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Early Enrollment Period Begins For Federal LTCI Program

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Early Enrollment Period Begins For Federal LTCI Program

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An early enrollment period began March 25 for the Federal Long Term Care Insurance Program offered by the U.S. Office of Personnel Management.

The program, offered to federal and postal employees and annuitants, members and retired members of the uniformed services and qualified relatives, is underwritten by Long Term Care Partners, a joint venture between John Hancock Financial Services Inc., Boston, and MetLife Inc., New York.

The early enrollment period, which runs until May 15, is designed for people already familiar with long term care insurance who want information about the rates and features of the federal program.

Many long term care insurance brokers and carriers not involved with the government program have welcomed the federal program, contending that the marketing push behind it will boost the credibility and visibility of all long term care insurance products.

Arthur Stein, a long term care insurance specialist with Cassaday & Company Inc., McLean, Va., agrees that the program will have a positive effect on the industry in general. But he also feels that while it is beneficial to some federal employees and their spouses, others might find policies more suitable to their needs in the private sector market.

Before buying a policy, a potential enrollee should “do an apples-to-apples comparison,” Stein says.

Enrollees should understand, for instance, that the new federal program is not using a uniform approach to pricing.

Instead, calculations of premiums take into account the enrollees age and the benefit period, waiting period and inflation protection option chosen.

“Benefit period” refers to the length of time benefits will last if the policyholder receives care every single day at a cost equal to or more than the daily benefit amount, according to the section of the Office of Personnel Management Web site– www.opm.gov/insure/ltc–that explains this program.

During the early enrollment period, enrollees can choose either a three- or five-year benefit period. During open enrollment, from July 1 to Dec. 31, a lifetime benefit period will be offered.

Long Term Care Partners is waiting to offer the lifetime benefit period because it has not yet finished all the underwriting for full rollout, says Carly Rager, long term care specialist with Long Term Care Partners. It chose to offer the three- and five-year options because it “wanted to get something out there for people to enroll now,” she says.

Enrollees who choose a three- or five-year option during early enrollment can switch to a lifetime option when open enrollment begins. That option will be costlier, Rager says, but if enrollees turn a year older by the time open enrollment begins, their premium will be calculated using their age at the time they applied at early enrollment.

“Waiting period” refers to the number of days during which an enrollee must be eligible for benefits and receiving covered services before benefits start. It works like a deductible.

The inflation protection choices are an automatic compound inflation option and a future purchase option. With the automatic option, the daily benefit amount will increase by 5% annually with no corresponding increase in premium. The initial premium is higher with this option. The future-purchase option allows an enrollee to buy additional coverage every two years at an extra cost. Each time additional coverage is bought the premium increases, according to the site.

A 55-year-old who wants a $50 daily benefit with a 3-year benefit period, a 30-day waiting period and the future purchase option would pay $16.70 in monthly premiums.

For a 55-year-old who wants a $100 daily benefit with a 3-year benefit period, a 90-day waiting period and a future purchase option, the monthly premium is $29.60.

The federal program offers a benefits package that pays toward services including: nursing home care; assisted living facilities; home care; adult day care; hospice care; respite care when a policyholder’s primary caregiver needs a rest; and bed reservations, or payments made to a nursing home or assisted living facility to hold a bed while a policyholder is hospitalized or out of the facility on therapeutic leave.

Stein has put a chart comparing prices for the federal program with prices for comparable policies available through the private market on his Web site, at http://www.ltcguide.com

Some federal employees and spouses of employees with health problems should have an easier time buying coverage through the federal program than they would through the private market, Stein says.

But, he says applicants who are married and/or qualify for a preferred health discount should be able to find a private sector policy that is cheaper than FLTCIP. Applicants who are single, only in average health and below the age of 60 should also be able to find a private sector policy that is cheaper than FLTCIP, he says.


Reproduced from National Underwriter Life & Health/Financial Services Edition, April 1, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.