The Federal Long-Term Care Insurance Program has rolled out its new plan, which it is calling FLTCIP 2.0. The new terms of coverage and premium calculator are available on the program’s Web site at www.ltc.feds.com, and the program has begun accepting applications for the new coverage. Rather than outlining the details of the new coverage, I’ll cut to the chase and give you my opinion.
First, and foremost, the new coverage is definitely better, in general. Most importantly, home-based care, which is often more costly than care in a facility, will be reimbursed at the same rate as facility-based care. The previous, rather arbitrary limit on home-care reimbursement – 75 percent of the facility-care reimbursement allowance – never made sense to me and was often a deal-breaker, in my opinion. I’m happy to see the problem fixed in FLTCIP 2.0.
There are additional improvements to what I consider second- and third-order benefits, but nothing that should make or break a deal for most applicants. When it comes to the benefits offered, FLTCIP 2.0 beats FLTCIP 1.0, easily.
“So what’s the catch?” you should ask. The catch is that the cost of the program has gone up. It’s safe to assume that part of the increase is the result of the improvements to the benefits, and the rest is the result of increases in the projected costs of running the program and paying claims.
A head-to-head comparison between FLTCIP 2.0 and 1.0 should be of interest to current 1.0 participants, since they have the ability to choose between the two. Current participants should carefully review the new coverage and premium, and compare them to 1.0 after the rate increase takes effect in 2010. Unless the premium for similar base benefits under 2.0 is significantly higher than for 1.0, you should favor switching to the new plan.
New applicants have access only to FLTCIP 2.0. Their responsibility as potential participants should be to compare the FLTCIP offering to what is available on the individual retail market. In general, I believe that the new FLTCIP coverage is as good as, or better than, what’s offered by most individual long-term care policies. There are some areas of weakness, however, and these should be considered.
There is no one-size-fits-all answer for every applicant, and your evaluation should consider your
circumstances and objectives. Whether you travel extensively overseas, have relatives or friends who would be willing and able to care for you if you needed long-term care, your personal and family medical histories, and your marital status, among other factors, should be taken into account.
As an example, consider the following coverage limits: $200 daily benefit limit, five years of benefits, a 90- day waiting period and 5 percent compound automatic inflation protection. At age 50, a qualified applicant to FLTCIP 2.0 would pay a monthly premium of $205.30. This is true regardless of the applicant’s health or marital status. The John Hancock Life Insurance company, which underwrites FLTCIP 2.0, and which is arguably one of the best sources for long-term care insurance in the world, also offers an individual policy on the retail market. This policy, issued to a Washington, D.C., resident, with benefits similar to those above, would cost an unmarried applicant in average health $284.26 per month. But if that 50-yearold applicant were in excellent health, married and eligible for a widely available group discount, similar benefits could be purchased for as little as $162.03 per month.
The bottom line is that, in order to make the right choices about long-term care coverage, you need to shop carefully and objectively. For most feds, FLTCIP is now the standard to which all other options should be compared.
Written by Mike Miles
For the Federal Times
Publication October 12, 2009