The limits of long-term care

A federal employee who is diabetic and whose wife has multiple sclerosis wondered whether the government's new discounted long-term care insurance program would cover people with pre-existing medical conditions. "Are we going to be automatically excluded, while [the Office of Personnel Management] maintains to Congress and the President that they will offer long-term care to federal employees?" the employee asked. The answer is "no" for the employee himself, but "sort of" for his wife. Next year, the government will begin offering long-term care insurance to federal employees, military personnel, retirees and some family members at 15 percent to 20 percent lower rates than such insurance in the private market. The Office of Personnel Management is seeking a contractor to provide the insurance at the discounted rates. Long-term care insurance covers services in nursing homes and chronic or extended illnesses that are not covered by standard health insurance. Frank Titus, OPM's assistant director for long-term care, said the agency is asking potential contractors to explain what kinds of questions they will ask to screen applicants for the insurance. For active employees, questionnaires will likely be limited to five or six questions, such as, "Do you certify that you have been actively at work (not in a leave status) for at least 50 percent of your scheduled tour of duty during your last pay period?" and, "Do you currently need or receive help with any of these activities: bathing, eating, dressing, toileting, continence, or transferring from bed to chair, (i.e., the six activities of daily living)?" Questions may also include specific illnesses, such as "Have you been diagnosed with or had symptoms of Alzheimer's disease, dementia, organic brain syndrome, multiple sclerosis, muscular dystrophy or Parkinson's disease?" An employee with diabetes would probably not have to let the insurance company know about his condition. He would be able to get a full long-term care insurance policy. But Titus said multiple sclerosis may be a disease that an insurance carrier would use to rule out a standard policy. In the case of an active worker or a spouse with such a disease, OPM is asking the insurance company to offer either a policy with limited benefits or higher costs, or a discount program through which the employee or spouse could get medical assistance at the lowest rate possible. Titus said OPM is asking long-term care insurance providers to treat spouses as much like employees as possible. But retirees, employees' parents and parents-in-law and their adult children (children under 18 cannot have long-term care insurance policies) will have to undergo full underwriting to get long-term care insurance. Full underwriting involves lengthy questionnaires. "The more the carrier knows about your health, the more likely they will identify something that would be a basis for a decision not to offer you an insurance policy," Titus said. Competition Question The employee with diabetes also wanted to know why OPM was limiting the long-term care insurance program to one company. The Federal Employees Health Benefits Program, the standard health insurance program, offers hundreds of health plans for federal workers to choose from. Titus explained that standard health insurance programs typically attract 90 percent of employees to enroll. But long-term care insurance programs in the private sector usually only bring on 5 percent of eligible employees. If more than one company were involved in the long-term care program, then they would be forced to spend a lot of money competing with each other for a relatively small pool of participants. "That would have a negative effect on premiums," Titus said. "The competition that will occur will be the competition among the carriers that will be responding to our request for proposals," Titus said. "They know one of the important criteria for award will be the premiums they charge." Once the contract is awarded, Titus said it will run for up to seven years. OPM will periodically compare the winning long-term care insurance company's premiums with premiums in private industry. If OPM officials think they could get a better deal from another company, they will re-compete the contract, Titus said.