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Long-term care can be provided by family members at home as well as at assisted living facilities or nursing homes. However, the cost of long-term care has ballooned in recent years as Americans continue to live longer and the cost of health care has steadily increased. Long Term Care Insurance may be a solution for some families.
Unlike typical health care — with annual check-ups with your primary care physician, or hospitalization for a required surgery or treatment — long-term care is for those who are physically or mentally unable to provide for their daily needs (e.g. eating, bathing, dressing, getting out of bed, etc.) and require assistance performing everyday activities.
Due to these expanded costs, long-term care insurance may be a savvy way to manage these financial risks and reduce the likelihood of having to pay out of pocket for future care expenses (no, Tricare does not cover long-term care). This article provides an overview of the Federal Long Term Care Insurance Program, which is the U.S. federal government-sponsored long-term care insurance offering. In addition to eligibility requirements and an overview of benefits, it will help you to determine if long-term care insurance is something that you should consider.
What Is the Federal Long Term Care Insurance Program (FLTCIP)?
The Federal Long Term Care Insurance Program (FLTCIP) is a voluntary, premium-based insurance option for employees of the U.S. federal government, including active-duty and retired servicemembers as well as U.S. Postal Service workers, and certain qualified family members. It was created by an act of Congress in 2000 in order to help federal employees better plan for and take control of their long-term care needs. Currently, there are nearly 270,000 people enrolled in the program.
Although there are a multitude of different long-term care insurance products available in the health care market, FLTCIP is the only option sponsored by the U.S. government and is intended to serve the needs of “federal families,” including military families.
Sponsored and regulated by the U.S. Office of Personnel and Management, the program is administered by Long Term Care Partners, LLC, which is affiliated with John Hancock Life & Health Insurance Company — the insurer of the program since its inception.
Broadly speaking, the FLTCIP helps pay for long-term care in several different settings (e.g. at home, an assisted living facility, a nursing home, etc.) and with different caregivers (e.g. friends and family versus a paid home health aide).
While the insurance program helps to cover the cost of care provided by friends and family members, this provision does not include spouses, domestic partners, or anyone living in your household at the time of eligibility.
Fortunately, the FLTCIP is “portable,” meaning that as long as beneficiaries continue to pay their premiums, they are covered — including care that is received outside of the United States (perhaps for those seeking high-quality long-term care abroad).
Pros and Cons of the Federal Long Term Care Insurance Program
- Offers Protection Against Rising Costs: Helps to protect your savings and assets from rising long-term care expenses.
- Portable Coverage: As long as you continue to pay premiums, your coverage remains intact — even if you’ve left government service or retired from the U.S. military.
- Benefits Can Help Reimburse Family Caregivers: Some of the features of the FLTCIP 3.0 plan include paying benefits to informal caregivers and providing them with breaks from regular caregiving responsibilities.
- It’s Expensive: …but not as expensive as requiring long-term care and not having any insurance. The premium amount — which can range from $25 to well over $1,000 per month — is calculated based on your age at the time when you apply (so it pays to apply younger and healthier as opposed to older) as well as the benefit amount, benefit period, and inflation protection option selected.
- Rising Premiums: Premiums have risen substantially over the past decade (not just for FLTCIP, but across the long-term care insurance market), largely due to the intricacies of pricing long-term care insurance. Therefore, even beneficiaries run the risk of unforeseen, escalating premium expenses.
- Lack of Competition: The current insurer of FLTCIP, John Hancock, was the only company to compete for the 2016 award, possibly indicating a lack of competition among providers and lack of incentive to optimize long-term care offerings.
- No Couples Discount: While other long-term care insurance products offered by independent carriers offer “couples discounts,” the FLTCIP does not, meaning that every individual must purchase their own policy, which can lead to higher overall costs.
Both a Pro & a Con
- Single Pricing Class: Unlike other long-term care insurance offerings, FLTCIP has one pricing schedule based solely on age, which reduces some complexities for those considering different policies. This could be a pro or a con, since a single pricing class could end up leading to greater overall costs for those who live longer or require less care than they previously thought.
Who Needs Long-Term Care?
Although long-term care is often associated with the aging population and tends not to appear on the radar of young people, statistics reflect differently: around 37 percent of long-term care is for people under the age of 65, many of whom live with a chronic sickness, severe mental illness, or injury and need help taking care of themselves on a daily basis. It is reasonable to think that at some point in the future, many of us will require some type of long-term care, whether it’s delivered in our own homes via a home health aide, at an adult daycare center, in an assisted living facility, or in a full-time nursing home.
Despite the widespread need, long-term care is typically not covered by health or other types of insurance (including, in many instances, Medicare) and is most commonly provided in the United States by adult children, family members, or friends. And given the high costs of any type of long-term care, it’s wise to consider insurance options to help protect your savings and assets.
Generally speaking, FLTCIP is available to:
- Eligible federal and U.S. Postal Service employees
- Those receiving annuity payments
- Active-duty and retired servicemembers
- National Guard members who have been activated for more than 30 consecutive days
- Members of the Selected Reserve
- Qualified family members – spouses, domestic partners, adult children, or parents, parents-in-law, and stepparents of living eligible employees (a great Christmas present for your in-laws!)
Federal employees and U.S. Postal Service workers who are eligible for the Federal Employees Health Benefits (FEHB) program are therefore eligible for FLTCIP, regardless of whether or not they are enrolled in FEHB.
The FLTCIP is also available to a few other groups, such as employees of the Tennessee Valley Authority, the District of Columbia Courts system, certain District of Columbia government employees, and eligible survivors of federal employees or military members.
How to Apply
If you fall into one of the eligibility groups listed above, you can apply for FLTCIP online or by calling Long Term Care Partners at 1-800-582-3337 to request an application.
There is no open season for FLTCIP; therefore, eligible individuals can apply at any time.
Be prepared to submit personal information, such as your Social Security number, date of birth, and health information. More information may be required depending on the applicant’s age.
Plan and Benefit Options
In October 2019, the Office of Personnel and Management rolled out the program’s latest plan — FLTCIP 3.0. This version of FLTCIP places an emphasis on home and community care services and includes a “premium stabilization feature” which is intended to reduce the variability in premiums (which has been an ongoing problem for FLTCIP beneficiaries in past years).
Some of the key benefits and features of FLTCIP 3.0 include:
- Choice of Care Location: Care can be provided at home, an assisted living facility, adult day care, hospice facility, or nursing home.
- International Benefits: Care received outside of the United States is covered up to 100% of a beneficiary’s daily benefit amount.
- Friends and Family Member Caregivers: Excluding spouses or domestic partners, other family members can serve as informal caregivers for a 500-day period and up to 100% of a beneficiary’s daily benefit amount can be applied.
- Built-in Flexibility: An “alternate plan of care” may incorporate customized benefits that are not already included in FLTCIP 3.0, allowing some flexibility to meet specific needs.
- Stay-at-Home Benefit: Certain costs that make care at home more feasible and comfortable (e.g. wheelchair ramps, durable medical equipment, caregiver training) are covered up to 30 times the daily benefit amount.
- Guaranteed Renewable: Coverage cannot be canceled due to age or a change in health.
- Break for Caregivers: Benefits are paid to provide your primary caregivers with temporary relief from caregiving responsibilities.
However, since long-term care is a deeply personal decision, the FLTCIP allows beneficiaries to design their own long-term care plan so that policyholders can actively manage the costs and included features of their care plan. This includes choosing a daily benefit amount, a benefit period, and inflation protection options, since care down the road will cost more than care provided today. For more comprehensive details about FLTCIP provisions, see the FLTCIP 3.0 Benefit booklet.
Is Long-Term Care Insurance Right for Me?
As with other insurance products, such as health or renter’s insurance, whether or not to buy a policy depends largely on your personal situation, financial situation, and risk tolerance.
Long-term care insurance may be right for you if you have significant assets to protect, the means to pay premiums, and you want to be able to choose how and where to receive care. Additionally, you might not want to rely on family or friends for long-term care, or you may wish to devote your funds and assets to things other than long-term care expenses.
On the other hand, long-term care insurance may not be practical if you do not have the extra cash to pay premiums, if you have few assets to protect, or if the bulk of your income comes from Social Security or Supplemental Security Income.