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By: FEDweek StaffThe Federal Long-Term Care Insurance Program is now offering a “premium stabilization” feature, effective with those first enrolling on Monday of this week (October 21) and afterward.
The change, made with no announcement other than revisions to the underwriter’s website, “is designed to reduce the potential need for future premium increases,” the new benefits booklet says about what is now called “FLTCIP 3.0.” (Coverage elected under the original contract that started in 2002 is 1.0; coverage elected in 2010 until Monday is called 2.0. There are some differences in available benefits between the two.)
The booklet describes the feature as essentially a credit that builds up over time and that will be payable in one of two ways for those who continue their coverage: as a death benefit regardless of how long the person had been enrolled, or in the form of a reduction in premiums for those past age 85 and who have been in the 3.0 version of the program for at least 10 years, until the credit is exhausted. In both cases the amount would be reduced by any benefit payments received and otherwise will have no cash value.
The information does not address differences in premium amounts compared with those already enrolled in the FLTCIP, whose premiums are not changing. Current enrollees could re-enroll in 3.0 to gain eligibility for the new benefit but they would have to go through underwriting again and their premiums would be based on their current age, not the age when they first enrolled.
In addition to age at purchase, FLTCIP premiums vary according to choices of daily benefit amount, maximum payout period, and type of inflation protection elected. While a policy is in effect, premiums may change only for entire groups, not on an individual basis, based on enrollment and claims patterns. The program has experienced several increases in premiums for that reason, one applying to certain enrollees in 2010, another applying to all new enrollees starting in August 2015, and another in November 2016 for almost all those who had enrolled before August 2015.
