Feds’ Long Term Care Insurance Premiums Will Rise Sharply in 2016

Premiums for federal employees and retirees in the long-term care program will jump later this year, according to the Office of Personnel Management.

A new contract awarded Tuesday to John Hancock Life and Health Insurance Co. will result in larger out-of-pocket costs for Federal Long-Term Care Insurance Program enrollees in the fall of 2016, as first reported by Federal News Radio. OPM is still working with John Hancock to finalize the new rates, and expects to unveil specifics in the “near future,” according to agency spokesman Sam Schumach.

The new, seven-year contract retains John Hancock, which last received the contract in 2009. The insurance company was the only one to place a bid for the contract, which remained open for one year.

While insurance rates increase annually for enrollees who opt not to pay higher costs up front, the rate change under the new contract will likely surpass the 4 percent to 5 percent annual inflationary increase. In 2009, FLTCIP enrollees saw their premiums jump by as much as 25 percent.

“It is expected rates will increase as is occurring across the country,” Schumach said, noting that “whenever possible” OPM will work with John Hancock to offer enrollees different policy options to “help mitigate or offset the effects of any increase they may experience.” These “landing spots” -- options provided by an insurance company to help offset cost increases -- will give enrollees more opportunities to pick and choose coverage so their policies are customized and fall into their price ranges, Schumach said.

Premiums increased in August of last year for new enrollees in the FLTCIP, but not for the approximately 273,000 people already participating in the program. OPM attributed that increase to a periodic review of program pricing “to assess the adequacy and appropriateness of the premium rates available to new FLTCIP enrollees.” At the time of the 2009 contract award, OPM said there would not be a premium hike until 2016.

FLTCIP, which was created in 2002, assists with health care costs for participants who need help with daily personal functions, or who have a severe cognitive illness, and covers home care or care in a nursing home or assisted living facility -- benefits not often included under health insurance plans. Federal employees, retirees and their relatives, including same-sex domestic partners, are able to apply for long-term care insurance, and can customize their plans based on age, inflation rate options, and when they want to pay their premiums (monthly or biweekly).

The program does not include a federal match for employee-paid premiums.

Kellie Lunney contributed to this report

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