Federal Long Term Care Insurance

January 21, 2013 | Kate Horrell

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You’ve probably spent some time organizing care for a family member, or you certainly know someone who has.  Whether you are worrying about yourself, your spouse, your parents or even your kids, most of us have thought about long term care insurance.  It is scary, confusing, and expensive, and it can be easier to put it off than deal with all the fuss.  However, there is hope.  If you are reading this page, there’s a good chance that you are eligible for the Federal Long Term Care Insurance Program.

What Is Long Term Care Insurance

Long term care insurance (LTC)  is designed to help pay for the cost of long-term care for situations not covered by health insurance, Medicare or Medicaid.  It is usually not designed to cover illness directly, but rather the inability to perform basic activities of daily living such as bathing, dressing, and feeding.  While LTC insurance is usually thought of as insurance for older people, approximately 40% of people currently in long term care are under the age of 65.

Who Is Eligible For The Federal Program?

Those employed by the federal government, whether as a military member or a civilian, have the option to purchase coverage through the Federal Long Term Care Insurance Program.  In addition, people receiving annuity payments from such service are also eligible to purchase insurance through this program.  There is a provision for some adult children to utilize the program.  Most fascinating to me, however, is the fact that parents, parents-in-law and step-parents of current employees are eligible, too.  That’s a wide range of eligibility!

How Much Does LTC Cost?

The prices vary considerably, depending on the benefits purchased and the age and health of the beneficiary.  I’ve put in a variety of different examples to get some price estimates.

For a 65 year old female, a five 5 year plan with $200 per day coverage, a 90 day waiting period, and 4% automatic compound inflation coverage will cost $322.74 per month.

For a 43 year old male, a three year plan with $200 per day coverage, a 90 day waiting period, and  5% automatic compound inflation coverage will cost $129.37 per month.

For a 22 year old female, a three year plan with $100 per day coverage, a 90 day waiting period, and 4% automatic compound inflation coverage, coverage will cost $54.36 per month.

You can calculate the costs for your particular variables at the Federal LTC Rate Quote Calculator page.

Other Considerations

There are many things to consider when purchasing a LTC insurance policy.  First, you must be sure that you will be able to continue to make the premium payments.  Non-payment is the only reason that LTC insurance policies may be cancelled, but non-payment will get your policy cancelled without any refund of premiums.

In addition, you must consider whether you would be eligible for financial assistance under any other programs.  Health insurance usually does not cover LTC.  Medicare, the federal government’s health insurance program for those aged 65 or older, or people with certain specific conditions, does not cover all forms of LTC.  Medicaid, the federal government’s health insurance program for people who are unable to provide for their own care in any way, pays for LTC for people with minimal assets.  The Department of Veterans Affairs (VA) provides LTC to some of its clients, based upon priority ranking basis that gives the highest preference to veterans with severe, service-connected disabilities.

Lastly, it is important to consider your ability to pay for LTC out of your own assets.  LTC coverage has lifetime coverage limits, and you may be able to cover those same costs out-of-pocket.  In this case, you can save the premiums and put that money towards your LTC costs.

LTC insurance is not the right tool for everyone, but it can be an important part of an overall financial plan.  The Federal Long Term Care Insurance Program is a convenient and relatively affordable LTC insurance program.

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I have specifically not covered everything there is to know about the Federal Long Term Care Insurance Program here because their website is fabulous.  I encourage you to investigate and learn more.

Comments

  1. verlin says:

    If you plan on purchasing LTCI you better have a good health history showing no treatments such as for cancer, etc. etc. Also, This insurance isn't for those people retired overseas either. Expensive? yes, even for the young healthy person who has no history of any health problems.

  2. ltcfacts says:

    What Verlin states is not necessarily true.

    1) Just because you’ve been declined by one long term care insurer, does NOT mean that you’ll be declined by all.

    2) Each of the top ten long-term care insurers has a unique way of looking at your health history. Whichever insurance agent you work with, make sure that he or she knows the unique “underwriting nuances” that each company has.

    3) Just because one long-term care insurer approves you with a “substandard” rate, does not mean that they all would. Each long term care insurer has a unique way of determining who can qualify for the ‘preferred’, ‘standard’, or ‘substandard’ rates.
    http://ltcfacts.org/2013/01/21/declined-for-long-

  3. BERNARD ODELL says:

    OVER 65 MARRIED COUPLE-IRS HAS INFORMED US THAT OMB
    WILL SEND US A STATEMENT FOR THE YEAR 2012 TAXES AND THE
    AMOUNT WE PAID FOR THE WHOLE YEAR TO THE OMB LONG TERM
    CARE PARTNERS LLD SUBJECT TO THE TOTAL AMOUNT FOR THE YEAR-ONLY THE EXCESS OVER 7.5% OF YOUR ADJUSTED GROSS INCOME IS DEDUCTIBLE-SO WE COULD COMBINE ANY INSURANCE
    PREMIUMS DEDECTED FOR THE YEAR TO ADD TO THAT TOTAL.
    MOST PEOPLE HOWEVER DO NOT EXCEED 8.7% OF THEIR ADJ
    WHICH IS DEDUCTIBLE.
    ALSO FEDERAL CIVIL SERVICE RETIREES HAVE BC/BS INSURANCE TAKEN OUT OF YOUR MONTHLY RETIREMENT PAY AND THAT AMOUNT IS ALSO ON YOUR 1099R TAX STATEMENT WHICH IRS SAYS
    YOU CAN DEDUCT PER THE OFFICAL TAX STATEMENT BOTH FROM'
    OMB.

  4. RIck Martin says:

    Curious how often LTC premiums are increased after you've signed up. LTC-industry has seemed to undercalculate what will be needed to cover the aging population.

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