Long-term care: Bad news or worse news

The 274,000 feds and retirees in the federal long-term care program have until the end of the month to decide what, if anything, to do about their coverage. Premiums are going up an average of 83 percent (that’s an increase of $111 per month for most) with some going up as much as 126 percent.

Lots of people, and things, are to “blame” for the massive price hike. The entire insurance industry missed out when actuaries failed to correctly estimate the future costs of long-term care: As in how many people would be using it, double-digit increases in medical costs and the fact that people would be living longer and requiring intensive, costly long-term care (either at home or in a facility) for a longer time than most experts expected. In 2000, 104 insurance companies offered LTC coverage. Today there are 14. Go figure.

The economy is to blame. Since the recession, safe investments — the kind insurance companies invest most of their premium dollars — have been paying next to nothing. The Federal Reserve keeps talking about raising interest rates, but so far no action. Meantime the premium pool insurance companies use to pay benefits have been shrinking.

This year only one company — John Hancock — even bothered to bid for the new seven-year LTC contract with Uncle Sam.

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(The company that underwrites the group LTC plan with The Washington Post got out of the LTC business years ago. It was required by law to grandfather in people like me and give us coverage as long as we paid the premiums. But, like most other insurance companies, it isn’t taking in new people for LTC coverage. By the way, my premiums are going up next month too).

Some members of Congress have pledged to do something. But what? And when?

Meantime, LTC policyholders have some important decisions to make. For themselves and their families because if you need LTC down the road somebody, probably a spouse, significant other or your children will get the bills. And decide where you go. And that can be both emotionally and financially crippling.

So what are your choices: Drop LTC coverage and take your chances. Downsize your benefits. Reduce the number of years you will be covered or reduce your inflation protection. Those can be tough choices. But maybe we can help:

Today on our Your Turn radio show we’ll be talking with Paul Forte and Joan Melanson from Long Term Care Partners. They administer the federal program. And they’ll review the ways that enrollees can submit their decision and the avenues available to get help. They’ll also talk about the actual choices people have already made. In some cases, they’ve downsized their coverage but will not be hit by any premium increase.

If you have questions send them to me (before show time) at mcausey@federalnewsradio.com. If we can’t answer them on air, we will be in touch by email. You can also call in during the show at 202-465-3080. The show will be archived on our website so you can listen later, listen again or refer it to a friend or worker. That’s 10 a.m. EDT streaming at federalnewsradio.com or in the D.C. area on 1500 AM.

Nearly Useless Factoid

By Michael O’Connell

In the late 1760s, the British government charged John Hancock with smuggling. Hancock’s Boston lawyer, John Adams, helped him avoid conviction.

Source: Boston Tea Party