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Long-Term Care InsuranceLower Risk to Cover Future Care
A NARFE Federal Benefits Institute Webinar
Presented byTammy FlanaganFederal Retirement Benefits Expert
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Some Facts About Long-Term Care
14,000,000• The number of Americans needing long-term services in 2018
• 60% of Americans 65+ can expect this expense (majority will be age 85+)
• 2,500,000 Americans are seriously hurt in a car accident each year
7,900,000• 56% of those needing care were age 65 or over
• 49,200,000 Americans are over age 65 (2016)
6,100,000• 44% were ages 18 - 64
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Some Facts About Long-Term Care
10,000,000
• The number of Americans who have LTC Insurance since 1998
• 199,962,269 cars are insured in the US
One out of every four will face $50,000+
• 9% will face $250,000 or more in LTC expenditures
$85,800
• Median annual cost of nursing home care
• $150,200 in Connecticut (most expensive)
• $54,800 in Texas (least expensive)
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What You Will Learn Today
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What is long-term care?
• Understanding activities of daily living
• How care is provided
How can long-term care
insurance help?
• Peace of mind amidst a crisis
• Provides a resource to pay for care
• Gives the option for in-home care
Federal Long Term Care Insurance
Program
• History of FLTCIP
• Versions 1.0 and 2.0
• Introducing 3.0
Other options to finance care
• Private insurance
• Self insure
• Family caregiver
What Is Long-Term Care?
• More common after age 65
• Assistance with activities of daily living
• Supervision
• Personal
• Custodial
• Informal
• Skilled medical care
• Acute care
• Medically necessary
• Rehabilitation
• Provided by FEHB, Medicare or Tricare
• Easy for a family caregiver
• Inexpensive
It is
…It is n
ot…
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What is Long-Term Care?
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Or…
Activities of Daily Living
Feeding
Getting Dressed
Toileting
Incontinence
Transferring
Bathing
What is Long-Term Care?
82%In the
community
18%In a facility
Where Does Long-Term Care Take Place?
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Family Caregivers
Spouses, partners, adult children, parents, other relatives, friends, neighbors
Emotional, physical, and financial strains
Steps to avoid being overwhelmed:
• Include family and friends on situation
• Find support
• Discuss finances and health care wishes
• Estate planning – advance directives: Five Wishes
• Learn skills for caregiving
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Causes of Long-Term Care
LTC Insurance can provide peace of mind at a time of crisis
Stroke
Cancer
Injury induced by fall or other activity
Dementia, Alzheimer's, or other mental illness
Diabetes
Obesity
Nervous system disorders (ex. Parkinson's Disease, Multiple Sclerosis)
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How Can Long-Term Care Insurance Help?
Provides a resource to pay for care
Most people can’t self-insure
Avoid financial insecurity
Provides your family an option
• Training for informal caregiver
• Home modification
• Respite for caregiver
Policy may provide additional features:
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How Can Long-Term Care Insurance Help?
Home Care
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Best Age to Purchase
• Prices will rise with your age and policies
• Medical underwriting will be easier today
• Current policies may no longer be availableNo time like now
• There may be future options not available today
• Your money is obligated to higher priorities
If you are younger than
age 50
• Cost may be prohibitive
• May not be medically insurable
If you are older than age 70
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FLTCIP Introduction
https://youtu.be/qAjl1HRez0g
The Federal Long Term Care Insurance Program
Time: 2:55
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The Federal Long Term Care Insurance Program (FLTCIP)
Created by an Act of Congress
• Long Term Care Security Act of 2000
• Established in 2002
Coverage for more than 268,000 enrollees
Sponsored by OPM
Insurance by:
• John Hancock Life & Health Insurance Company
Administered by:
• Long Term Care Partners, LLC
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The Federal Long Term Care Insurance Program (FLTCIP)
Version 3.0 currently available
Coverage available before 10/21/2019:
• Version 1.0 from 2002 - 2009
• Version 2.0 from 2010 – 10/21/2019
You may not “convert” 1.0 or 2.0 to 3.0
• New contract based on current age
• New contracts are all “comprehensive coverage”
• Some features not available under 3.0 include:
• 4% or 5% inflation option
• Unlimited benefit period
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The Federal Long Term Care Insurance Program (FLTCIP)
Informal caregiver benefit
• Friends and family
• Up to 500 days
• 100% of daily benefit amount for home and adult day care coverage
Portable coverage
• No need to retire to maintain
• Retirees can enroll
• Family members are eligible
International coverage
• Care outside of the U.S.
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FLTCIP Version 3.0
Premium Stabilization
• Reduces need for premium increases
• May offset future premium payments
• May provide a refund of premium at death
Premium Offset
• Applied at age 85
• Enrolled 10 years+
• Enough remaining to offset 50% of monthly premiums for 12 months
Refund at Death
• Based on Premium Stabilization Feature (PSF) percentage in effect
• Paid to your estate or beneficiary
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The Federal Long Term Care Insurance Program – FLTCIP Version 3.0
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Premium Stabilization Feature Amount
(FLTCIP 3.0 premium paid to date* X
Current PSF Percentage) -
Claims paid and premium offset used = PSF Amount
Example:
$48,000 X 35% - $0 = $16,800
*The total amount of premium you paid out-of-pocket for FLTCIP 3.0 coverage, and
the amount of any premium offset used for you under the premium stabilization
feature
Definitions
• Premium paid = premium paid out of pocket + any premium offset used
• PSF Percentage = used to calculate what portion of premium paid may be available under this feature (may be adjusted based on the experience of FLTCIP)
– No less than 10%
– No more than 100%
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The Federal Long Term Care Insurance Program (FLTCIP)
Introducing Version 3.0
Pass Underwriting?
How much does it cost?
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The Federal Long Term Care Insurance Program (FLTCIP)
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• Age at application
• Daily benefit amount
• $100 - $450 in $50 increments
• Benefit period
• 2 years
• 3 years
• 5 years
• Inflation protection
• Future purchase option (FPO)
• 3% automatic compound inflation (ACI)
Factors that
influence the
premiums
The Federal Long Term Care Insurance Program (FLTCIP)
Example: Apply at age 50:Daily Benefit Amount $150 $300 $450 $300
Benefit Period 2 years 5 years 2 years 3 years
Lifetime Benefit $109,500 $547,500 $328,500 $328,500
Inflation Protection ACI 3% ACI 3% FPO FPO
Monthly Premium Payment
$77.93 $335.75 $124.85 $117.71
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The Federal Long Term Care Insurance Program (FLTCIP)
Example: Apply at age 60Daily Benefit Amount $150 $300 $450 $300
Benefit Period 2 years 5 years 2 years 3 years
Lifetime Benefit $109,500 $547,500 $328,500 $328,500
Inflation Protection ACI 3% ACI 3% FPO FPO
Monthly Premium Payment
$139.61 $601.75 $260.46 $254.09
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The Federal Long Term Care Insurance Program (FLTCIP)
Example: Apply at age 65Daily Benefit Amount $150 $300 $450 $300
Benefit Period 2 years 5 years 2 years 3 years
Lifetime Benefit $109,500 $547,500 $328,500 $328,500
Inflation Protection ACI 3% ACI 3% FPO FPO
Monthly Premium Payment
$191.79 $839.25 $393.73 $386.91
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The Federal Long Term Care Insurance Program (FLTCIP)
Example: Apply at age 65Daily Benefit Amount $300 $300 $100 $100
Benefit Period 3 years 2 years 2 years 2 years
Lifetime Benefit $328,500 $219,000 $73,000 $73,000
Inflation Protection ACI 3% FPO ACI 3% FPO
Monthly Premium Payment
$564.75 $262.49 $127.86 $87.50
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A Word About Premium Increases
We reserve the right to increase your premium in the future. However, it is
important to note that we cannot single you out and raise your premium
because of your advancing age, declining health, claim status, or for any other
reason related solely to you. We may only increase your premium if you are
among a group of enrollees whose premium is determined to be inadequate.
While the Group Policy is in effect, OPM must approve the increase in
premium. As a reminder, your premium may also increase if you voluntarily
elect to increase your benefits.
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Other Long-Term Care Policies
Sales have declined more than 90% since 2010
Fewer than 12 carriers are selling stand-alone policies
Hybrid policies available
• Annuity products with LTC benefit
• Life insurance products with LTC benefit
• Available through waepa.org
2017
• 60,000 stand-alone policies sold
• 260,000 hybrid policies sold
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Other Options for the Future
Social Insurance Benefit
• Washington state passed law for $36,500 benefit
• Paid by wage tax of ½ of 1%
• Benefits available in 2025
• First in the nation
Medicare Advantage Benefits
• Meals delivered
• Transportation services
• Home health aid
• Therapeutic massage
• Allowance for safety devices
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Other Options to Finance Care
Other insurance / Private policies
Veterans Administration
• Priority ranking system
• Funding limitations
• Vary by geographic region
Medicaid
• State-based supplemented by federal funds
• State poverty criteria
• Spend down requirements
• Asset transfer limitations
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Quiz Time
Long-term care provides help with everyday self-care activities (such as eating or getting out of bed) and household activities (such as preparing meals or managing medications).
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Long-term care provides help with everyday
self-care activities (such as eating or getting
out of bed) and household activities (such as
preparing meals or managing medications).
Quiz Time
Long-term care provides help with everyday self-care activities (such as eating or getting out of bed) and household activities (such as preparing meals or managing medications).
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True
Quiz Time
What pays for most long-term care?
•Medicare
•Medicaid
•Private insurance
•Out-of-pocket spending
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Quiz Time!
What pays for most long-term care?
•Medicare
•Medicaid
•Private insurance
•Out-of-pocket spending
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Quiz Time
What is another name for long-term care insurance?
•Long-Term Disability Insurance
•Medicaid
•Nursing Home Insurance
•Medicare
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Quiz Time!
What is another name for long-term care insurance?
•Long-term disability insurance
•Medicaid
•Nursing home insurance
•Medicare
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Resources:
www.ltcfeds.com - Federal Long Term Care Insurance Program
Phone: 1-800-LTC-FEDS (1-800-582-3337)TTY 1-800-843-3557Int'l 1-571-730-5938
www.aaltci.org
American Association for Long-Term Care Insurance
www.LongTermCare.gov
HHS Clearing House for long-term care information
www.caregiver.org
Family Caregiver Alliance
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