The Hidden Liability in Group LTCi Plans

June 11 | 2018
By: Ryder Kimmes
Vice President - Business Development LTC Solutions, Inc.

For those of you already offering long term care insurance to your employees, you are ahead of the curve! You are not only adding protection to each of your participating employees’ retirement and savings endeavors, you are affording employees the opportunity to maintain their assets if they should need long term care. As we know, long term care is expensive and having a tool to protect yourself against these expenses is invaluable.

As an employer, some of our largest liabilities lie within our administration of benefits. How would you like to know that someone is proactively performing quality assurance for you, thereby making you less exposed to this liability?

Finding the right partner for your LTCi plan can help you reduce, if not remediate, this liability.

Long term care insurance is different from other benefits. The specialized characteristics of long term care insurance can make the administration of the benefit complicated and, if not managed appropriately, can leave employers exposed to liability.

A clear example of this exposure, and how common it is, can be seen within a recent compliance audit that was done by LTC Solutions for a client that revealed billing errors of more than $27,000. The majority of the inaccuracies were found in unreported terminations of employees. There were some eligible employees that were never added to the plan, some incorrect dates of birth and names (which could mean difficulty when a claim is filed or when an employee would normally port their policy after leaving employment). There were also inexact deduction amounts as well as deductions taken from employees’ payroll for coverage they did not have.

All in all, an immense potential liability for this employer was identified by LTC Solutions.

Long term care insurance can be so important, yet such an involved process for any employer. You wonder if anything is falling through the cracks or if anything is being set in motion for a potential liability. Let’s look at the kinds of items we can inventory to shine a light on potential liabilities within your company:

  • Do you reconcile your premium deductions to the carrier bill every month?
  • Are you performing quarterly payroll audits (name, plan design, date of birth, terminations, additions, employee ID, Social Security number) against the carrier files?
  • Do you have a protocol in place for new hires so that they can opt in within the underwriting timeframe?
  • Are your employees offered claim support or care coordination support at the time of a long-term care event?
  • Are your employees offered education-based support if and when the time comes to compare long term care insurance plans as the marketplace continues to change?
  • Do you have a process to confirm that departing employees are getting directly billed by the carrier to ensure continued coverage?
  • Is there a process in place to make sure new applications have been submitted to the carrier? Has confirmation of coverage been received from the carrier? Are the employees on payroll deduction?
  • Are your employees educated on how they can utilize their HSA funds for their long-term care insurance premiums?

If you answered ”no” to any of these questions, you’re not alone – many employers find themselves exposed to some liability. Partnering with a specialist like LTC Solutions can help you answer ”yes” to these checkpoints!

We administer many of these services at no additional cost. The biggest advantage of letting us take on the ongoing administration is that you, the employer, are making sure these quality assurances are put in place so that you are not exposed to any type of liability with your long-term care insurance program.

On a more human level, you are providing a much-needed benefit to your employees. You are giving them and their families protection against financial and emotional strain at a time when they need it the most.

©Copyright 2018 by Ryder Kimmes, Vice President  Business Development LTC Solutions, Inc.  Reproduction permitted with attribution to the author.

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