April 15, 2011You might not have noticed the beginning of the second-ever Federal Long-Term Care Insurance Program open season due to all the shutdown and furlough hype last week. But the open season did begin on April 4, and will run through June 24.
This is an opportunity for current employees, along with their spouses or same-sex domestic partners, to sign up for a plan with a shorter list of health-related questions than is usually required. Eligible employees, retirees and family members always can apply for the FLTCIP, but there are usually around 40 questions to answer regarding your health; during this open season period, there are only seven questions for employees, or nine if you are the spouse or same-sex domestic partner of a current employee. To learn more about the basics of the federal plan, visit the FLTCIP website. It includes an interactive consultant to help you through the process of applying for insurance, designing a plan and understanding the benefits.
Employees I meet generally can be divided into two groups when it comes to their opinions about the need for long-term care insurance.
The first group likens such insurance to "cancer insurance" or "mortgage insurance" -- types of coverage for a very specific need that is unlikely to make anyone more financially comfortable than the person selling it. These people just don't see the need for long-term care coverage. Often, they think the cost of such care could be met through their own personal savings, or provided free of charge by a family caregiver.
The other group I meet has firsthand knowledge of a situation in which the need for long-term care had a devastating effect on the finances of a loved one. These people tend to purchase long-term care insurance as soon as they can.
We all hope we'll never live to see the day we need constant care. But there are some facts about the reality of aging in the 21st century that all of us should be aware of. With any insurance, you might pay premiums for the rest of your life and never collect a dime in benefits.
The way any insurance works is everyone pays premiums, but not everyone will get the same benefit. It isn't all that much different from Social Security. Most Americans pay FICA taxes, but 25 percent of taxpayers never collect a Social Security benefit. Or think of term life insurance. You pay premiums during the term of the policy, obviously hoping that at the end of the term you are still around, and you will no longer pay premiums if your need for the insurance has ended. The benefit you received for paying the premiums was the peace of mind that your family would be protected in the event you weren't around to provide for their needs.
People aren't dying like they used to.
Considers these facts, courtesy of the Hastings Center, a nonpartisan research institution dedicated to bioethics,:
Long-term care takes a heavy toll on caregivers.
Most people who need custodial or personal care receive it at home from family members. Caregiving can lead to emotional stress and even depression. People who experience the most caregiver stress are the most vulnerable to a decline in their own health. If you are a caregiver, then you surely can tell of the rewards of providing such help, but you also know all too well the demands it places on your health, your time, your other family members and your own well-being.
Long-term care can destroy your finances.
If you were to need someone to help you with dressing, bathing, feeding and other basic tasks, or if you needed supervision because of a severe mental impairment, how much would it cost? Even if such care is provided by a family member, how much would it cost them to take time off work, or to be away from their own family to care for you?
Here are some figures on average costs, as of 2009, according to the Health and Human Services Department Clearinghouse for Long-Term Care Information:
It could happen to you.
You might not want to think about it, but the sad fact of life is many of us will need some assistance during our lifetime. According to the American Association for Long-Term Care Insurance, baby boomers start turning 65 in 2011 and the number of older people will increase dramatically. The older population in 2030 is projected to be twice as large as in 2000, growing from 35 million to 71.5 million. Between 2000 and 2040 the numbers of older adults with disabilities will more than double, increasing from about 10 million to 21 million. More than two-fifths of people 65 and older have reported a functional limitation. Eighteen percent had difficulty with one to two activities of daily living.
An estimated 10 million Americans needed long-term care in 2000. That figure is going nowhere but up.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.
For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Monday mornings at 10 a.m. ET on federalnewsradio.com or on WFED AM 1500 in the Washington metro area.
April 15, 2011