Federal Long Term Care insurance?
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Anonymous
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FLTCIP is now 3.0. Notice they no longer have an unlimited/lifetime option. It suggests to me the long term insurance industry, and the actuaries who priced them, figured out they overpromised. Well, I bought my LTCI at the ripe age of 24 (33 now). An unlimited option with a 4% inflation option (my daily benefits are compounded 4% each year). And, I darn well expect that to be there. No way, I am getting out now looking around the marketplace.
I would create a spreadsheet of what you are being quoted now, anticipate an increase every seven years (when OPM rebids the contract)...just to be safe, double it, and price it when you anticipate to use it (that is, when you anticipate needing nursing home care/etc.). The big big mistake people are making is anticipating only needing LTC for a short period of time. Folks: with the advances in science, I anticipate we will be living longer, not better, and I very much expect to be in a nursing home on the tail end of my lifespan. I would suggest you get some sort of protection foryoursel. |
Anonymous
| no underwriting involved and, because of that, it may not be the best option out there in terms of cost. shop around. or save enough so that between health insurance and money saved, you won't need this. |
Anonymous
But the problem is that the unlimited LTC insurance policy you have is no longer available. OP needs to calculate the benefits for 3 years or whatever the policy covers, not longer. Plus, there is no way to know what the premium increases will be. As the old folks would say, you're buying a "pig in a poke." I'd rather save my $$ in an investment account and be able to keep the $$ if it turns out I don't need it. Further, if you have a budget in retirement that includes a generous amount for travel, clothing, dining out, home decor, boat, etc, those expenses will diminish greatly or even disappear completely when you need LTC. The LTC won't be $150,000 a year on TOP of your current budget. The amount you need to make up will be much less than that. |
Anonymous
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I would talk to a financial planner. There is so much to consider. If you took money you would pay in premiums and invested it, how much would you have when age 65 or 70? How good is LTC benefit and can you make up difference between LTC benefit and cost of private care (given that you will have been paying premiums with some of the money you'd otherwise be saving)? How much do you care about your kids inheriting money and would you be open to giving them money when you are still relatively young and healthy?
My mom needs 24/7 Alzheimer's care. A home caregiver is $400/day. Her LTC insurance will cover it for a few years. One place we looked at is $21K/month for a private room. |
Anonymous
That's a fair point but I actually am the nutcase who read his policy booklet. The booklet was unequivocally clear that the group policy guarantees continuation of coverage and in the event that the Contract with John Hancock ends, OPM will continue coverage and provide coverage that is "substantially the same as that provided by the Group Policy." I would argue that if they were to pull the rug from me and renege on their deal of providing unlimited coverage, I would take them to court. And, if you think I'm kidding, I already started looking at all my rights and preparing for the lawsuit. See 5 CFR 875.104. https://www.ecfr.gov/cgi-bin/text-idx?SID=97a4188f80a446f1d3d25d9ba475a48a&mc=true&node=pt5.2.875&rgn=div5 Long story short: don't trust the insurance industry. |
Anonymous
I don't have your policy booklet, but the one I looked at when I made the decision not to purchase the coverage had absolutely no commitment regarding premium increases. In fact, it was explicit that premiums could be increased. "Substantially the same" coverage, yes, but at what price? And this still doesn't help those who sign up for the new program that doesn't offer unlimited coverage. |
Anonymous
01/28/2020 16:19 PP here. The premium increases were always there and I agree that the premium increases were explicit in the booklet. However, I read the part when JH can increase premiums and the booklet is also clear that they cannot single me out and raise my premium because of advancing age, declining health, claim status, or any other reason related to me. And, any premium increase must be approved by OPM. I have already done my research as to who in OPM is involved with this, I bought one share of Manulife stock (NYSE: MFC), the company that owns JH so that I could be apprised of their SEC disclosures and financial strength of the company and its insurance products, I have researched fully the FOIA process and request for information about me and any of the process involved with FLTCIP, including the actuaries who are partly to blame. Sounds like overkill, I'm sure, but I am not messing around with the insurance industry. |
Anonymous
PP, I appreciate your research on this. Which version do you have. (Note: I have 2.0.) |
Anonymous
I think you've done your due diligence, but I also think you've overestimated your ability to do anything about this should they screw you. Even if you're a lawyer and represent yourself, they'll have a team of lawyers that will keep you tied up in discovery forever. The precedent is worth way more to them than it is to you. |
Anonymous
| How much should one save for LTC if they don't buy LTC insurance? $300K? I guess it makes sense to assume 3 yrs of care? How do you know what to save? |
Anonymous
You don't really. For someone who has quite a bit saved in retirement, it's an easy call -- if you have $5 million in assets and are living off of $200,000 in earnings, you just figure that any additional costs will come out of your capital, and it will take a very long time to spend it down (say you need $250k per year rather than $200k, then even if you need to come up with an additional $150k on top of the $200k, you're still good for longer than you'll live). If you have very little savings, then it's not hard, as you just figure that you'll spend it all and go on Medicaid. It's a harder call for those in the middle -- say you're living pretty well on a pension but don't have a ton of extra assets. I'd do a calculation on what you think you'd really spend out of your budget if you were in assisted living and you're not spending $$ on travel, outside activities, etc. My guess is that $100,000 per year is a good bet. Although I understand pp's concern that people will live longer in the future, it is still true that very few people live in extended care for more than 3 years. I had one relative who did, although that was an unusual situation with someone who got dementia at a relatively early age and was otherwise very healthy. My other relative with dementia was in care for about three years, and almost none of that involved super expensive medical care. Personally, I'd mentally bookmark about $300,000 in savings and assume that if the worst happens, the final years will be covered by Medicare. |
Anonymous
PP here: I have 2.0. It is the last plan to have the unlimited option (which is not in 3.0). I monitored very closely what the industry was doing with unlimited plans and saw the writing on the wall: they overpromised. Well, when the time comes, I want the services for which I paid. And I don't think that's unreasonable for me to expect. |
Anonymous
In the words of the Dowager Countess of Downton Abbey: "don't be so defeatist, dear, it's very middle class." |
Anonymous
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Bumping this discussion back up:
OPM is shutting down the federal LTC program for two years to new applicants and coverage increases on Monday, December 19. You must apply by 11:59pm on December 18. My prediction is that they are going to introduce a new LTC 4.0 program with even worse coverage and higher premiums. If you want to participate in the current program or increase your coverage, you must do so this week. You do not need to wait for open season or a qualifying life event. I just opted in last night, as I am a new employee to my agency. It required only an abbreviated underwriting questionnaire with no medical appointment required. My coverage is $300/day for 5 years with $547K lifetime cap. I’m age 41 and it’s costing me $122 per pay period. There is a 3% annual compounding inflation rate for the benefit amounts, while the premium stays static (except when the program is rebid). My great grandparents lived until 100, so I expect longevity. The good thing about the Fed plan - the plan also covers your spouse or kids, so long as they don’t have qualifying medical conditions; it covers informal caregivers (like relatives or a friend who provided care); premium refund benefit upon your death My spouse has a preexisting medical condition, so doesn’t qualify under the federal LTC plan (or any LTC plan). So we will need to save separately for my spouse, but at least my care is covered. |
Anonymous
The contract was last bid in 2016 and there was an average premium increase of 83%. I think the contract ends next year so I would expect a substantial premium increase at that time. It just seems like the actuarial assumptions used to price the product were poorly done and one can be subject to dramatic price increases. |