Human Capital Briefs

Retirement Planning And Long-Term Care – Can You Influence the Future?

February 05, 2015

 This blog serves as a follow-up on my recent post: Retirement Planning And Long-Term Care— The Impact on Your Employees and Workplace. 
 

The Society of Actuaries newly released monograph: Managing the Impact of Long-Term Care Needs and Expense on Retirement Security Monograph provides various views on how retirement security and long-term care intertwined and provides ideas for the future of the long-term care system. Another Society of Actuaries sponsored research project, Land this Plane: A Delphi Research Study of Long-Term Care Financing Solutions, looked at a variety of long-term care issues and the future of the long-term care system. 

The system is in a state of flux, creating challenges for employers, employees and policymakers. Employers need to decide if and how whether they will join the policy debate.  This article deals with the challenges to the system and ideas for the future.

Several interesting ideas emerged from the combination of the paper call and the Delphi Research study:

In one of the monograph papers, Financing Future LTSS and Long Life Through More Flexible 401(k)s and IRAs, Karl Polzer set forth an idea for integrating 401(k) plans and long-term care financing. Under his approach, 25% of the 401(k) dollars can be used to finance long-term care benefits. There are many possible variations on this idea, and the paper provides an outstanding platform for discussing the pros and cons of some of these options. The paper also explores related policy changes that could reduce longevity and LTC financial risk for people across the economic spectrum.

Some of the questions to think about as you consider these ideas are:

• Should 401(k) plan funds be available for funding long-term care insurance or long-term care?
• How much should be available and what restrictions should apply?
• Should the same rules apply to other forms of risk protection?
• How can we encourage more dialogue on this topic?
• How can I participate in the dialogue?
• How do we get this topic on the regulatory agenda?

Another of the papers sets forth the idea of a national long-term care exchange. These ideas have some similarity on the exchanges for health insurance developed under the Affordable Care Act. This concept is outlined in a paper by Paul Forte titled The American Long-Term Care Insurance Program (ALTCIP)

The Land this Plane Delphi Exercise reaches the conclusion that a solution will involve a public private sector partnership. It reviews a number of ideas for the future of the long-term care system.

Systems of care management are evolving as are supports to assist people who wish to have care at home or in the community. Some of the evolution is focused on programs that use volunteer help and mutual support to enhance community-based options. The business community can help to encourage community development programs and offer some support for them.  

The paper by Sandra Timmermann, The 65 Plus Age Wave and the Caregiving Conundrum: The Often Forgotten Piece of the Long-Term Care Puzzle. She discusses the move to aging in place and securing care at home. She points out that the community supports for aging in place are limited, and that aging in place will become feasible for more people and less of a strain if community supports improve. One of the issues for the business community is the extent to which they want to encourage community initiatives to support families and help further develop them. This will help employees and can reduce the strain on business from family caregiving.

There are also many issues confronting the private long-term care insurance market. The papers and Land This Plane study discuss some of these issues. The paper by John Cutler, How American Society will Address Long-Term Care Risk, Financing and Retirement, provides a broad overview of  both the public and private-sector issues.

For businesses, there are several key questions:

• How important is it to get involved in the community infrastructure that helps support family caregivers?  What can we do?
• Should we get involved in the policy discussions with respect to how much long-term care is provided through public programs?
• Should we get involved in enabling better connections between retirement programs and long-term care?  How do we feel about the Polzer proposals?
• Should we participate in policy discussions related to the long-term care insurance marketplace?

When family members need long-term care, it has an impact on employees and the organizations that employ them. Many families have members who need care. There is no choice about this. Businesses need to decide whether they will participate in trying to improve the system. They can do this directly or encourage the trade associations they belong to try to improve the system.

Do you have any suggestions for moving this discussion forward?

The Society of Actuaries newly released monograph: Managing the Impact of Long-Term Care Needs and Expense on Retirement Security Monograph is a collection of papers in response to a call for papers issued by the SOA’s Committee on Post Retirement Needs and Risks in partnership with the Society of Actuaries Long-Term Care Section to explore the impact of long-term care needs and expense on retirement security from a variety of aspects. The papers dealing with policy provide ideas about integrating the 401(k) and long-term care financing systems, a national approach to insurance using exchanges, and changes in the way insurance is handled. The papers help expand thinking on how long-term care events impact families as well as approaches to mitigating the impact of these events and related issues. All of the papers can be downloaded. The monograph starts with an overview chapter and this is followed by a document compiling the 12 abstracts for the papers.

 

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