These documents will allow consumers to compare plans on an apples-to-apples basis,” said Medicare chief Marilyn Tavenner, who is also overseeing implementation of President Barack Obama’s health care law. If an insurance plan offers substandard coverage in some respect, they won’t be able to hide it in dozens of pages of text, she added.
The new summaries are required under the health care law, and most consumers will start seeing them this fall during open enrollment. The requirement takes effect Sept. 23 and applies to all private insurance, including employer coverage and plans purchased individually, affecting about 150 million Americans.
Although the health system overhaul itself continues to divide the public, a major poll last year found that 84 percent of Americans support the provision requiring insurance summaries. These summaries could prove particularly important for people buying coverage directly from an insurer. From now on, they will have a standard format for comparing plans.
Many employers currently give such information to their workers in the health plan summaries they provide during open enrollment. But the federal comparison goes further. It requires something new — so-called “coverage examples” that give a ballpark estimate of the cost for a typical individual for two common health conditions: normal childbirth and managing diabetes.
The preliminary version of the regulations also called for an example focusing on breast cancer treatment. But Health and Human Services officials said that proved too complicated, since there are different approaches to treatment.
“We didn’t take this off because it happens to be more expensive,” said Steve Larsen, head of the Center for Consumer Information and Insurance Oversight. “It just needed more work.”
In the future, up to six such coverage examples may be required, he said.
Consumer representatives, insurers and employer groups are poring over the fine print to see how the administration balanced concerns about providing full disclosure while keeping compliance costs affordable for businesses.
The administration appears to have tried to take both sides into consideration.
For example, large employers had asked that the requirement be phased in over a longer period for them. Instead, they will have to comply this fall, in most cases for coverage that starts Jan. 1, 2013.
Insurers and employers had complained that providing paper copies of the summaries would be a huge new cost. The administration will allow them to comply by providing an online version, but consumers must be told that they can receive a paper copy promptly upon request.
In an election year, the administration is sensitive to criticism of government overreach through regulations.
____
Online:
Template for health plan comparisons: http://tinyurl.com/7ang6gu
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
GEORGETOWN — With a significant increase in the elderly population of Sussex County expected by 2020, the need for long-term care services will also grow.
According to Delaware Health and Social Services Division of Services for Aging and Adults with Physical Disabilities, the size of the population over age 60 began to spike dramatically around 2005 and will continue to expand steadily for the next 20 years. By 2030, Delaware is projected to have the ninth highest proportion of people over the age of 65 in the country.
Bill Love, director of DSAAPD, said the increase can be attributed to the baby boomer population and migration of retirees to the state, especially Sussex County.
“Delaware definitely needs to prepare for the growing age of the population,” he said. “The growth rate for the older population is definitely significant in Sussex County as well as statewide.”
The town of Millsboro will consider a change to its zoning to allow for assisted living facilities. The proposed amendment would allow people who don’t need the amount of care a nursing home provides the ability to stay close to home, Mayor Bob Bryan said.
“We see those needs rising,” said Town Manager Faye Lingo. “The facilities that do exist have waiting lists.”
Brandywine Assisted Living at Fenwick Island opened three years ago, just eight years after the Brandywine facility in Rehoboth Beach opened its doors. Now, the Rehoboth building is at capacity and Brandywine Fenwick is making its way there.
The Fenwick location recently expanded its dementia neighborhood from 13 rooms to 25, replacing rooms originally intended for other purposes, and it’s nearly at capacity in every program besides assisted living, despite having opened in 2008.
In the last year alone, the Fenwick facility has increased from 54 residents to 78.
“The reason for the need in our area outside of the population influx is just the fact we provide such a remarkable quality of life for people,” said Heidi McNeeley, director of community relations. “We have people here that could do perfectly fine on their own, but they don’t want to live by themselves anymore.”
People are also becoming more educated about assisted living than they were in the past, she said.
Methodist Manor House in Seaford is a Continuing Care Retirement Community, which provides independent living, assisted living and nursing home care. Michael Smith, corporate director of public relations for ACTS Retirement-Life Communities, Manor House’s parent company, said as people learn more the misperception usually changes.
Life-communities keep seniors active and interacting with others while also offering the peace of mind that medical care is available if needed.
“They provide the lifestyle the seniors want and the security that they need,” Smith said.
» Staff Writer Ethan Rothstein contributed to this report.
acunningh@dmg.gannett.com
Many small businesses with limited staff use the open enrollment period as the one and only time they discuss benefits with employees. This activity, though necessary, can prove to be overwhelming for the staff to comprehend large amounts of benefits information all at once. Small businesses seeking more effective ways to support employees should implement a year-round benefits communication and education approach instead of limited, intense periods of information overload or otherwise infrequent communication. Doing so can help businesses provide employees with retainable information and make processes such as open enrollment smoother and more effective.
Impact on Retention
Improving benefits communication efforts can have critical business results for smaller companies. To help understand a few revealing workplace realities, the2011 Aflac WorkForces Report study found that when it comes to making benefits decisions, a mere 8 percent of workers agree that they are fully engaged in making those decisions, a sentiment their employers share. Some 63 percent of companies agree that workers need to be more engaged, and just half feel their employees take full advantage of the benefits they’re offered.
By proactively encouraging worker engagement when it comes to making benefits decisions, employers can help workers be better prepared and protected against an accident or illness, resulting in significant financial implications for both themselves and their employers.
When evaluating workplace benefits communication at small companies, 39 percent of workers agree they would be less likely to leave their jobs if they were well-informed about their benefits. The turnover cost alone is an incentive for employers to make changes in how and how often their organizations share benefits information.
Small businesses must acknowledge the possibility that communication needs improvement. For example, almost half (46 percent) of employees at small companies say their HR departments communicate too little about employee benefit plans, and just over half (52 percent) of HR decision-makers at small businesses believe they communicate very or extremely effectively with employees.
Reap significant rewards by developing more-effective benefits communications, including healthier, more-protected and more-engaged employees. Four best practices include:
1. Being a Valuable Resource
Without real information, employees often turn to less-than-reliable sources for insight and guidance. The majority of workers (62 percent) get their insurance advice/information from colleagues, friends and family. In fact, employees at small companies are the least likely to get their information/advice about employee benefits from company HR professionals (39 percent).
When employees don’t know better, they don’t do better in terms of adequately protecting their income and well-being, leaving many workers underinsured and vulnerable to the financial ramifications of an unexpected health event. Over time, unexpected health events can impact the productivity of a small business.
2. Using Surveys
Electronic communications have made it easier than ever to survey workers at minimal cost. Unfortunately, little more than half (52 percent) of organizations conduct surveys that increase their understanding of employee satisfaction with benefit offerings. Even fewer—just 43 percent—survey employee understanding of benefits communication.
By taking the time to understand the preferences and needs of workers, employers can increase employee satisfaction with benefits packages and help provide the peace of mind that comes from knowing their employees have adequate protection. Additionally, employers can use these surveys to identify unaddressed health insurance needs, enabling HR decision-makers to better address benefits communication needs and find ways to make benefits information more robust and accessible.
3. Helping Eliminate Common Benefits Mistakes
Roughly 77 percent of workers have admitted to making mistakes about benefits coverage during their open enrollment process, leaving many employees feeling negatively at the end of the year about the process, including being stressed, confused or regretful. A closer look reveals that nearly half of workers (47 percent) say they have made mistakes or have regrets, such as putting too little in their flexible spending account (FSA), or not electing available benefits coverage like voluntary, dental or vision; or chose benefits they didn’t need or chose the wrong level of coverage.
The brevity of annual benefits decisions requires a comprehensive, year-long education and communication program. Best practices include diversifying materials to encompass print, Web, email, and face-to-face meetings; hosting multiple in-person meetings throughout the year; and including spouses in the decision-making.
4. Consider Retaining a Benefits Consultant or Broker
Giving employees the opportunity to speak directly to a benefits advisor or a representative from a brokerage or insurance carrier can be incredibly effective in terms of education. In fact, 50 percent of workers at small companies agree they’d be more informed about benefits if they sat with a consultant or broker during enrollment.
Keeping up with complicated, ever-changing regulations is increasingly difficult, especially for small businesses. Partnering with brokers or benefits consultants can help companies bolster their insurance benefits with little impact on the bottom line. Brokers and benefits consultants can also advise and assist in developing effective communication strategies and enrollment processes.
According to Aflac’s study, companies that use brokers or benefits consultants are likely to offer more robust benefits packages than their competitors, believe their benefits packages are more competitive than those of industry peers, and communicate more often about their organizations’ benefits.
Conclusion
Developing effective benefits communications is difficult, particularly when it comes to educating workers about their insurance options. However, using reinforced, year-round communication, small business HR decision-makers can make information sharing simpler for employees, enabling them to make better choices for their families, and generating stronger retention and greater appreciation for their total compensation packages.
Benefits Package Photo via Shutterstock
About the Author
 Thomas R. Giddens is Senior Vice President, Director of Sales, at Aflac. He began his career with the company in 1983 as assistant vice president in the marketing department before leaving headquarters for the field, where he excelled for more than 20 years. Prior, Tom was a regional sales coordinator in Atlanta and consistently exceeded goals, earning the number one spot for regional sales coordinator four times and a promotion to state sales coordinator.
What to consider as a potential caregiver.
As more and more people find themselves in a caretaking role with respect to their aging parents, they often find themselves completely unprepared. Men and women in their 40s, 50s, and 60s who have successfully managed their careers, their children, and every other aspect of their lives may be caught off guard by suddenly having to learn everything they can about an entirely new realm – often under time pressure and great emotional stress.
In addition to the psychological demands of coping with an aging parent, the family has to deal with financial considerations, as well. Many adult children are astonished to learn that nursing homes cost upwards of $9,000 a month. They are even more surprised that Medicare doesn’t cover this cost unless the elderly individual was transferred to a nursing home following a hospitalization. Even then, Medicare may only pay for 20 to 100 days, and only if the individual will be receiving rehabilitative care, meaning he or she continues to improve.
But what about aging individuals who need custodial care – in other words, those who become residents of a nursing home because of the level of care they need? The stark reality is that the family is required become a private payer, meaning it covers all costs, until the individual becomes qualified for Medicaid.
The Role of Medicaid
While Medicaid is currently the number one payer for long-term care, qualifying for it is difficult. The individual’s total assets must be valued below a few thousand dollars. In addition, there is a five-year look-back period, meaning the government reviews the individual’s finances for the past five years to make sure he or she didn’t gift money to children in order to qualify for Medicaid more quickly. While there are no actual fines for gifting, there is a penalty in the sense that Medicaid simply won’t pay for long-term care until the individual qualifies according to its formula.
Basically, for approximately every $7,000 gifted during that five-year look-back period, that’s one more month Medicaid payments will be delayed. This even includes tuition payments a grandparent may have made for a grandchild’s education.
Financing Long-Term Care
There are several good ways of financing long-term care that avoid depleting the family’s financial resources. They include using an existing life insurance policy, using long-term care insurance, and getting a reverse mortgage.
Life Insurance Policy. One option that’s not particularly well known but which is becoming increasingly useful is for the family to convert an existing life insurance policy into a long-term care benefit – in other words, an asset that is used to pay for home health care, assisted living, or a nursing home.
Many life insurance policy holders are only familiar with two options: surrendering the policy for its cash value or, if they can’t or don’t want to continue making payments, letting it lapse and losing all the money they’ve already paid in. Yet policy holders have another option that in many cases is the answer to the question of how to pay for long-term care: policy holders who are 61 or older, or who have a medical condition that is chronic or terminal, can use their policy to pay for the care they need.
The advantages are that there is no waiting period, since the conversion process only takes about three weeks. Once the policy has been converted, the family stops making premium payments. Instead, a third party organization makes monthly payments directly to the long-term facility or the family gets a cash payout to use for long-term care.
While the principle is simple, the best way to use a life-insurance policy to pay for long-term care is to work with a senior care consultant who has experience and expertise in working with insurance companies. “Converting a life-insurance policy can be done quickly and effortlessly,” says Howard Chernin, Managing Director of Elder Care Financial Solutions in Hackensack, New Jersey. “Suddenly finding yourself the caretaker for someone you love is extremely stressful. Our goal is helping families get the financing they need, leaving them to instead focus on the emotional demands of taking care of a parent.”
Long-Term Care Insurance. Another possible solution to the dilemma of how to pay for long-term care is the long-term care insurance market. This is a good option for some people, especially those who are healthy and can afford it. It’s much easier to buy it in your 50s than in your 70s. And when the policy that’s purchased has inflation protection, it’s a good tool for preserving the family’s assets. Of course, buying long-term care insurance requires planning far in advance.
To encourage individuals to purchase long-term care insurance, some states have developed incentives. New Jersey’s Long-Term Care Insurance Partnership Program allows policy-holders to shelter from Medicaid the amount of money that’s equal to the amount of the policy. In other words, someone who holds a $250,000 long-term care insurance policy is permitted to shelter $250,000 in cash when applying for Medicaid.
Reverse Mortgage. A third option is a reverse mortgage which allows a homeowner to withdraw equity from his home. The homeowner is not required to repay the mortgage, either the principal or the interest, until the house is sold or the borrower passes away.
There are advantages to taking out a reverse mortgage. For example, the borrower’s credit rating is not an issue. However, there are several disadvantages, as well. When the borrower dies, the house, which serves as collateral, must be sold to repay the mortgage. Reverse mortgages also tend to have larger origination costs than most other mortgages, and because those costs become part of the original loan balance, interest accrues on them. Still, for many people the home is their primary asset and being able to use the equity to finance home health care, for example, is a terrific benefit.
Other Things to Know
In addition to becoming familiar with options for financing long-term care, there are a few other things the children of aging parents should know.
For one, it is critical to obtain Power of Attorney from an aging parent early on. Something as simple as writing a check for the electric bill while a parent is in the hospital becomes impossible without it.
Another important thing to know is that an aging individual can gift his or her house to an adult child, without a penalty from Medicaid, if that adult child has resided in the home for two years preceding institutionalization. The presumption is that the adult child was caring for the parent and therefore delaying the need for institutional care. This is an excellent way to preserve a major asset.
As parents age, it’s important for their children to prepare themselves in every way possible – not only emotionally, but also by consulting an elder care attorney and learning about all their options. Planning ahead and becoming knowledgeable are the most important tools for coping with what is invariably an extremely difficult and demanding time.
About John Zucker-
(This article written by By John A. Zucker, Attorney, Rose & Zucker, LLC)
Mr. Zucker is an experienced Elder Law attorney and general law practitioner. Prior to joining Rose & Zucker, LLC in 2003, Mr. Zucker was a legal consultant at Hill & Knowlton, Inc. specializing in crisis and litigation communications. From 1997 to 2000, he served as Senior Advisor to the National Chairman of the Anti-Defamation League. From 1994 to 1997, he served as a legislative aide to Congressman Tom Lantos in Washington, D.C.
Mr. Zucker received his Juris Doctor in 1991, from the George Washington University School of Law. He earned his Bachelor of Arts degree from Cornell University in 1988.
Mr. Zucker is a member of the New Jersey State Bar Association, National Academy of Elder Law Attorneys and the Hudson County Bar Association.
Over the years, I’ve advised many of my clients on the importance of life insurance. You’d think everyone would understand the need for life insurance in the event a wage earner or family member dies. Yet LIMRA estimates 41% of U.S. adults — 95 million people — have no life insurance at all.1 And 43% of those with coverage believe they need additional life insurance.2 These statistics tell me we still have a lot of work to do in helping our clients understand the need for life insurance and how to adequately protect themselves. That’s where good benefits communication comes into play.
Employers clearly feel an information gap exists among their workers when it comes to life insurance.3 In fact, only 41% of HR professionals say their employees understand the need for life protection very well. Improving benefits communication efforts at the policyholder level can reap strong rewards, helping clients who don’t have life insurance understand the valuable need for this coverage.
Good communication can also help clients who don’t have enough coverage determine the right amount of life insurance for them and their families. LIMRA says 44% of those who say they need life insurance haven’t bought because they don’t know how much to buy.
While many policyholders struggle to figure out how much life insurance they need, many of those with existing coverage simply don’t understand the important features of the policies they own. I find it valuable to emphasize these 10 commonly overlooked features of life insurance plans with policyholders when communicating with them about their benefits:
- Waiver of premium. This feature pays the premium of a policy if a serious illness or injury causes the policyholder to become disabled.
- Accelerated death benefit. This feature allows policyholders to receive cash advances against the death benefit of their policies if they’re diagnosed with a terminal illness. Many people with this benefit use the money to help pay for treatment and other expenses when they have only a short time to live.
- Guaranteed purchase option. With this feature, policyholders can purchase coverage at designated future dates or life events without proving they’re in good health.
- Long-term care riders. Some life products include this option, which allows individuals to use the benefits of their policies to pay for long-term care in exchange for a reduced life benefit.
- Spouse or child term riders. Life policies with this feature allow policyholders to purchase term life insurance for their spouses or dependent children, up to age 26. This option can be a more affordable way to purchase coverage for those who can’t afford separate policies.
Page 2 of 2
- Cash value plans. This type of policy pays out upon a policyholder’s death and also accumulates value during their lifetime. Individuals can use the cash value as a fund from which they can borrow and use to pay the policy premiums later.
- Mortgage protection. Some term life plans are designed to provide mortgage protection for homeowners, typically paying a decreasing benefit that corresponds to the outstanding balance of the mortgage.
- Cash withdrawals and loans. Many universal and whole life policies allow policyholders to withdraw or borrow money, using the cash value of the policy as collateral. Interest rates tend to be relatively low. Individuals can also use the cash value of their life policies to pay their premiums if they need or want to stop paying premiums for a period of time. Policyholders must pay back the loan, or your beneficiaries will receive a reduced death benefit.
- Survivor support services. Some life policies offer services that provide objective financial and legal assistance to beneficiaries.
- Employee assistance programs. This feature makes resources available to policyholders when they have problems that can affect their personal and professional lives. Resources are usually free and help address issues such as substance abuse, stress, marital problems, legal concerns and major life events.
Advantages of Voluntary
LIMRA research shows that 57% of people who are under-insured prefer to buy life insurance face to face. And 18% of them prefer to purchase at the workplace. Voluntary life insurance can be an important part of a company benefits package and can help meet the needs of employers and employees. This coverage can be sold as a complement to company-provided life insurance or as a standalone offering. Because it’s typically employee-paid, voluntary benefits allow employers to expand their benefits packages at little to no additional cost. Some other features of voluntary coverage include:
- Portability. With individual policies, the employee, not the employer, owns the policy, which means workers can keep their policies if they leave their jobs.
- Simplified underwriting. Both guaranteed issue (no health questions for underwriting) and simplified issue (minimal health questions for underwriting) are available, if participation and eligibility guidelines are met.
- Variety of life insurance plans. Employees now have choices in plans to meet their individual needs when it comes to protecting their families and building cash value.
Voluntary life coverage, when offered in conjunction with one-to-one benefits counseling sessions, can be an especially effective combination in an employee benefits plan. In fact, almost 60% of employers believe one-to-one benefits counseling sessions can strongly improve employees’ understanding of their benefits and their coverage needs. And 55% of employers rely solely on this type of benefits communication and education method. Companies that work with insurers to improve benefits education can boost participation in their programs, which helps ensure employees have the coverage they need to protect their families and their lifestyles.
Helen Rodriguez-Burton is a district general agent for the Amarillo, Texas, sales district of Colonial Life & Accident Insurance Company. She can be reached at (806) 356-7839.
Colonial Life & Accident Insurance Company is a market leader in providing insurance benefits for employees and their families through the workplace, along with individual benefits education, advanced yet simple-to-use enrollment technology and quality personal service. For more information, visit www.coloniallife.com.
FOOTNOTES:
- LIMRA, “Facts About Life,” 2011.
- Retzloff, Cheryl, “Trillion Dollar Baby — Growing Up,” LIMRA, 2011.
- Colonial Life, Life Insurance and Disability Insurance Survey, October 2011.
|
|
