OPM Announces New Long Term Care Insurance Plan Option

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Federal employees and annuitants now have a new option for long term care insurance.

The Office of Personnel Management earlier this week spear a new plan and rate structure for the federal long-term care insurance program.

The new plan, called FLTCIP 3.0, is available to federal and postal service employees, annuitants, serving and retired military personnel, and qualified parents who request coverage effective October 21, 2019.

Current long-term care insurance participants are not affected by the new plan or pricing structure, said Long Term Care Partners, the company that administers FLTCIP on behalf of the John Hancock Life and Health Insurance Company.

FLTCIP 3.0 emphasizes home and community care services.

Notably, the new plan includes what long-term care partners have described as a “premium stabilization feature” (PSF). This feature is believed to reduce the need for future premium increases, which, as current FLTCIP participants can attest, have increased significantly in recent years.

Under this feature, the premium stabilization amount will be calculated as a percentage of premiums paid under the FLTCIP 3.0 group policy.

This amount can be used to offset a member’s future premium payments under specific conditions or will provide a refund of a death premium. This amount can be changed at any time and OPM must change the percentage of PSF. Registrants will be notified of these changes, according to long-term care partners.

Premium payments can be offset up to 50% when the participant has reached the age of 85 and has been enrolled in the 3.0 program for at least 10 years.

In addition, the member must have sufficient PSF to pay 50% of his monthly premium. Participants can request the cessation of premium compensation by contacting the program in writing.

Long-term care insurance premiums have increased up to 126% the last time OPM re-competed its contract for the program in 2016. The premium increases affected approximately 264,000 active and retired federal employees, who are paying an average of $ 111 more per month for the same coverage they had in previous years.

With the current pace of change in the long-term care insurance market, FLTCIP participants could see even higher premiums in the future, OPM’s Inspector General said last year. Premiums rose the last time OPM re-competed its long-term care contract in 2009, but the increases have not been so dramatic.

The IG said in 2018 that it wanted to see more formal plans and preparations for what it described as “rapid change” in the long-term market.

Last year, OPM said it was considering new product options and plans for FLTCIP, but Congress is expected to allow larger changes to the long-term care program in the future.

The announcement of the OPM premium rate in 2016 angered members of Congress on both sides. The agency is required by law to issue a new contract for the long-term care program every seven years.

The last fixed price contract went to John Hancock, the sole bidder. John Hancock himself stopped selling group long-term care insurance plans in 2010 and individual policies in 2016. He only administers FLTCIP and his current contract with OPM will expire in 2023.


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