Federal employees that sign up for long-term care insurance now have a means of keeping costs for that plan more consistent as they get older, as the Office of Personnel Management announced Oct. 21 the release of the Federal Long Term Care Insurance Program 3.0.
“It has a new feature — the premium stabilization feature — which we think goes a long way toward [addressing] what has been a problem with the long-term care industry at large and that is projecting premiums into the distant future that will occur quite some time from now,” a senior OPM official told Federal Times.
Long-term care insurance is an optional investment for federal employees, annuitants and qualified relatives that is separate from their health insurance and provides funding for care in the event of that person being unable to perform basic daily tasks for themselves.
Federal employees will see a more of a premium increase on their health insurance than in 2019, matching up with the average rate increase seen over the last decade.
The cost of premiums usually increases for such insurance as a person gets older and is more likely to have need of it, but the new federal plan is designed to help keep costs at a stable rate during that time.
“At purchase of this product, the enrollee will pay their premium, and if they have the coverage in force at the time of their death, they will receive at present 35 percent of the total premium that they have paid as a benefit payable on death,” the official said.
“If they live beyond age 85, they can use at least 50 percent of the premium stabilization fund that they have accrued to offset future premiums, until that fund is exhausted.”
Feds could end up having the amount available to their families from the premium stabilization fund in the event of their death change, depending on the costs of the program, although that amount will not go below 10 percent, according to the official.
“If we get good outcomes relative to the assumptions that we’ve made in setting the premiums, that number can actually go up, and it can go up all the way to 100 percent,” the official said.
The plan is tax-qualified, and no other long-term care insurance plan offered in the United States offers the premium stabilization features provided for feds.
The approximately 250,000 federal employees, annuitants and others that are already enrolled in a FLTCIP plan will not be impacted by the new offering, as the changes provided in 3.0 are designed for those that are new to enrolling in FLTCIP.
“The feedback that we got is that having a stable premium over a longer period of time is something that people in the market would like to see,” the official said.
“We think this is a very valuable benefit; it’s something that people should likely have in their portfolio of benefits ... but the choice is different for every individual to look at the benefit, look at what they’re able to afford and make the choice that’s best for them.”
The FLTCIP is one of the most underutilized benefits offered to federal employees, according to the 2017 Federal Employee Benefits Survey, which found that only 10 percent of those that responded to the survey were enrolled in the program.
But the official said that this modified benefit could offer a new recruiting tool in the federal arsenal, as this sort of plan isn’t offered anywhere else but the federal government.
More information on the types of services covered by long-term care insurance and a price calculator tool are available on the federal long-term care website.