Issue Briefs

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Age at Purchase

Percentage Increase

65 and younger

25%

66

20%

67

15%

68

10%

69

5%

70 and older

No increase

b) Underwriting requirements Action during Special Decision Period

Underwriting required

Choose one of the personalized choices presented in their letter

No

Make a change in coverage that is different from what is presented in letter:

Depends on whether the change results in an overall increase or decrease in benefits:

a) Changes that result in an overall increase in benefits, whether in FLTCIP 1.0 or FLTCIP 2.0

– Abbreviated underwriting for current enrollees who are now active workforce members or spouses of active workforce members (see actively at work requirement below)

– Full underwriting for all other current enrollees

If a current employee’s employment status changes after submitting an abbreviated application but before the increased coverage becomes effective, the employee must reapply with full underwriting.

b) Changes that result in an overall decrease in benefits

No

In most cases, the effective date of Special Decision Period changes in coverage will be January 1, 2010. For any Special Decision Period change that required abbreviated underwriting to go into effect on that date, the active workforce member must be actively at work at least ½ of one day during the month of December 2009.

d) Timing of Special Decision Period letters

The mailings will begin in mid-October and be staggered over several weeks, so enrollees will not all receive their letters at the same time. Mailings to enrollees with the Future Purchase Option will begin October 12. Mailings to enrollees with the Automatic Compound Inflation Option will begin October 26.

e) Due date for decisions

The Special Decision Period ends Monday, December 14, 2009. Elections must be submitted by that date.

f) Effective date

Benefit and/or premium changes will generally take effect January 1, 2010. Changes requiring underwriting may have a later effective date depending on the length of the underwriting process.

g) For current enrollees only

The Special Decision Period is for current FLTCIP enrollees only. It is not a general open season for all employees and annuitants to elect FLTCIP coverage. We expect to hold a FLTCIP Open Season for all individuals eligible to apply in late 2010. However, eligible individuals may apply for coverage under the FLTCIP at any time with full underwriting.

h) Help is available

We recognize that these Special Decision Period choices can be difficult ones to make. We are making the Special Decision Period documents as simple as can be for a complicated decision, but we want to emphasize that enrollees should not feel that they have to make decisions without assistance. Long Term Care Partners has specially trained Customer Service Consultants standing by to help current enrollees understand their choices. Live help is available from 8 a.m. to 7 p.m. Eastern Time at 1-800-582-3337 (TTY 1-800-843-3357).

i) Federal Register Notice

We will issue a Federal Register Notice with rules for this Special Decision Period in the near future. These rules pertain only to changes that existing enrollees may make during that time.

 

OPM recently issued this benefits letter providing the most detail to date on the new provisions in the FLTCIP long-term care insurance program, along with procedures for current and future enrollees and the pending premium increases for some.

New contract term

By law, the FLTCIP operates on a seven-year contract cycle. Last year, the Office of Personnel Management issued a Request for Proposals for the FLTCIP’s second contract term (2009-2016). After a competitive procurement process, OPM awarded the contract to John Hancock Life and Health Insurance Company to provide insurance coverage to all current and new FLTCIP enrollees. The transition to John Hancock as the sole insurer of the second contract term will occur on October 1, 2009. Until that date, insurance will continue to be provided by the John Hancock and MetLife consortium that provided insurance for the Program during the first contract term.

Current enrollees’ coverage continues without interruption.

Long Term Care Partners continues as the program administrator. Their toll-free phone number, 1-800-582-3337 (TTY 1-800-843-3357), and website, www.ltcfeds.com, remain the same.

New benefit plan

New benefit options and the accompanying updated premium structure will become available for new applicants starting October 1, 2009. The new benefit plan, called "FLTCIP 2.0," features several benefit enhancements and the elimination of some less-popular features, as shown in the FLTCIP Plan Comparison. Anyone whose application for coverage is received by Long Term Care Partners on and after October 1, 2009 will be applying for coverage under FLTCIP 2.0.

The benefit plan offered during the first contract term, which we are now calling "FLTCIP 1.0," will no longer be offered after September 30, 2009. Enrollees with FLTCIP 1.0 may keep their coverage or move to the new benefit plan, if they wish (see the "Choices" section for more information on this topic). Long Term Care Partners will accept applications for FLTCIP 1.0 coverage through September 30, 2009. FLTCIP 1.0 applications received after September 30, 2009, will be returned to the applicant, who will be able to re-apply using the FLTCIP 2.0 application.

Applications being accepted

New applications for coverage under FLTCIP 1.0 will be accepted until September 30 under normal rules. This includes new hires and newly eligible employees, who still have the opportunity to apply for coverage with abbreviated underwriting within 60 days of becoming eligible. Other eligible individuals will still be able to apply for coverage with full underwriting at any time. As mentioned above, applications for FLTCIP 1.0 must be received by Long Term Care Partners by September 30, 2009.

The online application process and downloadable applications will not be available from the www.ltcfeds.com website until the transition to FLTCIP 2.0 takes place. If employees are interested in applying for coverage before October 1, they should call Long Term Care Partners for guidance. Long Term Care Partners will discuss the benefit and premium changes that will take place, the timing of those changes, and the appropriate application to use.

General notification letter

In August, Long Term Care Partners sent a letter to each current enrollee with general information about the changes to the Program. This letter enclosed formal documentation noting the change to John Hancock as the insurer for the second contract term and provided information for the enrollee on what to expect in the next several months as the program transitions to the new contract. Enrollees in claims status and enrollees in the Alternative Insurance Plan received a slightly different letter.

Premium increase

The general notification letter also informed enrollees that OPM and John Hancock have determined that a premium rate increase is necessary for current FLTCIP enrollees (those insured under FLTCIP 1.0) with the Automatic Compound Inflation option (ACIO) whose age at purchase was 69 or younger. This premium increase will take effect on January 1, 2010, although enrollees can downgrade their coverage to avoid the increase if they wish (as discussed below). The amount of the increase depends on the person’s age when the insurance was purchased:

 

 

 

The increase will not apply to enrollees with ACIO whose age at purchase was 70 or older or to enrollees who have the Future Purchase Option (FPO).

We regret that premium increases are necessary. However, certain assumptions used when the original premiums were set are no longer sufficient, including the long term return on Program investments and other factors such as persistency (the number of people who enroll and continue to remain insured). The premium increase is needed so that sufficient funds will be available to pay benefits to enrollees in the future. OPM and John Hancock believe it would be irresponsible not to increase premiums at this time. This is the first increase in premiums since the Program began seven years ago, and it is consistent with increases in other public sector long term care insurance programs and the long term care insurance industry as a whole. Most long term care insurance carriers have either implemented or announced premium increases in the last few years. OPM retained the services of an unaffiliated actuarial consultant to independently price the FLTCIP product, and the consultant confirmed that the announced premium increase is necessary and appropriate.

 

Special Decision Period for current enrollees

a) Choices

Current enrollees will receive personalized letters providing information about changes to their premiums, if any, and opportunities to change their benefits.

All enrollees will receive at least two personalized choices:

(1) Keep their current benefit levels and accept any applicable premium increase. If the enrollee decides to accept this option, no action is required on their part. This is the default option — enrollees who do not take action to request a different choice will receive this choice.

 

(2) Change their current benefit levels to a specified level of benefits in the FLTCIP 2.0 plan design with updated premiums.

 

Enrollees facing a premium increase will also receive a third option:

(3) Downgrade their coverage in FLTCIP 1.0 to a specified level of benefits in FLTCIP 1.0 in order to keep their premiums approximately the same as they are currently paying. Please see the FAQs at http://www.ltcfeds.com/help/faq/second-contract.html for more information.

No enrollee’s coverage will change unless he/she voluntarily chooses to change it.

Enrollees may request other changes to their coverage not specified in their Special Decision Period letter. They will be able to model some changes on the web at www.ltcfeds.com. They may need to call Long Term Care Partners at 1-800-582-3337 (TTY 1-800-843-3357) to discuss these changes, including the premiums for coverage and underwriting requirements.

 

 

c) Actively at work requirement