TOPICS
TOPICS
Popularity Contest
This is the story of two federal insurance plans that met with very different welcomes.
Dental and vision insurance finished its first enrollment period at the end of last month with 690,000 enrollees. That number was way beyond the 250,000 participants officials anticipated. The Web site that handled enrollments became bogged down because so many people were using it.
Federal employees, apparently, were hungry for the coverage despite the fact the government isn't subsidizing premiums. For regular health insurance, the government pays for about 70 percent of premiums.
Then there is federal long-term care insurance, which was introduced in 2002. Long-term care insurance covers assistance with the basic tasks of life such as bathing, dressing and preparing meals, including services available in nursing homes. As of September 2006 -- four years since the plan's inception -- about 214,000 people had signed up.
Why is there a 476,000-person gap in enrollment between the two offerings? The interest group AARP released a study last month that found most people don't know the cost of long-term care and overestimate Medicare's portion of it. Fifty-nine percent of the 1,456 people surveyed believed Medicare would pay for an extended nursing home stay. But it doesn't. Fifty-two percent said Medicare would pay for assisted living costs. It doesn't, except in cases where people have depleted their assets.
Only 9 million Americans have long-term care insurance. In fact, the federal program is the largest group plan in the country and lawmakers have looked to it as a model.
The Government Accountability Office released a report this week detailing, among other things, the challenge of marketing the federal long-term care program. Insurers say direct-mail is the most effective way to market the coverage, but the Office of Personnel Management was unable to provide addresses for all eligible employees; only 40 percent received information about the program in the mail.
If you didn't get the mailing, then here are some statistics that may turn your head: According to the Federal Long-Term Care Insurance Program, average nursing home costs are about $52,000 per year. Those for assisted living facilities are about $25,300 annually, and home care costs more than $20,000. By the year 2030, those costs will rise to about $190,600; $109,300 and $68,000; respectively.
The monthly rates for the government's long-term care insurance range from $6 to $605.10, depending on age and the breadth of the coverage.
But this type of insurance, like dental and vision coverage, may not be cost-effective for everyone. A useful source of information is the Shopper's Guide to Long-Term Care Insurance, published by the National Association of Insurance Commissioners.
Dental and vision insurance enrollment ended with the close of open season last month, but you can sign up year-round for long-term care coverage. Anyone interested in the federal program can apply here.
COMMENTS
- I am interested in long-term care insurance, especially after a relatively short convalescence for my Mom (who then died). More than anything my sisters and I wanted to get her home, an option that would have been available if she had had long-term care insurance. Beyond the need, however, are the caveats. Last month's AARP newsletter had a major story on problems with some of these programs. For example, one man who had paid in for years was hit with double premiums to keep coverage in line with market forces; he was apparently hit due to fine print in his contract. "Market forces" driven by drug and insurance conglomerates' profits. A horror story in this month's AARP journal told of a lady who had paid for years, then got Alzheimer's. Her daughter helped her sell her house, then moved Mom in with her. The insurer then refused to pay due to a fine print definition of "home." Frankly, this stuff scares me. I don't understand the fine print. Since this is a private company, not a government program, I feel there is less oversight and no guarantees. Beyond that, the early fed group premiums were below $100 a month. They are now double or more. I appreciate feedback from other folks who have had some experience with this. GovExec.com reader Posted January 12, 2007 3:53 PM
- My father has been in a nursing home in the Midwest for almost 10 years with Alzheimer’s and he is in fairly good physical health. He pays approximately $5,000/month for care and that amount continues to rise. My mother-in-law is also in a nursing home with Alzheimer’s and her monthly bill exceeds $5,000. Because of this my husband and I took the time and effort to understand the options available and signed up when the insurance was first issued. Is it money we could use elsewhere? Absolutely. But dealing with this first hand has made us believers in this type of coverage. Pam Posted January 9, 2007 9:27 AM
- The information on long-term care was confusing. Everything was this is how we think this will work or it could include this or that. You were never sure exactly what the coverage for long-term care was. Then it was finally firmed up and it seemed like you had a short time to make your commitment. It took me a while to feel comfortable with what was being offered and the cost of the insurance. I was not ready to commit the significant amount of money to long-term care when the quick sign up period occurred. I had asked the long-term care hot line if there would be another open season without the medical exam and was told yes. Now, I know that wasn't true -- so the cost of long-term care for someone with a health issue just sky-rocketed to be prohibitive. The dental and vision insurance has an open season each year. If you have no major dental to take care of it's a great deal. Dental and vision will always be more popular because it's affordable and people understand the need. Long-term care was hard to understand and the cost was like sticker shock. Lindy Posted January 4, 2007 7:22 AM
