The Federal Long term Care Insurance Program lets you choose between two inflation protection options.
Automatic Compound Inflation Option—With this option, your daily benefit amount and the remaining portion of your maximum lifetime benefit will automatically increase by 4 or 5 percent every year (your choice) with no increase in your premium. The benefit increases continue even if you are eligible for benefits. (Note: Rates under this option were increased effective in March 2010, for those who were younger than age 70 when they purchased the coverage.)
Future Purchase Option—This allows you to buy additional coverage every two years at an extra cost. The increase offered in your daily benefit amount and the remaining portion of your maximum lifetime benefit is based on increases in the Medical Consumer Price Index. Each time you buy additional coverage, your premium will increase. The premium for the additional coverage will be based on your age and premium rate at the time the increase takes effect. Every two years you will receive your Future Purchase Option notification provided you are not eligible for benefits and have not declined three Future Purchase notifications in the past.
You may switch to the Automatic Compound Inflation Option without proof of good health when you receive your Future Purchase notification as long as you are not at the time eligible for benefits and have not declined three Future Purchase notifications in the past.
You can request a decrease in your coverage at any time. You can decrease to anything that is available under the program, and your premiums (which will be based on your original age) will also decrease. For example, if you have the five year benefit period, you can decrease to a three year benefit period. You do not have to undergo new underwriting in order to decrease your coverage. Your premiums would continue to be determined as of your age when you took out coverage and would decrease according to the effect of the options you chose.