A voluntary long term care insurance program is having a hard time mailing promotional letters to federal employees, but the insureds appear to be good risks.
Officials at the U.S. Government Accountability Office have presented those observations in a report on the performance of the Federal Long-Term Care Insurance Program.
Units of MetLife Inc., New York, and Manulife Financial Corp., Toronto, have teamed to form Long Term Care Partners L.L.C., Portsmouth, N.H., a joint venture that manages the LTC insurance coverage for 214,000 program enrollees.
The program, which began enrolling federal employees in March 2002, is now the largest private LTC insurance program in the United States, John Dicken, a GAO director, writes in the report, which was sent to a number of Republican and Democratic congressional leaders who have oversight over federal civilian and military employees and retirees.
The current program contract expires at the end of 2008, and the U.S. Office of Personnel Management has the right to replace LTC Partners with another vendor.
One difference between the federal program and ordinary voluntary LTC benefits programs is that the government itself owns the program and the assets backing the program, Dicken writes.
Because the program is so new and because the structure is so different from an ordinary private voluntary LTC program, the OPM agreed when it negotiated the program contract in 2001 to allow LTC Partners to set up an unusual compensation arrangement, Dicken writes.
Profits at most insurers selling voluntary insurance depend on the experience of the programs they insure, Dicken writes.
LTC Partners gets a performance-based based payment that amounts to up to 3% of LTC program premium revenue.