Category Archives: Employers

Fringe benefits: Long-term care insurance can pay off

The U.S. population is aging and, as it does, the need for long-term support and services will only grow. According to a 2017 fact sheet from the AARP Public Policy Institute, on average, 52% of people who turn 65 today will develop a severe disability that will require long-term care (LTC) at some point. For this reason, among others, employers should consider offering LTC insurance as a fringe benefit.

High cost of care

LTC insurance helps covered individuals pay for the care they need because of a severe cognitive impairment or if they need assistance with activities of daily living (ADLs), including bathing, dressing, toileting and eating. They might require assistance because of an accident, disability, chronic illness or aging.

The costs associated with such care have skyrocketed. AARP reports that the average annual cost of a private room in a nursing home in 2016 was about $92,000, with a shared room costing around $82,000 annually.

The average cost for a home health aide in 2016 was $20 per hour. With the average aide working about 30 hours per week, that came out to $31,000 per year. And, to the surprise of many, Medicare doesn’t pay anything for LTC, whether in-home or at a facility.

Purchase considerations

LTC insurance isn’t cheap. But by buying the insurance on a group basis, you may be able to obtain a discount from the individual policy rates.

You also might qualify for a guaranteed issue plan that provides coverage regardless of health status and need — meaning employees who might not be able to get coverage on their own would now have one less thing to worry about.

From a tax perspective, you can claim a deduction for the premiums you pay, and neither the premiums nor the benefits are taxable for the employee.

Employer benefits

The positive impact of offering LTC insurance can play out over the long term. First, a fringe benefit like this can draw better job candidates who are looking for more than just basic health care coverage. It might help you retain employees as well — especially those who are already looking toward retirement and beyond.

Think about extending LTC insurance to employees’ family members, too. As AARP notes, unpaid family and friends provide most LTC support, often incurring direct costs as well as lost wages and benefits. Employees providing caregiving could be forced to cut their work hours, take easier positions or quit work altogether.

By providing coverage for their family members, you could reduce the caregiving burden on your employees, relieving stress on them — and probably reaping productivity gains to boot.

A worthy consideration

Not every employer will have room in its benefits budget to buy LTC coverage. But if you’re looking to upgrade your fringe benefits, this is one perk that’s well worth considering. To discuss further, please contact us.

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Analyze your health plan’s electronic security to comply with HIPAA

If you’re an employer that sponsors a health care plan, you may worry about inadvertently violating the Health Insurance Portability and Accountability Act — commonly known as HIPAA. But you should also bear in mind that there is a formal requirement for ensuring electronic data security. Specifically, sponsors of most plans must do a risk analysis to comply with what’s called the HIPAA security rule.

Pertaining to PHI

The HIPAA security rule describes the required risk analysis as “an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information.”

In this context, a “vulnerability” is a flaw or weakness in a security system that could be exploited (intentionally or accidentally) to breach security. “Risk” is determined by assessing both the likelihood that a vulnerability will be exploited and the extent of the resulting impact on the health plan.

In performing the risk analysis, it’s important to remember that the HIPAA security rule applies only to electronic protected health information (PHI). Employers with insured plans may limit their compliance obligations by minimizing the amount of electronic PHI they create, receive, maintain or transmit. For example, you might structure your plan so individually identifiable information, such as claims data, is maintained exclusively by your insurer.

Also, enrollment information created by the plan sponsor — for instance, when you administer open enrollment — doesn’t constitute PHI because that information isn’t collected on behalf of the plan. Thus, the risk analysis for a small insured plan can be much simpler than that for a large, self-insured plan where the sponsor performs administrative functions.

Surveying your systems

As a first step, identify all hardware, software, facilities, workstations and information systems used in storing, receiving, maintaining or transmitting electronic PHI. You may be surprised at the amount of electronic PHI you have. Next, identify and assess security measures currently in place to protect the electronic PHI, noting specific vulnerabilities and risks. Finally, determine what, if any, additional security measures are needed to respond to the identified vulnerabilities and risks.

It’s particularly important to document completely each step of the risk analysis, including how the health plan reached its conclusions regarding vulnerabilities, risk assessment and security measures. The security rule doesn’t require perfect security but, in the event of a security breach, a health plan must be able to explain why its security measures were appropriate.

Undertaking the process

Note that the HIPAA security rule doesn’t apply to a health plan that has fewer than 50 participants and is self-administered by the employer that established and maintains the plan.

If the rule does apply to you, keep in mind that it doesn’t specify how often employers should conduct a risk analysis. Undertaking the process annually or whenever there’s a major change to your health plan or IT systems is generally recommended. For further information, please contact us.