Letters to enrollees cite an imbalance between the program’s projected income and outflow. Image: Africa Studio/Shutterstock.com
By: FEDweek StaffMost enrollees in the Federal Long-Term Care Insurance Program must choose over the next two months between higher premiums or lower coverage, the latest in a series of erosions of the program’s value to enrollees.
Letters sent to enrollees and a posting on ltcfeds.com say the reason again is an imbalance between the program’s projected income and outflow, which triggered the prior “enrollee decision periods” and which resulted in the suspension of new enrollments late last year for what is expected to be through late next year.
“Recent analysis of the program’s actual and projected experience concludes that a premium rate increase is needed,” the posting says.
Those affected are enrolled in benefit designs called FLTCIP 1.0 and 2.0, many of whom already have experienced the same choice more than once—also on short notice—although there may be exceptions depending on the person’s age at enrollment. Individual premium increases and coverage decrease options are being outlined in letters sent to them and through the personal account feature at ltcfeds.com; they vary according to the enrollee’s age when the policy was issued and the benefits chosen.
Those wishing to decrease coverage must do so by November 9; if they make no choice, the higher premiums will take effect automatically January 1. Coverage can be canceled at any time but there is no paid-up provision unless the increase would exceed a threshold under consumer protection law. In that case, lifetime benefits will be limited to the lower of the total premiums paid through January 1 or 30 times the person’s daily benefit amount.
Those who have enrolled after October 2019 are in what is called FLTCIP 3.0, which already has a less generous set of coverage options, including no option for lifetime coverage and a lower maximum for annual inflation protection. Also not affected are those in FLTCIP 1.0 or 2.0 or enrollees in the “alternative insurance plan” (which covers only nursing home care and only for up to two years) who currently are drawing benefits or are waiting for a decision on a pending claim. However, if a claim is denied, or if a condition for which benefits currently are being paid improves to the point where the individual is no longer eligible, the premium increase will apply.
The notice adds, though, that not being subject to the upcoming increase “does not mean your premiums are guaranteed. Your premium will not change because you get older or your health changes, or for any other reason related solely to you. Premiums may only change if you are among a group of enrollees whose premium is determined to be inadequate and OPM approves the change.”
The NARFE organization said the premium increases could be so high as to be “contrary to what any reasonable person could expect when they entered into their contract for coverage. Now, they may be facing a choice between unaffordable premiums or inadequate coverage; and have lost the time and opportunity to forge an alternative plan for future long-term care costs.”
“The scenario resembles a classic bait-and-switch scheme, as FLTCIP enrollees took the bait when they purchased insurance at lower-quoted price, and now are forced to switch to a higher cost product or lose their investment,” it said.
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