The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management

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May 2007

Time Has Come For Long-term Care

By: Greg Pearson

Are Canadian employers ready to embrace offering long-term care (LTC) coverage to their employees? The current evidence would suggest that Canadian employers have been virtually silent on the issue. The number of Canadian employers offering LTC coverage to their employees could be counted on one hand.

The factual argument for the need to incorporate LTC coverage into an employerʼs offering is compelling from both sides – both the employer and the employee. Depending on the severity and length of time a person needs long-term care, the costs are significant.

Long-term care is not covered under the Canada Health Act and is a provincial responsibility with services and subsidies differing depending on a personʼs province of residence. The average cost for long-term care in public facilities varies by province, but can range from $2,500 to $7,000 a month.1 Most provincial governments determine cost for long-term care to the individual based on an income test. The province of New Brunswick, however, does consider income and assets in the determination of subsidy.

If the trend seen in other industrialized nations (as the population ages and the financial costs grow) holds true, it would be reasonable to expect that in the near future assets will be taken into consideration for the eligibility of long-term care services in most provincial long-term care plans.

time for long-term care

Handful Of Insurers

Currently, only a handful of insurers offer LTC on individual and affinity platforms in Canada. Only two companies provide LTC to the employer market on either a mandatory or voluntary offering basis.

The information below explores what LTC coverage is and how incorporating this coverage into an employee benefit package could help provide meaningful solutions to employees.

At its most basic, long-term care insurance provides financial benefits intended to help pay for, offset, or minimize the costs for care when an individual is left functionally dependent because of injury, sickness, or severe cognitive impairment. In other words, this person is unable to bath, dress, feed, transfer (move), go to the bathroom, or maintain continence without substantial assistance. This also includes individuals with severe cognitive impairments in need of constant supervision. These activities are referred to as activities of daily living, or ADLs for short.

The LTC products currently available in Canada generally stipulate that an individual must be unable to perform two or more of these ADLs or have a severe cognitive impairment (for example, dementia related disorders such as Alzheimerʼs) to make a claim.

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