Federal Long-Term Care Insurance Just Got More Expensive for Some

This story has been updated.

Premiums increased Aug. 1 for new enrollees in the Federal Long Term Care Insurance Program, according to the Office of Personnel Management.

OPM sent agency benefit officers a notice on Monday informing them of the rate increases, which do not affect current enrollees in the FLTCIP. The notice said the agency and insurer John Hancock periodically review program pricing “to assess the adequacy and appropriateness of the premium rates available to new FLTCIP enrollees.”

The new premiums -- which, for now, affect only new enrollees -- apply to all plan options, including those under both the automatic compound inflation option (ACIO) and the future purchase option (FPO). Enrollees who choose ACIO pay higher premiums up front to avoid annual increases for inflation, while the future purchase option automatically updates premiums for inflation.

The program does not include a federal match for employee-paid premiums.

OPM did not specify what the average rate increase is under the program going forward. The Federal Long Term Care Insurance Program, which was created in 2002, assists with health care costs for participants who need help with daily personal functions, or who have a severe cognitive illness, and covers home care or care in a nursing home or assisted living facility -- benefits not often included under health insurance plans. Federal employees, retirees and their relatives, including same-sex domestic partners, are able to apply for long-term care insurance, and can customize their plans based on age, inflation rate options, and when they want to pay their premiums (monthly or biweekly).

The increases range widely, depending on which option new enrollees choose. Here are a few examples OPM provided, with the rate changes bolded for clarity: 

A 40-year-old federal or Postal Service employee who wishes to purchase the FLTCIP 2.0 prepackaged plan B (three-year benefit period, $150 DBA) with a 4 percent ACIO will pay $42.68 or $15.45 more biweekly than if they applied before August 1, 2015. 

A 50-year-old federal or Postal Service employee who wishes to purchase the FLTCIP 2.0 prepackaged plan B (three-year benefit period, $150 DBA) with a 4 percent ACIO will pay $50.29 or $8.08 more biweekly than if they applied before August 1, 2015. 

A 60-year-old federal or Postal Service employee who wishes to purchase the FLTCIP 2.0 prepackaged plan B (three-year benefit period, $150 DBA) with a 4 percent ACIO will pay $75.62 or $6.87 more biweekly than if they applied before August 1, 2015. 

The FLTCIP rate calculator reflects the new premiums for new applicants. 

OPM downplayed the seemingly sudden decision and lack of notice to current and new enrollees. 

“Since this did not impact current enrollees, OPM did not announce the rate change in order to limit the confusion for current FLTCIP enrollees,” said an agency statement on the issue in the form of a Q&A. “Federal family members were and are able to apply for FLTCIP coverage at any time. This is consistent with long-term care insurance industry practice; the new rates are communicated as soon as they become effective. This avoids the potential for individuals to make a rush decision to purchase without full consideration of their needs and the product options.”

In 2009, OPM announced a new seven-year contract with John Hancock Life and Health Insurance Co., for the FLTICP, which increased some enrollees’ premiums. At that time, the agency said there would not be another premium hike until 2016.

Federal employee unions and other advocates did not immediately respond for comment to the FLTCIP changes.

To assess the costs and benefits of federal long-term care insurance, check out this October 2009 Retirement Planning column by Government Executive columnist Tammy Flanagan. 

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