In a report prepared by the OPM’s Inspector General, federal workers who have purchased a policy from the Federal Long Term Care Insurance Program (FLTCIP) will soon see higher premiums and/or a reduction of benefits. The cause: a significant deficit created by lower long-term interest rates and higher claims due to longer life expectancies.
The Cost Of Long-Term Care (LTC)
Another likely factor driving higher FLTCIP premiums is that the cost of care continues to rise year after year. Depending on where you live, the average cost of a private room in a nursing home is over $8,000 per month while the average monthly cost of a semi-private room is over $7,000. Without a doubt, long-term care is expensive. However, purchasing long-term care insurance can help reduce the cost even as premiums rise.
“Sponsored by the OPM, FLTCIP policy benefits are paid through the John Hancock Insurance Company.”
FLTCIP Was Established In 2002
The FLTCIP program was established in 2002 under the Long-Term Care Security Act of 2000. Sponsored by the OPM, FLTCIP policy benefits are paid through the John Hancock Insurance Company. FLTCIP is a premium-based insurance option for federal employees and their qualified family members. Premiums are based on age and the maximum length of the benefit period with the option of purchasing additional inflation protection.
What is inflation protection? When benefits remain the same, long-term care insurance may not offer enough protection when the cost of care is higher decades later when you need it. Automatic inflation protection increases your benefit by a fixed amount each year to keep pace with inflation.
FLTCIP Compared To Private LTC Insurance
The main difference between private LTC insurance and FLTCIP is that the federal program offers a choice of pre-determined standard plans while private plans are more flexible and can be customized for your needs even as your needs change. Many private LTC policies offer a 10% to 20% good health discount as well as discounts for couples who purchase shared-care insurance. These and other advantages are not available with FLTCIP.
Alternative Insurance Products
Since healthcare costs are expected to continue rising far into the future, it should come as no surprise that premiums for long-term care (LTC) insurance in the private sector are also increasing. That’s why it’s important to consider more affordable alternatives that can cover at least some long-term care costs. Touch base with an FRC® trained advisor to learn more about other insurance products designed to provide similar coverage:
- Short-Term Care Insurance
- Critical Care or Critical Illness Insurance
- Annuities With Long-Term Care Riders
