The Next Generation of Long Term Care Insurance

FLTCIP 3.0 changes the landscape.

Are you one of the many people who have thought about long term care insurance, but haven’t figured out if it’s worth the risk of rising costs in the future and the possibility that you might not use the benefits you paid for? If so, you’re not alone. Now there’s a new version of the Federal Long Term Care Insurance Program that seeks to address some of these concerns.

According to the Office of Personnel Management, at the end of fiscal 2018, FLTCIP had nearly 270,000 enrollees, making it both the largest group and employer-sponsored long term care insurance program in the country.  Every month, FLTCIP policy holders receive a total of $21 million in claims reimbursements. Over the life of the FLTCIP program, $1.3 billion has been paid in claims with an approval rate of 95 percent.

The program is designed to provide a resource to pay for care needed if you are unable to perform without substantial assistance at least two activities of daily living (such as bathing, dressing, transferring into or out of a bed, or eating) for at least 90 days, or you require substantial supervision due to severe cognitive impairment. 

Now, there’s a new version of FLTCIP, known as FLTCIP 3.0, that provides a premium stabilization feature. That’s an adjustable amount computed as a percentage of the total premium paid for the policy that’s designed to reduce the potential need for future premium increases.

The provision provides for a potential 50 percent decrease in premiums at age 85 if there is a sufficient amount of money available in the premium stabilization fund and if you have been enrolled in FLTCIP 3.0 for at least 10 years. Depending on the experience of the FLTCIP in the future, the amount of the decrease will vary.

FLTCIP 3.0 also provides for a potential refund of a portion of premiums at the time of death. The refund would be subject to a reduction of any claims that were paid while the policy was in effect.

More details about the premium stabilization feature can be found on the FLTCIP website.

The change is designed to address concerns about the potential for future rate increases, which have plagued the long term care insurance industry since its inception. Future increases are still a possibility under FLTCIP 3.0. But it’s important to note that you can’t be singled out for a premium increase because of your advancing age, declining health, claim status, or any other reason related solely to you. Premiums go up when you are among a group of enrollees whose premium is determined to be inadequate. OPM must approve such increases. Your premium also may go up if you decide to increase your benefits.

One of the ways the long term care insurance industry has sought to reduce the cost of insurance is to eliminate features that were the most costly to provide, such as an unlimited benefit period and a 5% inflation option. FLTCIP 3.0 does not include either of these features. 

Premiums under FLTCIP 3.0 are based on your age at the time you purchase your policy, the amount of your daily benefit and the length of your benefit period. FLTCIP offers $100 to $450 daily benefit amounts in $50 increments, and includes two-, three-, or five-year benefit periods.

The last factor that affects your premium is the inflation protection feature you select. FLTCIP 3.0 offers an automatic compound inflation option under which your daily benefit amount will increase by 3% compounded every year. Or you can choose the future purchase option, under which every two years you will be offered an increase to your daily benefit amount based on a calculation derived from the change in the Consumer Price Index.

If you’re considering whether to purchase long term care insurance, here are some first steps to take:

  • Determine if you’re a good candidate for long term care insurance. Some people don’t qualify for this type of insurance for medical reasons, and for others it may simply not be financially wise. For more information, visit the Health and Human Services Department’s  long term care insurance website
  • Learn more about the FLTCIP program on its website, which includes a premium calculator.
  • Don’t wait too long to act. I purchased an FLTCIP policy 14 years ago, at age 47. It currently has a daily benefit amount of $187, a five-year benefit period and a 3.9 percent automatic compound inflation option with a maximum lifetime benefit of $345,500. My premium is currently $148 per month. If I were to purchase a similar policy under FLTCIP today at age 61, it would cost $428 a month.

One of the reasons to consider buying long term care insurance is to relieve yourself and your family of financial burdens that could come as a result of an illness, a fall, or other emergency. It may not be enough to cover the full cost of care, but it can help.

Disclosure: Tammy Flanagan is under contract with Long Term Care Partners, which administers the FLTCIP,  to provide informational webinars on retirement planning issues.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.