Posted on Friday, 10th June 2016 past

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I applied for Long Term care insurance when it was first offered as a do good in Dec of 2002. Our premiums for the Future Purchase Option (FPO) at that time were reasonable for the 5 years of coverage we elected; $73.57 monthly for my married woman and I.  My premium for the Hereafter Purchase Pick was 37.98 and Mary's $35.59.

I was 52 at the time. Nosotros didn't select the automatic compound aggrandizement adjustments and with the future purchase option our v years of coverage provided a full benefit of $228,125 or $125 per day. Currently our premiums are $149.26 monthly, $77.17 for me and $72.09 for my wife,  simply over a 100% increment from our initial 2003 premiums.  Our daily benefit increased to $203 per day, a 39% increase  in the daily coverage amount for a 100% premium increase!

Originally the providers were John Hancock Life and Insurance Company and Metropolitan Life. Now John Hancock is the sole provider.  Many insurance companies aren't issuing new policies anymore and there are few providers to choose from today. Plus the prices have increased dramatically for many.

The Federal Long Term Care Insurance Programme (FLTCIP) costs increase significantly if you opt for the compounded inflation coverage, the 4% or 5% Automatic Compound Aggrandizement Choice (ACIO).  Every two years under the FPO plan I receive a letter offering to either increase our premium and daily benefit amount, reject the offer and maintain current coverage, or alter to an (ACIO) option. Last October we could accept inverse to Option three, the 4% (ACIO) for a full monthly premium of $421.33 with a lower daily do good or the five% (ACIO) for $558. That is almost 4 times what we are paying now!

Thankfully we haven't changed coverage to the ACIO options and I can decline future purchase offers 3 times without having to complete a total underwriting application to receive time to come FPO increases. I haven't declined a FPO increase yet.

Many federal employees selected the (ACIO) options and are at present pondering what to do with their coverage since y'all can't elect the (FPO) plan that I have once yous leave it.  It states in their alphabetic character that,"You will no longer receive FPO offers" one time you change to ACIO.

If y'all accept Choice one, the Future Purchase Choice (FPO), and your wellness is declining yous can opt for the inflation adjusted rates without providing testify of your good health concurrent with the next premium increase.  At any other time y'all would have to provide verification of your health to make this modify.

We intend to keep our current coverage unless the premiums down the road skyrocket and if my health starts to decline I can modify to one of the ACIO options if needed. With the FLTCIP program you can phone call to alter your coverage at any time, there number is ane-800-582-3337 or visit their online site at www.LTCFEDS.com. However, to increase coverage you will accept to submit an underwriting awarding confirming your good health except equally noted in a higher place. If your premiums become likewise high you can always reduce coverage by changing from a 5 year to a 3 year policy or reduce your Daily Benefit Amount (DBA).  This can be done anytime.

The majority of insurers have dramatically increased premiums for Long Term Care and in some states premiums take increased over 50% recently. In Pennsylvania four insurers requested permission from Pennsylvania insurance regulators to increase premiums for electric current policies.  MetLife, according to the Kiplinger's Retirement Report, "requested rate increases of 43% to 60%, and the insurance department canonical a 20% increase."  Other providers requested increases of up to 88%.

If I inverse to Choice 4 with a 5 year policy and five% ACIO coverage for my wife and I, our combined almanac premium would be $6,696! Currently nosotros pay $1,791 annually for FPO Pick i.  In the private sector many are paying  thousands more annually and getting hit with huge premium increases.

According to Genworth'south study titled "Almanac Median Cost of Long Term Care," the following median annual long-term rates use:

  • Homemaker Care $45,760 ($125/day)
  • Dwelling house Health Aide $46,332 ($127/day)
  • Developed Twenty-four hours Care $17,680 ($49/ twenty-four hours)
  • Assisted Living $43,539 ($119/twenty-four hour period)
  • Nursing Home
    • Semi-Private Room $82,125 ($225/twenty-four hour period)
    • Private Room $92,378 ($253.twenty-four hour period)

The duration and level of long-term care according to LongTermCare.gov varies from person to person and oftentimes changes over time. They list the following average need:

  • Someone turning age 65 today has about a 70% chance of needing some blazon of long-term intendance services and support in their remaining years
  • Women need care longer (3.seven years) than men (2.2 years)
  • One-3rd of today'southward 65 year-olds may never need long-term care back up, just 20 percent will need it for longer than 5 years

These statistics highlight the high cost of this insurance and the need to accept long-term care coverage. Personally, my concerns are twofold. I desire my wife and I to have dignified care in a professional person, make clean, and caring facility and at the same time I don't desire to bankrupt our manor in the procedure. These high costs tin can easily drain your Thrift Savings Plan (TSP), other retirement and banking concern accounts, and investments. Also, I don't want to burden my married woman or our children if I or both of us need long-term wellness care services. The physical and mental strain that a healthy spouse, partner or family member faces when long-term care is needed is monumental and if you take a long-term policy it helps to reduce at least the fiscal stress to a manageable level.  You won't have to worry about where the money is coming from.

Federal employees and annuitants that are confronted with large premium increases should contact FLTCIP to hash out their options for reducing costs. Earlier canceling your policy check for means to reduce costs and explore other coverage options.

Some private sector providers are combining insurance policies with a long-term care passenger and others offer deferred-income annuities if appropriate for your state of affairs.  Lincoln Financial offers a Money Guard policy that combines both.  According to Lincoln Financial, "Unlike traditional long-term care insurance, your policy costs are set at issue and will never increase. Your policy provides benefits, even if you never need intendance, provided all planned premiums are paid."

My wife and I have sufficient coverage for the bulk of our projected expenses for a 5 yr period and volition use personal savings to cover whatever shortfall. Currently my coverage is $203 per mean solar day for a total of $370,475 over a 5 year flow. My wife has the same coverage. Per the Annual Median Cost of Long Term Care Report mentioned earlier in this article I would have sufficient coverage for all but the semi-private and private nursing home room. A semi-private average cost is $225 a solar day of which I or my manor would have to scrap in $23 a twenty-four hour period and an additional $50 a day for a private room.  Call the FLTCIP and ask them for the average cost of coverage for your expanse.  They maintain a database of boilerplate costs for all major metropolitan areas. For Pittsburgh, where I live, the average cost for a nursing home was $283 in 2013 and this would require me to increase my daily benefit amount (DBA) or contribute more from our savings to encompass the costs over my current DBA coverage.

You lot also take to cover the required waiting menses of 90 days and that alone volition require a considerable cash outlay. For example, if you enter a nursing home and are placed in a semi-individual room the average cost today is $6,843 a calendar month, the first three months are on yous. You will need $20,531 to cover this waiting period. Later on that your long-term insurance will pay the bills up to your insured daily amount. Yous will accept to pick up the tab for any charges in a higher place that.  You only need to satisfy the 90 day waiting period in one case during your lifetime. If yous stay at an assisted living facility beginning for 30 days and so enter a nursing habitation, you would merely have to look 60 days since you already had 30 days at an assisted living facility according to the FLTCIP customer service representative that I talked to this week.

Many believe that Medicare and your FEHB program will comprehend long-term intendance costs. Medicare states on page 72 of their guide, "Medicare and nearly health insurance plans, including Medicare Supplement Insurance (Medigap) policies, don't pay for this type of care."  If y'all don't want to brunt your family when you lot need these services research your long-term care options At present. The younger you are when you apply the lower your monthly premium, start early on and research your options.

Asking aRetirement Benefits Summary & Assay. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

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Disclaimer: Opinions expressed herein by the writer are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The writer is not acting in an investment, tax, legal, benefit, or whatsoever other advisory capacity. This is not an investment or benefit inquiry report. The author's opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot exist a substitute for comprehensive investment assay. Any analysis presented herein is illustrative in nature, express in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors deport thorough investment and benefit enquiry of their own, including detailed review of OPM guidance for benefit issues and for investments the companies' SEC filings, and consult a qualified investment advisor. The information upon which this fabric is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates institute the author'southward all-time judgment as of the date of publication, and are subject to alter without discover. The author explicitly disclaims any liability that may arise from the use of this cloth.

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