Just a few of the challenges employers will face in 2017 include changing leave laws, the uncertainty of the overtime regulations, expanding equal pay initiatives, benefits, the Affordable Care Act, the rapid rise of the on-demand workforce and gig economy, and the threat of a cyber breach in an increasingly digital world, according to a survey by XpertHR. Employers also face the uncertainty of a new Republican government in Washington, D.C., with a transitioning Trump administration, and Republican control of the U.S. House of Representatives and the Senate. “It’s clear to me that many of the challenges…will cause employers to review and revise their workplace policies, practices, and procedures,” says legal editor of XpertHR, Beth Zoller.
The biggest employment challenge is the election. Employers are asking these questions:
- Who will the president-elect nominate for the open seat on the U.S. Supreme Court and what effect will this have on labor and employment law cases?
- What will happen to the National Labor Relations Board if the president-elect appoints two Republicans? Will that affect the expansion of workplace rights?
- Will the president-elect, as previously said, support six weeks of paid maternity leave for working mothers?
The second-ranked challenge involves recruiting, hiring, and retention of workers amid changing demographics and the global marketplace. Fifty-five percent of respondents say they extremely or very challenged in finding high-quality applicants.
The third-ranked challenge, mandated employee leave protections, continues to be a significant trend affecting employers. Employers are feeling the heat of leave laws. Thirty-four percent find the administrative burden of managing leaves to be extremely or very challenging. It’s even more complicated for employers who need to manage leaves across states. To get the full results of the study, visit http://www.xperthr.com.
Tighter Job Market Causes Employers to Hang onto Benefits
Despite significant increases in healthcare insurance premiums (9% in 2016 versus 6% in 2015) employers are optimistic about their ability to provide robust benefit packages to employees. In fact, the number of midsize employers offering health benefits to part-time employees has nearly doubled since 2013 (26% in 2016 versus 13% in 2013). Plus, 57% of employers expect wages increase in the next one to two years, and 65% expect profitability to increase, according to a study from Transamerica Center for Health Studies (TCHS) conducted by Harris Poll.
TCHS executive director Hector De La Torre said, “In previous years, the cost of providing health insurance to employees was a top concern. While it remains a primary issue, employers are increasingly interested in adding new benefits such as workplace wellness programs.”
Eighty-four percent of employers agree that healthcare benefits are important for attracting and retaining employees. Eighty-eight percent of employees say healthcare benefits are important to their job satisfaction. While nearly 19% of companies plan on changing their plan options in the next one to two years, 31% don’t expect to make any changes. Altering plan options (31%) and implementing a wellness program (16%) are the two most common changes across all company sizes. Eighty percent of employers and 57% of employees are concerned about the affordability of health insurance. Seventy-eight percent of employers and 52% of employees are concerned about healthcare expenses. Companies are less likely to alter their benefit offerings to avoid the Cadillac tax when compared to the 2015 survey. Seventy percent of the companies that say they are at risk for paying the Cadillac tax are planning to make changes to avoid paying it.
Wellness program offerings continue to rise among employers. Twenty-eight percent of employers have implemented wellness programs in the past 12 months (a steady increase from 23% in 2014 and 25% in 2015). However, many employees are not aware of their wellness benefits. Fifty-five percent of employers offer wellness programs, but only 46% of employees say they work for an employer that offers wellness options. Consistent with the 2015 TCHS survey, more than 80% of employers say their leadership is committed to improving the health of their employees, but only one-third of employees feel the same way. Eighty-two percent of employers say their workplace wellness program improves workers’ health; 80% say that it improves productivity; and 72% say that it reduces healthcare costs.
Employer awareness of Small Business Health Options Program (SHOP) Marketplaces is at a low since 2014. Fifty-four percent of small businesses are aware of SHOP Marketplaces; 30% know how to access SHOP coverage for their employees; and only 29% have heard about the SHOP Marketplace in their state. For more information, visit www.transamericacenterforhealthstudies.org.
Opioid Abuse Becomes a Workplace Epidemic
With opioids commonly used for pain management for workplace injuries, a newcomer in the prescription drug market has led to nationwide fatalities, according to HMC HealthWorks. The synthetic opioid called “U-47700,” or “pink” is seven to eight times stronger than heroin or morphine, resulting in the likelihood of addiction, abuse, and death. Suzanne Smolkin of HMC HealthWorks said, “Opioid use, including pink, creates significant biochemical changes in the brain and the addiction is difficult to overcome. With the drug more potent than heroin and morphine, and available online for less than $10 in some cases; individuals seeking inexpensive and immediate relief to chronic pain open a door to potential abuse or worse.”
The drug can be pressed into pill format and marketed as a wide variety of prescription opioids. The DEA has banned the drug temporarily, linking it to 88 deaths in the U.S. in the last year. Opioid abuse in the workplace continues to rise as healthcare providers write more than 250 million prescriptions for painkillers each year, according to the Centers for Disease Control and Prevention. “The goal of prescription medications is to create favorable treatment outcomes and quality of life. This presents a challenge for employers. They need to ensure that their partnerships with benefit providers give them concrete action steps on how to deal with this nationwide and sometimes lethal epidemic. Opioid medications create serious risks at work, Employees should know they can discuss their concerns about painkillers confidentially,” explained Dr. Janis DiMonaco, president, and founder, HMC HealthWorks. Workplace-related injuries often necessitate prescription painkillers. At-risk employees include those with mental illness, long-term opioid use, or who work with multiple physicians. In addition to promoting drug-free workplace initiatives, employers can implement Employee Assistance Programs (EAP) to offer employees who need appropriate interventions and treatment, among other benefits. As employers seek to control costs, a sound benefit plan can support them with federal regulation compliance and offer access to ethical treatment for opioid abuse. For more information, visit www.hmchealthworks.com.
The Financial Wellness of Today’s Workers
Ernst & Young (EY) did a financial wellness analysis of today’s workers and the results are mixed. EY surveyed more than 4,000 respondents, primarily from large corporations and large non-profit organizations. Retirement continues to be on the minds of employees and only 37% said they are confident they are on the right track for a comfortable retirement. Fifty-one percent worry about their financial situation.
Forty-one percent have estimated their needs in retirement within the past 12 months. Sixty-seven percent of workers 18 to 25-year have never thought about retirement planning. Thirty-three percent of those over 50 have never tried to determine how much they would need to retire comfortably. Eighty-six percent contribute at least 4% of their salary to retirement savings plans, such as a 401(k), 403(b), or another type of workplace retirement plan. Yet 14% are contributing less than 4%, which indicates that they may not be receiving their full company match. Sixty-nine percent have some portion of their retirement account in cash-type investments (money market accounts, stable value funds, etc.). Fifty-one percent say they are not likely to sell stock investments and invest their money in safer investments during a market downturn. Sixty percent don’t have a will and, of those who do, only 41% have reviewed it in the past year. Fifty-one percent feel they have an appropriate amount of life insurance.
Forty-one percent overall are satisfied with their financial situation. Fifty percent of those 50 to 64 are satisfied with their financial situation. They are the most satisfied of all the age ranges. Seventy-one percent of respondents have never paid a bill late. Twenty percent said they paid a bill late once or twice over the past 12 months. Seventy-four percent say their debt is manageable, with 9% saying that they have no debt. Even 66% of those just beginning their careers or just out of college (18 to 25-year-olds) say that their debt is manageable as well as 77% of those who are over 50.
Ninety percent say that their household spending is less than or equal to their household income. Eighty-seven percent are confident that they would be able to come up with $2,000 if an unexpected need arose in the next month. Nearly 95% of those who are 65 and older say they could come up with $2,000 as well as 80% of those who are 18 to 25. Fifty-two percent say they could maintain their minimum standard of living in the event of a six-month absence from the workforce due to medical issues. Sixty-three percent of employees who use credit cards pay the balance in full each month; 28% pay more than the minimum; and 6% pay the minimum. Three percent don’t use credit cards. For more information, visit www.ey.com/efs.
Millennials Are Most Likely to Quit Their Jobs
Millennials are more likely than are GenXers or Boomers to quit their jobs in the next six months and nearly one-third of them say that is exactly what they plan to do. A new survey by Clutch finds that Millennials have less job fulfillment than do other generations and they rely heavily on their managers for immediate feedback. Thirty-two percent of the Millennials say they are likely to leave their job in the next six months, compared to 11% to 12% of GenXers and Boomers. Similarly, 40% of Millennials don’t consider themselves fulfilled at work, which is nearly double the number of Gen-Xers and almost four times more than Baby-Boomers.
Experts cite a lack of employee perks like flexible hours and telecommuting that may be contributing to the lack of Millennial loyalty in the modern workplace. However, inconsistent and infrequent feedback from managers can significantly reduce Millennials’ career happiness, regardless of perks. Sixty-eight percent of all workers who get accurate and consistent feedback from their managers find their job fulfilling as do 72% of Millennials. Joe Carella, Assistant Dean for the Eller College of Management, University of Arizona said, “The more traditional models of providing feedback are less liked by Millennials. They want…instant feedback and the immediate connection to the work that they’re doing.” Only 23% of Millennials say they get informal or immediate feedback, compared to 30% of Gen-X employees. Millennials are more likely to correlate job fulfillment with the success of their manager’s feedback.
Millennials Want a Diverse and Inclusive Workplace
Forty-seven percent of Millennials consider the diversity and inclusion of a workplace an important factor in their job search compared to 33% of Gen Xers and 37% of Boomers, according to a study by the Institute for Public Relations (IPR) and Weber Shandwick. Fifty-eight percent of all employed Americans say they haved witnessed or heard about some form of discrimination or bias at their workplace, most frequently racial or ethnic (22%). Millennials are significantly more likely than are older generations to be attuned to such behavior at work. They are also much more comfortable discussing diversity and inclusion issues at work.
Millennials are more likely than are Gen Xers and Boomers to say investing in diversity and inclusion improves business performance (27% of Millennials versus 18% of Gen Xers and-and 20% of Boomers). Employers should do a better job of communicating their diversity and inclusion activities to their employees, according to the study authors. Forty-four percent of employees say that their employer does a good job communicating its diversity and inclusion goals, programs, and initiatives. Although not every employee has a diverse workplace, 34% say they have more diversity at work than outside of work. For more information, visit www.webershandwick.com.
Record Number of Top U.S. Companies Embracing Inclusive Policies for LGBTQ Workers
The nation’s major companies and law firms are advancing in record numbers to protect lesbian, gay, bisexual, transgender, and queer (LGBTQ) workers around the world, according to the 2017 Corporate Equality Index (CEI) by the Human Rights Campaign (HRC) Foundation. This year, a record-breaking 517 businesses earned the CEI’s top score of 100, up from 407 last year. That’s a single-year increase of more than 25% – the largest jump in the 15-year history of the index. The leadership demonstrated by these businesses, including speaking out against discriminatory laws like North Carolina’s HB2, reflects more than a decade of work inside these companies to expand LGBT, and particularly transgender, workplace equality.
Over the past several years, CEI-rated companies have dramatically expanded their support for transgender workers. When the CEI launched, just 3% of Fortune 500 companies had non-discrimination protections that included gender identity. Today, that number is 82%. In a historic display of support for transgender equality, 68 companies joined HRC to file an amicus brief earlier this year supporting the Department of Justice’s effort to block some of the most egregious anti-transgender aspects of North Carolina’s HB2 law. And more than 200 business leaders signed on to an open letter urging North Carolina Governor Pat McCrory and the state’s General Assembly to repeal the harmful law. The record number of companies earning a score of 100 in the most rigorous evaluation in the history of the CEI, reflects their commitment to sexual orientation and gender identity non-discrimination protections — at home and around the world — and to adopting LGBT-inclusive practices and benefits such as establishing employee resource groups and offering trans-inclusive health benefits.
Deena Fidas, Director of HRC’s Workplace Equality Program said, “Through 15 editions of the annual Corporate Equality Index, major private sector employers have demonstrated, over and over, that inclusion is not just the right thing to do, it makes for a stronger, more successful business. From centuries-old companies to those that have existed for just a few years, major employers have adopted LGBT-inclusive policies and benefits at rates that continue to outpace lawmakers and lead the way forward.” Last year, the CEI for the first time expanded its benchmarks for inclusion to include global policies, recognizing the worldwide impact of many Fortune 500 companies. The community has responded, and this year 92% of CEI-rated companies include sexual orientation and gender identity non-discrimination protections that apply to workers domestically and internationally.
The survey includes the following highlights:
- 93% of rated companies had adopted sexual orientation equal employment policies for U.S. and global operations and 92% had gender identity equal employment policies for U.S. and global operations.
- Same-sex domestic partner or spousal benefits were provided by 98% of rated companies.
- 73% of rated companies offer transgender-inclusive health care coverage, up from 60% from last year, the largest single-year increase in trans-inclusive health benefits since the coverage was added to the CEI.
The full report is available online at www.hrc.org/cei.
Book Recounts Doctor’s 10-Year Legal Battle Against Anthem Blue Cross
Three years after a Los Angeles jury awarded damages to Dr. Jeffrey Nordella, the California physician is detailing his legal battle against Anthem Blue Cross in his new book “Denied,” now available for purchase. Dr. Nordella has a long history of confronting Anthem Blue Cross’ business practices that focused on profit instead of patient access to healthcare. In a rare case, a Los Angeles jury awarded $3.8 million in compensatory damages to the Porter Ranch doctor who contended that Anthem retaliated against him for being a strong patient advocate. Dr. Nordella alleged that Anthem barred him from its network in 2010 when he applied to be a preferred provider. Nordella said he was turned away because he had challenged the denial of hundreds of patient claims over the years when he was previously included in Anthem’s network. Nordella said many doctors are unwilling to challenge powerful insurance companies because their incomes are so dependent on being in these provider networks.
Obamacare and Seven Years Down the Drain
by Rob Pariseau
When I think of the millions of hours spent learning and implementing Obamacare, I can’t help but identify with John Belushi as Bluto in Animal House after being expelled from college. Do you remember what he said? “Seven years down the drain.” No one knows what will become of Obamacare, and no one is suggesting that employers cease complying, but here are a few things we do know. President-elect Trump ran on the concept of repealing and replacing the law. The Republican replacement, their Better Way plan, adds medical tort reform and allows interstate health insurance sales to increase competition. It keeps the ban on pre-existing condition limitations and parental coverage to age 26 from Obamacare and tax deductibility of employer-provided coverage to a limit. It adds a health insurance tax credit for those self-employed and others with no access to employer coverage, which requires funding.
Repeal is easy. Replacing is much more difficult and here’s why. Obamacare was can be repealed in the Senate by reconciliation, a rarely used legislative tool that bypasses the self-imposed filibuster requiring 60 votes to act. Reconciliation only requires 51 votes, and the Republicans have 52, so Republicans could repeal Obamacare in the first 30 days of a Trump presidency. Republicans now are debating whether that’s their preferred course of action.
Not so fast. Repealing Obamacare would leave nearly 20 million Americans with much more expensive, if not unaffordable health premiums, and in some cases, no health insurance – and no one wants that. According to Senate rules, reconciliation cannot be used on legislation that requires additional funding and replacing Obamacare with the Better Way plan certainly would, so reconciliation is out. Republicans would then need 60 votes to act, which means they need Democrat votes.
Republicans are vulnerable in 2017 because if they repeal Obamacare and can’t get the needed Democrat votes to replace it, they face the 2018 midterm elections with up to 20 million Americans without health coverage. Not pretty. They may need to compromise to get something passed. Democrats need to defend 25 Senate seats in 2018. As recently as 2014, Democrats had to defend 21 seats and lost nine. Similar results in 2018 would give Republicans a filibuster-proof majority and carte blanche, so it may be in the Democrats’ best interests to compromise in 2017.
And in the meantime, you need to keep going as is. But before you get too hopeful, do you remember what became of Bluto? He became Senator John Blutarsky, Washington D.C. Rob Pariseau CEBS is executive vice president and employee benefit practice leader at Lykes Insurance in Tampa, Florida.
Medicare Part D Shopping Rates Are Up
A study by Connecture finds that shopping for Medicare Part D plans is up by 17% from last year and the share of all enrollments through multi-carrier brokers rose by 8.4%, from 30% percent to 38%. However, more consumers are delaying their plan selection and enrollment to find the plan that provides the best coverage at the lowest price. Jeff Surges, president & CEO of Connecture said, “The lesson for brokers and health plans is that health insurance continues to be complex and intimidating for most people. By offering the right technology you are better positioned to help consumers and members find coverage and other benefits that suit them best.”
Brokers who use health plan and drug comparison technologies can offer more comprehensive and cost effective plan comparison and enrollment options. For example, consumers who look only at the lowest premiums plans rather than the plan’s total annual cost could be in for a rude awakening. Connecture aggregated the total annual cost for a sample population of 50,000 Medicare beneficiaries and found that this group spent about $1,870 per beneficiary. If those same consumers enrolled in plans based only on the lowest possible premium, their out-of-pocket costs would have been $2,229 or 16% higher than the sample. Without this visibility into the total annual cost, picking a plan based solely on premiums leaves consumers vulnerable to higher out-of-pocket costs and lower satisfaction with their selected plan. For more information, visit connecture.com
Americans Nearing Retirement “Terrified” of Future Health Care Costs
More than seven in 10 Americans nearing retirement say they are terrified of what health care costs may do to their retirement plans, according to a study by Nationwide. Nearly three in four older adults say one of their top fears in retirement is out-of-control costs for health care. John Carter, president of Nationwide’s retirement plans business said, “Year after year Americans cite health care costs as a major source of anxiety, particularly as they approach retirement. However, in our sixth annual survey (blog.nationwide.com/wp-content/uploads/2016/12/NFM-16070AO.pdf), we are seeing more fear and uncertainty than ever. Americans know changes are coming and they don’t have a clear sense of what health care costs will look like in the future, and that is adding to the uneasiness people were already feeling about this important issue.”
People are becoming increasingly reliant on federal programs to pay for their health care. The online survey of 1,316 adults over 50 finds that 64% plan to use Social Security and 61% use or plan to use Medicare as their main sources to pay for their health care costs in retirement. Shockingly, less than half use or plan to use savings to cover health care expenses. A third of older Americans couldn’t pay a $500 medical bill. Most older Americans say they are unprepared for certain health care expenses, yet they’re not acting to save now. One in three of those nearing retirement is not doing anything to save for healthcare costs in retirement. To save for health care costs in retirement, 41% are building their savings, 33% are paying off credit cards and debt, 28% are investing, and 27% are increasing 401(k) contributions. Seveny-five percent are worried about not having the funds to cover unplanned medical expenses. Carter said, “As workers prepare for retirement without savings it’s not surprising they are quite fearful. Thirty-three percent say they couldn’t pay $500 in unexpected medical costs. Relatively common expenses, such as X-rays, can be close to $1,000 in out-of-pocket costs. A good way those living in and preparing for retirement can address their fear is to establish and follow a sound plan.” More than one-in-three older adults with a household income under $150,000 are deflecting health care costs by making sacrifices, such as spending less on groceries, delaying treatment for illnesses, and skipping preventative screenings.
Caregiving comes into play when discussing health care cost concerns. Family members are often the first line of defense as aging Americans need to rely on others for care. Half of these adults are worried about becoming a burden to their family as they get older. Sixty-two percent say they would rather die than live in a nursing home. Despite the overwhelming concerns about care, nearly half of older adults have not discussed health care costs in retirement with anyone. Half of married adults haven’t talked with their spouse about it, and eight in 10 adults with children haven’t talked to their children about their plan to address health care needs in retirement, most often because they don’t want to worry them.
Carter said, “Older Americans seem to be paralyzed by their fears when it comes to addressing health care costs in retirement. In a day and age with so many unknowns around health care, it can be easy to avoid the conversation, but that is the first and most important step to ensuring you and your family have a plan for future care.” Fifty-seven percent of those who have a financial advisor haven’t talked with their financial advisor about health care costs. Seventy-five percent of those who have discussed retirement with a financial advisor say it is very important or important their advisor talks to them about health care costs, compared to 53% last year. Eighty percent of those who have discussed retirement with a financial advisor say their advisor is well-equipped to discuss health care costs in retirement. Only 28% of older adults work with a financial advisor. Sixty-five percent of those who do plan to discuss health care costs with an advisor.
Consumers Hold Drug Companies Responsible for High Prices and Out-of-Pocket Costs
Voters blame drug companies for high drug prices and high out-of-pocket costs. The findings undermine the drug industry’s $100 million PR campaign to blame higher costs on employers, unions, health plans and the pharmacy benefit managers (PBMs) they use to negotiate discounts on prescription drugs, according to a survey by the Pharmaceutical Care Management Association (PCMA). “Consumers are well aware drug companies set drug prices and they know higher prices mean higher out-of-pocket costs. No one’s buying the drug companies’ campaign to shift blame to employers, unions, plans, or the PBMs that negotiate discounts on their behalf,” said Mark Merritt Pharmaceutical Care Management Association (PCMA) president and CEO. By almost three-to-one, voters blame high drug prices for increased cost-sharing; three-quarters of voters say the cost of prescription drugs is too high, and more than four of five voters with prescription drug coverage are satisfied with it.
Why We Need a Government-Run LTC Program
by Laura Katz Olson
The U.S. is experiencing a rapid aging of our population, particularly among the eighty-five and over a sector that is most in need of long-term care (LTC). Low-income seniors requiring personal assistance in performing activities of daily living generally cannot afford costly private-sector services on their own, whether at home or in an institution. So they must rely on Medicaid, a demeaning needs-tested program that may force them into a nursing home. Middle class older people have to impoverish themselves to qualify for the program and they, too, frequently wind up in an institution unless the family steps in. People who depend on Medicaid generally do not have access to the better-quality facilities.
Abdication of collective responsibility for our frail elders also overly burdens their roughly 17.7 million family caregivers, mostly women, often leaving them emotionally, financially, and physically overwhelmed. They must contend with a confounding array of complex illnesses and multiple functional and cognitive disabling conditions, including Alzheimer’s disease and related dementias. In order to attain any government assistance, the aged and their families endure pointless paperwork and bureaucratic hurdles not encountered by participants in other social programs such as Social Security. I experienced this first-hand, nearly eight years ago, when I was suddenly thrust into a long-distance caregiving role for my mother and repeatedly faced intractable obstacles to attaining assistance for her. This was the beginning of my education as a consumer and not just a researcher of services for the aged. Geographic location determines the available amount, scope, and duration of publicly-supported services rather than actual need. My mother, who was entitled to only 10 hours of home care per week under Florida’s Medicaid program, surely could not have remained at home with such limited help given the extent of her disabilities. She might have fared slightly better in another state.
Private long-term care insurance is touted by certain political leaders as a solution. However, the evidence suggests that this is not a viable alternative for the vast majority of Americans. Premiums tend to be prohibitively expensive for moderate and low-income families, and have been skyrocketing for many individuals who already own policies. Plans typically pay far less than the actual cost of care, cap the number of benefit years, impose elimination periods (generally ninety days), and usually are not indexed to inflation. Collecting on contracts can be challenging as well since qualifying conditions for claiming benefits tend to be stringent. In addition, insurance companies tend to cherry-pick the healthiest clients, refusing to enroll anyone even at risk for disabling disorders.
In my estimation, in order to meet the current and future needs of care-dependent individuals, the U.S. must implement a mandatory, government-run LTC social insurance program. Similar to Medicare, everyone would contribute through a combination of general taxes, payroll taxes and annual premiums for recipients, based on income. Concomitantly, a universal single-payer system would de-stigmatize the receipt of benefits by advancing LTC as a social right; eliminate the pauperization of middle-class elders; remove income verification requirements; drastically reduce recertification and other burdensome procedures; save money through lower administrative costs, and offer economic security to seniors and their families. The plan would equalize access to benefits, irrespective of household income or where one resides. Older people not only would be eligible for the same services in each state, but they could also move to a new locale more easily and expeditiously. Certainly, this would be advantageous for chronically ill elders who want to be closer to their adult children and grandchildren. Moreover, in an all-embracing public program, the choice between entering a nursing home and obtaining care at home would be the same everywhere in the nation and the quality of services would no longer depend on one’s ability to pay.
In order to recruit enough competent, dedicated nurses and nursing aides, it would be necessary to pay adequate wages and benefits, provide advancement opportunities and improve the workplace environment. Many nursing homes are short-staffed and face high turnover. Studies consistently show that having high levels of direct-care workers is one of the most important factors in providing decent care.
Let me offer a few suggestions to further enhance the quality of care under my proposed government-run LTC social insurance program. The U.S. would benefit from a restructuring of the nursing home and home care delivery systems. For example, it is well-documented that for-profit nursing homes—especially publicly-traded chains—generally have a lower quality of care in terms of overall ratings, staffing, turnover, deficiencies, citations, and complaints. The growing trend toward private equity ownership of institutional facilities and home care agencies has greatly worsened the situation.
Long-term care is ill-suited for market strategies and the concomitant pressures of profit maximization. We should transform the financial underpinnings of LTC by moving from commercial to predominantly public and nonprofit providers, as occurs in most other economically advanced nations. Such a shift would not only eliminate the perverse incentives that prioritize financial gains over people, but could also foster a less costly and more humane means of serving our vulnerable citizens.
Barring such a radical transformation, at a minimum, it would be necessary for policymakers to break up the multi-facility nursing home chains; outlaw the takeover of long-term care services by private investment firms; and establish tougher regulations for the LTC industries and impose immediate and harsh penalties for violating them. The cost of prescription medicines must be controlled as well.
Some may argue that a government-supported LTC social insurance system would be too costly. However, the U.S. already spends considerable taxpayer dollars for such services, with clients mostly receiving substandard, sometimes harmful care for our money. In 2014, total Medicaid spending on LTC was $119 billion; Medicare contributed an additional $30 billion for post-acute services and rehabilitation. As these figures suggest, LTC is big business with much of the money flowing into the coffers of commercial nursing home and home care companies. Unless our public officials advance fundamental structural changes, the long-term care industries that have positioned themselves to feed at the public trough will continue to thrive at the expense of the chronically ill aged and their struggling paid and informal caregivers.
Laura Katz Olson has served as a Professor of Political Science at Lehigh University since 1974. She has published widely in the field of aging, health care and women’s studies, her articles addressing social welfare policy, especially the problems of older women and long-term care. To date, she has published nine books, mostly focusing on the care of the frail elderly. Olson has served on the American Political Science Council and is on the editorial board of the Journal of Aging Studies and the New Political Science Journal. In 2009, she received the Charles A. McCoy Lifetime Achievement Award and, in 2012, Lehigh University’s Williamson Award in Social Research for her book The Politics of Medicaid. Her most recent book, Elder Care Journey: a View from the Front Lines, relates her personal experiences as a caregiver for her mother.
Deferred Income Annuities
Mass Mutual expanded its deferred income annuity product offering by making it available as a qualified longevity annuity contract (QLAC). A QLAC is a deferred income annuity offered by an insurance company that allows distributions to begin after age 70 1/2. Approved in 2014 by the IRS and the Dept. of the Treasury, new rules allow owners of qualified assets to delay receiving distributions from the assets in a QLAC up until a maximum age of 85. Once distributions begin, all standard RMD rules apply. Because of strict IRS limits on how a QLAC can be established and funded, this option isn’t right for everyone. However, when it is set up and maintained correctly, a QLAC may help the owner to do the following:
- Supplement Social Security retirement benefits or pension benefits with a predictable stream of future income.
- Transfer some of the risks associated with longevity to the insurer. Future income is guaranteed, no matter how long the owner lives or what happens in the financial markets.
- Manage RMDs and plan for expenses that may become a priority later in retirement (such as increased health care costs).