How to Evaluate What to Do About Federal Long Term Care Rate Increase

Although this is geared to federal employees who are evalating what to do about Federal Long Term Care rate increase, the process of evaluating what to do are the same for those with other policies.  

A new contract was awarded to John Hancock Life and Health Insurance Co. for the LTC Federal program and will result in higher premiums for those enrolled in the Federal Long Term Care Insurance Program (FLTCIP).    If you have this plan, your premium will increase an average of 83 percent and could be as much as 126% to take effect November 1, 2016. 

Options available to you:

·         Accept the increase, benefits unchanged

·         Reduce benefit options

o   Reduce future inflation % to have a partial premium increase

o   Reduce future inflation % to pay approximately the same premium as you do now

o   Reduce other features – such as benefit period or daily benefit – for these you need to contact LTCFeds at 1-800-582-3337

·         Accept a paid-up policy with a limited benefit and pay no further premiums.

o   Limited benefit will be the greater of the paid-to-date premiums or 30 times your daily benefit

How to evaluate what to do?

·         What is the cost of care where you live now and where you expect to retire?

o   https://www.genworth.com/about-us/industry-expertise/cost-of-care.html

o   A 3% compound inflator is included in the projection on the above site if you use the option to calculate future cost.

·         How will your other finances (pension, TSP, 401K, other financial resources) complement insurance?

·         If you decide that yes, you do want insurance but would like to explore other options, individual long term care insurance or a life or annuity with long term care rider may be the solution. Baygroup Insurance can educate you and help you decide what meets your personal needs. 

o   unlimited benefit period in your federal plan?  It Is important to keep your current plan.  Lifetime coverage with the one carrier on the traditional long term care marketplace will probably be much more expensive.

o   Did you purchase the federal plan over 5 years ago?  For similar benefits, the options on the individual marketplace will probably not be less expensive.  Pricing is based on your age and health at the time of application.   There are benefits features not available with the federal government plan with John Hancock that you find desireable.

• Shared Care - This feature allows partners to access benefits under each other's policy, contracts vary.  Up the death of one partner, the deceased's benefit pool would revert to the surviving partner.
• Joint Waiver of Premium - Both partners premium is waived when either is on claim (collecting benefits)
• Waiver of home health care elimination period - This makes the waiting period (elimination period) zero days for home and community based care and the days you use care will satisfy equivalent days of the facility elimination period with a service day elimination period.  With a calendar day elimination period, each day, once qualified care begins, is credited toward the one time elimination period.
• Monthly benefit - As opposed to daily benefit a monthly benefit will provide greater flexibility in home care situations since actual costs on a given day may exceed the average daily benefit allowed and would be covered until the monthly limit is reached.
• Survivorship - Premiums will be waived in the event the partner dies after both policies have been in force for at least 10 years.
• Greater number of inflation options - such as inflation for set number of years and then the benefit level will remain the same.
• Life Insurance with a long term care rider
• Annuity with a long term care rider
• Home health care only policy

o   Would you like to supplement your federal plan with additional coverage?  If so, contact Baygroup Insurance and we will be happy to educate you.