Feds Update Voluntary Long-Term Care Insurance Program

The U.S. Office of Personnel Management (OPM) is replacing its old voluntary long-term care insurance (LTCI) plan.

The new version of the Federal Long Term Care Insurance Program plan, FLTCIP 3.0, still offers stand-alone LTCI coverage, but it now comes with a new premium stabilization feature.

If the plan does poorly, the administrators will use the cash parked in the feature to hold premiums as steady as possible, OPM officials say.

If the plan does well, the administrators will use the cash to lower the cost of the policyholders' premium payments, or to provide a kind of a rebate in the form of a refund-of-premiums death benefit, officials say.

Program Basics

Manulife Financial Corp.'s John Hancock Life & Health Insurance Company insures the plan.

Long Term Care Partners LLC serves as the administrator.

Originally, back in 2001, when OPM was organizing the program, John Hancock worked with an arm of MetLife Inc. to offer the program. MetLife walked away from the partnership in 2009, when the federal employees' LTCI plan went through its first renewal period.

OPM renewed the program for a second time in 2016. John Hancock was the only bidder.

Federal civilian employees and uniformed service members can apply for coverage through a simplified process within 60 days after they become employees. After that they, they can apply for coverage at any time of the year but must go through a medical underwriting process. Retirees can also apply for medically underwritten coverage through the program, and active employees can use the program to apply for coverage for spouses and other relatives through a process that involves medical underwriting.

The program now provides coverage for about 268,000 people, according to OPM.

Competition

Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), said many federal employees may still be able to get cheaper coverage if they apply for ordinary individual LTCI policies, because the program limits the plan managers' ability to underwrite new federal employees.

"If the individuals are in good health, the federal plan's nature has healthy people subsidizing unhealthy applicants and that's something private plans do not do," Slome said.