It is important to evaluate a range of strategies, including private long-term care insurance, hybrid life insurance policies with long-term care riders, and personal savings, rather than relying on any single solution.
By: FEDweek StaffLong-term care insurance—whether purchased through the federal FLTCIP program or elsewhere—can be expensive. In fact, the FLTCIP program has been closed to new enrollments largely due to rising costs, an initial decision that was extended through late 2026 – including requests for increases to existing coverage.
Long term care is still an important aspect of retirement planning and it’s worth understanding some of the options available should the program open back up, or if you seek a policy outside of FLTCIP, such as:
- Private LTC insurance
- Hybrid life/LTC policies
- Self-funding strategies
The options available in such insurance can be tailored to hold down the premium costs but keep these thoughts in mind:
1. The daily or monthly benefit. Your policy should cover at least 60-80 percent of the cost of a private room in your area. If you couldn’t afford to pay the balance from other assets, you might want to think about purchasing 100 percent coverage.
2. The breadth of care. A policy should pay as much for home care as for nursing home care unless you would feel vulnerable/uncomfortable having strangers come into your home and thus do not want in-home care.
3. Benefit period. Pay for a policy that will provide at least three years of coverage. You also should have a plan to transfer assets and eventually qualify for Medicaid after a three-year waiting period.
4. Waiting period. The longer the waiting period before benefits begin, the lower the premiums you’ll pay. At, say, $5,000 per month a 100-day waiting period will cost you more than $15,000, out-of-pocket. If you’re not willing or able to bear that expense, choose a 30-day waiting period.
5. Inflation protection. Most people will want this protection. Simple protection will cost less than compound protection and may well be adequate in today’s low-inflation economy.
The suspension of the FLTCIP program reflects broader challenges in the long-term care insurance market. Rising care costs, longer life expectancies, and a prolonged low interest rate environment have made it difficult for insurers to accurately price policies.
The program’s carrier, John Hancock, has faced similar pressures in the private market, contributing to both the enrollment freeze and prior premium increases for existing policyholders. As a result, even if FLTCIP reopens after 2026, future offerings may include higher premiums, stricter underwriting, or reduced benefits compared to earlier versions of the program.
In the meantime, federal employees and retirees should understand that long-term care insurance—whether through FLTCIP or private insurers—is not guaranteed or static. Policies are medically underwritten, and premiums may increase over time.
Additionally, while some individuals consider relying on Medicaid as a fallback, eligibility requires meeting strict income and asset limits, and asset transfers are subject to a five-year look-back period that can trigger penalties. (For example, selling a home within five years of claiming against a policy.)
Because of this, it is important to evaluate a range of strategies, including private long-term care insurance, hybrid life insurance policies with long-term care riders, and personal savings, rather than relying on any single solution.
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See also,
Calculating Service Credit for Sick Leave At Retirement
FERS Supplement vs The 10% Pension Bonus
How Your FERS, Social Security and TSP Payments Get Taxed
