UPDATED: Long term care insurance: Pray your premiums are ‘wasted’

When many people consider purchasing long term care insurance, which isn’t cheap, they weigh the odds and worry that they might not collect.

When shopping for homeowners insurance, will you feel cheated if your place doesn’t burn to the ground? Or feel like a loser if it is not totally destroyed by a tornado or hurricane?

Will you consider yourself lucky that you didn’t have to collect, or be bitter because you “wasted” all those premiums for, hopefully, nothing? Is your glass half full, or half empty?

When many people consider purchasing long term care insurance, which isn’t cheap, they weigh the odds and worry that they might not collect — that they or a loved one will never need helping eating, bathing, toileting and just getting through the day.

My mother was a long time federal worker for the departments of Housing and Urban Development; Health and Human Services; the U.S. Information Agency and the Social Security Administration. She was one of the first people to work in the then, brand-new Pentagon building. A GS-2 who, with child in tow, made it close to the top ranks of the GS schedule, earning a master’s degree at night over nine or 10 years. Like I said, she had this kid who was … problematic, grew up to cover federal workers, so there you go. Meantime she was healthy most of her life. We were inner city folks, walked everywhere or took the street car. In fact, I got a car before she learned to drive at about age 30. She was a walker, healthy and smart.

In her 50s, while covering the federal scene I urged her to get long term care insurance. Like a lot of people she didn’t like to think about bad outcomes. Seat belts made her nervous, I could tell, because, I think, they were a constant reminder that there could be a serious accident. So she used them but she wasn’t happy about it. She never was comfortable with the possibility.

She had the same second thoughts about LTC as she had about seat belts, I think, meaning that she didn’t want to think about it. But she did finally get a policy, though not the one the government was offering employees. She did get coverage outside the government.

Then it happened — a car accident and immediate onset dementia, or something, then declined rapidly into assisted living which she,  the super-independent single mom naturally hated.

But the upside, if there is one, is that thanks to LTC, Social Security — she worked a long time in the private sector — and her Civil Service Retirement System annuity she was in good shape. We the family were in good shape financially. She got the best care possible with minimal cost of the family which included me, my kids and their kids. She lived a couple of years under the best conditions, considering the horrible, sad nature of the situation, and left some money to her grandchildren.

Her LTC premiums, which she took on with some trepidation, were not “lost.” It fact it was a major gift to her family and allowed her to end life with the maximum amount of dignity and comfort, given the circumstance.

So what about LTC for you? Premiums are high, for obvious reasons, and they keep going up. More and more companies have dropped coverage because it’s too expensive. The company that wrote my LTC policy has gone out of the LTC business. I’m still covered as part of a grandfathered group but couldn’t get it today from them because they don’t offer it. So if you have the chance to get into a group plan, think long and hard.

Today’s Your Turn radio show features Paul Forte and Joan Melanson from Long Term Care Partners Inc. They run the LTC program for the federal government, and they are going to talk about the existing program including its new 3.0 version, which gives policyholders various options when premiums go up in the future, as they inevitably will. The show will stream live at 10 a.m. EST on www.federalnewsnetwork.com and on 1500 AM in the Washington, D.C.-Baltimore area. It will also be archived on our website so you can listen again, or refer it to a friend or coworker.

If you have questions please email them to me before showtime at mcausey@federalnewsnetwork.com

Here’s a description of the new 3.0 program:

What’s new in the FLTCIP 3.0 product?

FLTCIP 3.0 launched on Oct. 21. New features include 100% international coverage (previously 80%), a 3% annual compound inflation option, and benefit period options of two, three, or five years. Additionally, and perhaps the biggest difference in 3.0, there is a built-in Premium Stabilization Feature (PSF).

What is the new Premium Stabilization Feature or PSF?

The PSF is designed to reduce the potential need for future premium increases; it also may provide a benefit to the enrollee if increases are not needed. The PSF value is based on a percentage of total premiums paid to date less claims/benefits paid. This percentage floats over time based on Program results/outlook. It can range from 10% minimum to 100% maximum and is kept uniform across the program.

Think of it as a “shock absorber” that protects your core LTC benefits. If bumpier than expected conditions occur, the PSF can help to absorb the impact while your premiums and LTC benefits remain unaffected. The value that accrues through the PSF may eventually be returned to you as benefits in the form of a 50% premium offset at later ages and/or partial return of premium at death.

To learn more information about the PSF, visit LTCFEDS.com.

What about current enrollees? Can they get the new product?

FLTCIP 3.0 is a new plan design for new applicants only. Ongoing consideration will be given to what might be offered to enrollees in previous plan series FLTCIP 1.0 and 2.0.

What is the response to the new product?

FLTCIP 3.0 was introduced on Oct 21. There has been considerable interest from applicants and those just beginning to educate themselves about protecting themselves against the risks of long term care.

What is the cost?

A plan can be designed to meet your needs and budget. For example, a 50-year-old applying for a $150 daily benefit amount, with a three-year benefit period and 3% annual automatic compound inflation protection would pay $1,363.08 annually, or $52.42 bi-weekly. A premium calculator can be found on LTCFEDS.com.

FLTCIP Highlights (as of 11/30/19)

  • Current Enrollees: Approximately 270,000
  • Claims paid, monthly (current): $23 million
  • Claims paid, program to date: $1.4 billion
  • Claimant Care settings:
    • Home-based:  47%
    • Assisted Living: 32%
    • Nursing Home: 9%
    • Hospice: 4%
    • Other: 8%

For more information, visit www.LTCFEDS.com or call 1(800)-LTC-FEDS, TTY 1(800)843-3557.

Nearly Useless Factoid

By Amelia Brust

The chemical element cobalt (Co) is named after “kobold,” a goblin from German folklore. In the 16th century miners working near the silver veins of Saxony encountered the ore which resembled silver, but didn’t melt as expected. It also had “mischievous effects” on their health, in other words toxic, so they named it after the mystical mountain-dwelling creatures which they claimed spoiled silver for their own benefit.

Source: Science Friday

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