July 21, 2009 —

John Hancock announced the results of a small business survey on long-term care, finding that employer misconceptions have resulted in a reluctance to offer long-term care insurance despite a perception of employee need. The study, conducted as part of John Hancock's "Know Your Options" long-term care education campaign, surveyed more than 500 benefits decision makers at companies with 10 to 1,000 employees.

According to the survey, six in ten small businesses think that employees are concerned about their ability to afford long-term care. Of the organizations that responded, more than half of those with 500 to 1,000 employees, reported negative impact due to employees dealing with long-term care issues. Yet, few small businesses currently offer long-term care insurance to their employees.

When asked to rank employee concerns, the ability to afford long-term care for themselves or other family members was second only to that of not having enough money for a financially secure retirement (63 percent versus 84 percent). The perception of need was more pronounced among companies with 500 to 1,000 employees, with 72 percent viewing long-term care as an employee concern.

The survey also showed that employers are beginning to feel the effects of long-term care at the workplace, with more than a quarter of small businesses, including more than half of the businesses with 500 to 1,000 employees, saying that their companies have been negatively impacted in terms of productivity loss or increased absences by employees who are dealing with long-term care issues.

Despite these concerns and the actual impact on business, only one-fifth of the companies surveyed offered long-term care insurance plans as a benefit to employees.

“When John Hancock undertook this survey, our intent was to gauge the attitudes of smaller employers in order to better understand and serve this important market segment,” said Marianne Harrison, President of John Hancock's LTC Division. “What we learned was that small employers hold a number of misconceptions about both the need for care and long-term care insurance itself.”

When small employers were asked why they do not offer long-term care insurance, two leading reasons cited were the perceived cost to implement a plan (66 percent) and a perceived lack of interest on the part of employees (63 percent). A third (33 percent) also mentioned that they thought it would be too time consuming to implement a plan. These results contrast with the actual experience of respondents who offer LTC insurance to their employees and felt the implementation and cost of an LTC plan was rarely a problem: very few (5 percent) had a poor experience with cost or ease of implementing a plan. The perceived lack of employee interest is curious and may reflect a lack of cohesive thinking about long-term care in general because the same percentage of respondents (63 percent) also reported that their employees are concerned about the ability to fund future long-term care.

Dennis Healy, Vice President of John Hancock's LTC Employer-Sponsored Sales Department observed that, "These survey results were not surprising. Many employers have mistaken beliefs about long-term care insurance that are just not borne out by actual experience. We have found that when we take the time to work with employers to explain the benefits of offering long-term care insurance and how easy it is to install, their concerns fall away pretty quickly."

In looking at why companies chose to offer long-term care insurance, survey respondents indicated that the four leading reasons important in their decision were attraction and retention of key employees (47 percent), tax advantages to the business or business owner (43 percent), employee demand (43 percent), and exposure to first-hand experiences dealing with long-term care issues (42 percent). When asked about choosing a carrier, leading responses cited as important included the rating of carrier (82 percent) and being offered by a well-known carrier (77 percent).

Healy added, "We already know that education is the key to convincing employers that long-term care insurance can be an important addition to their benefits portfolio. Because more than half the respondents indicated that they have not been approached by a benefits broker or financial advisor about this coverage, we believe the small business market represents a tremendous opportunity for our industry in terms of education and sales."

Methodology
The survey was conducted by Mathew Greenwald & Associates of Washington, D.C. A total of 502 telephone interviews were conducted between May 6 and May 28 with key benefits decision makers at companies with 10 to 1,000 employees. The data was weighted by employee size to reflect the actual distribution of firms with 10 to 1,000 employees. Respondents are top decision makers for the types of employee benefits their company offers; one in three are owners or presidents of their company.