Premium increase for federal employee long term care insurance

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ikowik
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Premium increase for federal employee long term care insurance

Post by ikowik »

John Hancock was the only bidder to administer the Federal employee LTC insurance program for the next seven years. It appears subscribers are going to pay a lot more now, similar to what has happened with insurers administering other LTC plans.

Washington Post has a story today on this

https://www.washingtonpost.com/news/pow ... age%2Fcard

I have been thinking of enrolling late this year, but now am not so sure. Major concern is that the premiums will continue to go up to a level that would force me to abandon the plan.

Would like to hear from federal employees who are already enrolled and their experience with this increase in premiums.
trueblueky
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Re: Premium increase for federal employee long term care insurance

Post by trueblueky »

I haven't seen the increase specific to us, but understand it's "in the mail." DW and I bought LTCi when it first became available to feds. My impression, and that of many others, was that rates would never go up once it was purchased. With the last new contract, seven years or so ago, we learned that was not true. Rates increase with each contract, rather than on every fifth birthday as with FEGLI or during open season as with FEHB.

This will be the third contract period. 83% is far above the inflation rate for these services (rest home workers and home health nurses have not received an 83% raise over the past seven years, and are unlikely to over the next seven).

The contracts provide an annual increase in lifetime benefit, but that's figured into the cost. Your benefit might be $100/day for five years this year and $103/day the next year. It seems the actuaries misjudged how many people would use the care or for how long, since mortality tables and maximum benefits are known.
pshonore
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Re: Premium increase for federal employee long term care insurance

Post by pshonore »

Lets cut the actuaries some slack (that guy who drowned in a stream that had an average depth of 4 inches). They've evidently badly underestimated the number of policies that are lapsing. People are living longer as well but my guess is they are also requiring more "custodial care" as they age. But that's just a guess.
delamer
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Re: Premium increase for federal employee long term care insurance

Post by delamer »

First, thanks for the link, ikowik. I had not seen the Post's article.

My husband and I purchased LTC insurance during the last open season; so I think about 5 years ago. I had a fear of one of us becoming ill and needing extended nursing care -- having had many friends and acquaintances develop serious health problems once they entered their 50's -- while at the same time losing that spouse's income when we were still putting our kids through college. I have been on the fence about whether to continue it now that our major life expenses are past. We have not had a premium increase since taking the insurance. Based on the Post's article, our premiums likely would rise to about $10,000 per year.

We can live comfortably on our Social Security and pension income when we are both fully retired, so our savings (plus significant home equity) can be our self-insurance if we decide to drop the LTC.

I have had several relatives who need skilled nursing/dementia care at the end of their lives, but most for just a few months. My mother recently died and was in a nursing home where she got very good care for the last 6 months of her life; the cost was $400/day if you were not on a Life Care plan (that is, a resident of the CCRC that the nursing facility was part of). This is in what would be a medium cost-of-living area.

This is a tough decision. Another option would be to explore LTC on the open market, although I bet you'd run into the same problem with unpredictable and huge premiums.
ChrisC
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Re: Premium increase for federal employee long term care insurance

Post by ChrisC »

trueblueky wrote:I haven't seen the increase specific to us, but understand it's "in the mail." DW and I bought LTCi when it first became available to feds. My impression, and that of many others, was that rates would never go up once it was purchased. With the last new contract, seven years or so ago, we learned that was not true. Rates increase with each contract, rather than on every fifth birthday as with FEGLI or during open season as with FEHB.

This will be the third contract period. 83% is far above the inflation rate for these services (rest home workers and home health nurses have not received an 83% raise over the past seven years, and are unlikely to over the next seven).

The contracts provide an annual increase in lifetime benefit, but that's figured into the cost. Your benefit might be $100/day for five years this year and $103/day the next year. It seems the actuaries misjudged how many people would use the care or for how long, since mortality tables and maximum benefits are known.
I had a different impression when I first signed up in 2003: I expected rates to go up, and expect them to continue to go up for past and future enrollments. Last time they went up, seven years ago, we were given the option of lowering the compound inflation adjustment from 5% to 4%, which in our case actually lowered our premiums a few cents. (I forgot what the actual increase would be if you kept the 5% inflation adjustment.)

I have my eyes wide open: my past premiums are sunk costs, I can absorb the financial risk of LTC without insurance, and if premiums are too high I might just decide to forego LTCi. But I tend to think that FedLTCi is the best deal available for someone in my shoes looking to pass on the risk of LTC to someone else.
BruDude
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Re: Premium increase for federal employee long term care insurance

Post by BruDude »

I think it's pretty telling that JH was the only company that was even interested in the immediate sale of 274,000 LTC policies on a group basis. None of the other companies even made a bid, wow!
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TimeRunner
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Re: Premium increase for federal employee long term care insurance

Post by TimeRunner »

I'm a Fed skipping the LTCI option. The numbers just don't pan out, and I don't want to be fighting with JH over paperwork and coverage when I can't lift a spoon. Here's an oft-quoted article: http://www.caniretireyet.com/long-term- ... buying-it/

Good luck to us all.
Last edited by TimeRunner on Thu Jul 21, 2016 11:25 am, edited 2 times in total.
One cannot enlighten the unconscious.
ChrisC
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Re: Premium increase for federal employee long term care insurance

Post by ChrisC »

BruDude wrote:I think it's pretty telling that JH was the only company that was even interested in the immediate sale of 274,000 LTC policies on a group basis. None of the other companies even made a bid, wow!
Metlife originally partnered with JH when FedLTCi was first rolled out and Metlife later backed out of the program. That was more telling to me a number of years ago. I'm thinking that other insurance companies would have an extremely difficult time ousting the incumbent insurance carrier and the prospect of losing a lot of money to take on these policies is fraught with carrier risk, precisely why Metlife backed out.

Meanwhile, I think Metlife has been the carrier for FEGLI for decades; and I doubt anyone else would bid for that contract. Just saying, it might be more telling of procurement risk for competitors as well as carrier risk that you don't have competitors for the FedLTCi contract.
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HueyLD
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Re: Premium increase for federal employee long term care insurance

Post by HueyLD »

Not a fed employee, but I have seen plenty of problems with LTCs among the older population.

It appears to be a program where nobody wins. Insurance companies didn't know how to price the product for years and they suffered the consequence. Older people on fixed income were forced to cancel their LTC just when they needed it and the financial damage to old folks was horrible.

Who knows what the future may hold?
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AstroJohn
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Re: Premium increase for federal employee long term care insurance

Post by AstroJohn »

My wife and I signed up for Fed LTCi when it was first offered. We were in our early 50s. When the first premium increase came along, we reduced our benefit to keep the premium more or less the same, essentially deciding to partially self insure. Our letters about the upcoming increase arrived yesterday. For both of us, the premiums have more than doubled!

My initial thought has been to once again reduce the coverage, putting more of the risk on us. This time, the insurer is making that more difficult. The options offered in the letter keep the same daily coverage, but reduce the annual inflation rate. A trip to the web site shows that it is possible to reduce the daily benefit payment and keep the same inflation rate, but they are not making it easy to make that choice.

Being good life-long Bogleheads, we have always lived below our means. Now in retirement, our investments in taxable and tax-deferred accounts have just hit $3M. So with a government pension, Social Security for my wife, and that much in investments, it seems to me that going fully the self-insured path may be the best option. My only nagging concern is that if I need extended care that depletes the savings and then die well before my wife, she will be left with a reduced government pension and a significantly reduced nest egg. Another option might be to drop her coverage, since if she dies first, my pension goes up more than the loss of her Social Security. I expect I will be doing a lot of what-if spreadsheets for the next couple of months. :-(
Dottie57
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Re: Premium increase for federal employee long term care insurance

Post by Dottie57 »

May I ask what your total premium is for a single person?

My ltc bought through employer is $2700.00. For a max of $270,000. Max of $273 a day.

I bought at age 56.
Engineer250
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Re: Premium increase for federal employee long term care insurance

Post by Engineer250 »

Jill on Money had a good program recently talking to a caller who was trying to figure out if he should get LTCI. (I can't figure out what one it was, I think one of the last 3 out). She had a pretty good explanation for why you don't hear about it anymore. People are living longer, future medical costs are hard to predict. Fewer insurance companies are interested in offering it due to all these uncertainties, therefore the cost is going up. That's probably why the feds had only one bidder and why the costs continue to climb.
Where the tides of fortune take us, no man can know.
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AstroJohn
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Re: Premium increase for federal employee long term care insurance

Post by AstroJohn »

May I ask what your total premium is for a single person?

My ltc bought through employer is $2700.00. For a max of $270,000. Max of $273 a day.

I bought at age 56.
I initially bought at age 52. My premiums are going from $123.64 per month to $279.42/month, so $1484 per year to $3353 per year. Wife's were just a little smaller. Daily payment is $267 and inflation rate is 4%.
BruDude
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Re: Premium increase for federal employee long term care insurance

Post by BruDude »

AstroJohn wrote:
May I ask what your total premium is for a single person?

My ltc bought through employer is $2700.00. For a max of $270,000. Max of $273 a day.

I bought at age 56.
I initially bought at age 52. My premiums are going from $123.64 per month to $279.42/month, so $1484 per year to $3353 per year. Wife's were just a little smaller. Daily payment is $267 and inflation rate is 4%.
That's probably still better than anything comparable on the individual market. As an insurance agent, LTC has become such a tough sale that I haven't even done one in about 3-4 years. Once in a while a client will inquire, I'll run quotes, and they wind up not buying because the value proposition isn't as good as it used to be, and I can't really blame them.

Without any guarantee on the premiums (some companies offer a 2-5 year guarantee but that's kind of meaningless), it's certainly not something I can stand behind as an agent and say "you've got a great deal" like I can with guaranteed life insurance and disability insurance premiums. It's almost more of a "when" you're going to get screwed instead of an "if" these days. People see these type of articles, hear about individual rates going up 30-40-50-70%, and don't want to feel like they spent a bunch of money only to have the premiums skyrocket out of sight. My grandfather has already had that happen with his own LTC policy, but at 90 years old it's now a "good deal" even at the high premiums and he's stuck paying for it. Caught between a rock and a hard place.
carruthers209
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Re: Premium increase for federal employee long term care insurance

Post by carruthers209 »

It would be nice to hear from John Hancock customers who are using the long term care policy and get some feedback from them. My dad had Alzheimer's and was very frail. He had to have 24/7 caregivers who could diaper him, wash him, feed him (near the end), dress him and keep him safe. This was in the last year and a half of his life. He never spent one day in a nursing facility (other than rehab after he broke his hip). His at-home care cost over $10,000 a month and we were lucky because we had low cost caregiving services. I think that's the unfortunate reality that most of us are going to be living in our old age. We will not be in skilled nursing facilities-we will be home (which is where we want to be) with caregivers. At home the usual daily expenses continue-so add another $70,000 plus in annual costs. We will become frailer and in need of more caregiving as time goes on-medical science can patch us up from a medical emergency-heart attack, stroke, major surgery etc. And then we go home. Researchers have validated the gradual decline that most of us will face. Long term care will cover at home care-at about half the price of skilled nursing per day depending on your policy. We've had a John Hancock policy for about fifteen years and opt in for the 3% inflation coverage each three years when it is offered. This was a group policy offered to ATT employees with no medical exam. Currently the total value listed in our paperwork is about $500,000 for my husband and another $500,000 for myself. We're paying about $250 a month each. We don't expect our children to have to take care of us for the last decade of our lives-caregiving by family members can be overwhelmingly challenging. Spousal caregivers can die of stress before their spouses. The New York Times has some excellent articles on Old Age. Long term care insurance is just that-insurance. I pay my car insurance premium every month and even don't plan on using it. If you're planning on self-insuring and you're a couple-that's two sets of costs-you probably need to set aside several hundred thousand per person and that means you will not be passing that amount on to your children.
delamer
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Re: Premium increase for federal employee long term care insurance

Post by delamer »

I just got our new premiums in the mail. The increase to keep the same coverage for both of us is 19.5%.

So not nearly as bad as the average 83% mentioned in the article. But based on my recent experience with my mother's nursing home care, I also realize that the coverage will only be about 2/3's of the cost of care in a good quality nursing home (and just for three years).

It might make more sense to save the premium toward the entry fee of a CCRC.
delamer
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Re: Premium increase for federal employee long term care insurance

Post by delamer »

carruthers209 wrote:It would be nice to hear from John Hancock customers who are using the long term care policy and get some feedback from them. My dad had Alzheimer's and was very frail. He had to have 24/7 caregivers who could diaper him, wash him, feed him (near the end), dress him and keep him safe. This was in the last year and a half of his life. He never spent one day in a nursing facility (other than rehab after he broke his hip). His at-home care cost over $10,000 a month and we were lucky because we had low cost caregiving services. I think that's the unfortunate reality that most of us are going to be living in our old age. We will not be in skilled nursing facilities-we will be home (which is where we want to be) with caregivers. At home the usual daily expenses continue-so add another $70,000 plus in annual costs. We will become frailer and in need of more caregiving as time goes on-medical science can patch us up from a medical emergency-heart attack, stroke, major surgery etc. And then we go home. Researchers have validated the gradual decline that most of us will face. Long term care will cover at home care-at about half the price of skilled nursing per day depending on your policy. We've had a John Hancock policy for about fifteen years and opt in for the 3% inflation coverage each three years when it is offered. This was a group policy offered to ATT employees with no medical exam. Currently the total value listed in our paperwork is about $500,000 for my husband and another $500,000 for myself. We're paying about $250 a month each. We don't expect our children to have to take care of us for the last decade of our lives-caregiving by family members can be overwhelmingly challenging. Spousal caregivers can die of stress before their spouses. The New York Times has some excellent articles on Old Age. Long term care insurance is just that-insurance. I pay my car insurance premium every month and even don't plan on using it. If you're planning on self-insuring and you're a couple-that's two sets of costs-you probably need to set aside several hundred thousand per person and that means you will not be passing that amount on to your children.
I am sorry about your father. I went through something similar with my mother, but she was in the skilled nursing facility in the retirement community where she had previously lived in an independent apartment. My husband and I are leaning toward the CCRC option for ourselves.

The odds of both spouses needing any extended period of care are small (but not zero, obviously). So the chance that all of a nest egg set aside for potential long-term care needs will be spent for that purpose is also small. The other disadvantage of a LTC policy is that it is another layer of bureaucracy that your children will need to deal with while they are already immersed in a difficult situation.
ChrisC
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Re: Premium increase for federal employee long term care insurance

Post by ChrisC »

I enrolled at 48; here's my current coverage and cost:

Plan FLTCIP 2.0
Plan type (see Covered Services) Comprehensive Plan
Monthly premium $102.46
Biweekly premium 2 $47.28
Daily benefit amount (DBA) $266.99
Waiting period 90 calendar days
Inflation option ACI 4%
Benefit period 3 1,825 days ( 5 years )
Maximum lifetime benefit remaining 4 $487,256.75

Also, I pay from my HSA so using tax deferred funds for this.
trueblueky
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Re: Premium increase for federal employee long term care insurance

Post by trueblueky »

pshonore wrote:Lets cut the actuaries some slack (that guy who drowned in a stream that had an average depth of 4 inches). They've evidently badly underestimated the number of policies that are lapsing. People are living longer as well but my guess is they are also requiring more "custodial care" as they age. But that's just a guess.
I also think there's a selection bias. It's a group policy with no individual rating. If all four grandparents lived to 95 with the last 15 years in assisted living with dementia, you would be wise to sign up and probably did.

Raising the rates will cause some policies to lapse and take that liability off the books.
Sandwich
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Re: Premium increase for federal employee long term care insurance

Post by Sandwich »

carruthers209 wrote:It would be nice to hear from John Hancock customers who are using the long term care policy and get some feedback from them......
Hello,

My mother paid LTC premiums into the system from 2002 thru 2015 as a "qualified relative" of a federal employee. She has been receiving LTC benefits since last summer and she has relied on me to do all the paperwork for the claims and benefit processing. The monthly benefit check covers most of her Assisted Living fee .... she uses Social Security and pension to cover the remainder.

The initial paperwork was done during the 90 day waiting / elimination period and claims payments have been relatively smooth ... a couple of bumps with misplaced invoices and communications mishaps ... some frustration at times ... but all in all manageable ... as the benefits have not been delayed longer than a few weeks at a time.

She had a 12 - month review of her eligibility and received certification to continue benefits. Her benefits are for an "Unlimited" period.

Within the first year, her amount of benefits exceeded the amount of premiums paid over 13 years. I expect her to live a long time as some of her elderly relatives lived to their late 80s or mid 90s. She is 81. It is my impression that seniors life expectancy "increases" once they are in an Assisted Living facility. My Mom's ALF has 8 residents. She moved in last spring and no one has passed away. This includes two residents over the age of 100, 4 in their 90s and 2 81 y.o.s. :shock:

That said, my LTC premium is being hit with a 125 % increase. I am considering taking the 125 % increase and maintaining my benefit level (period is Unlimited) or reducing the DBA by 20% which would mean a 60% increase (still keeping "Unlimited").

Am interested in what other LTC policy holders are considering.
edge
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Re: Premium increase for federal employee long term care insurance

Post by edge »

Th risk management of LTC carriers is one of the worst ever. Actuaries got many things wrong. Lapse was off by 50-100x. Claim duration and benefit utilization assumptions were very wrong. Furthermore, the gap between the time of sale and time of claim created a sense of complete irresponsibility. Product managers and commission chasing agents pushed for 'features' and riders like assisted living facility coverage without understanding the ramifications to risk (people live 2x as long in alf vs nursing home).

A complete unmitigated disaster. Just look at the state of GNW.
delamer
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Re: Premium increase for federal employee long term care insurance

Post by delamer »

Sandwich wrote:
carruthers209 wrote:It would be nice to hear from John Hancock customers who are using the long term care policy and get some feedback from them......
Hello,

My mother paid LTC premiums into the system from 2002 thru 2015 as a "qualified relative" of a federal employee. She has been receiving LTC benefits since last summer and she has relied on me to do all the paperwork for the claims and benefit processing. The monthly benefit check covers most of her Assisted Living fee .... she uses Social Security and pension to cover the remainder.

The initial paperwork was done during the 90 day waiting / elimination period and claims payments have been relatively smooth ... a couple of bumps with misplaced invoices and communications mishaps ... some frustration at times ... but all in all manageable ... as the benefits have not been delayed longer than a few weeks at a time.

She had a 12 - month review of her eligibility and received certification to continue benefits. Her benefits are for an "Unlimited" period.

Within the first year, her amount of benefits exceeded the amount of premiums paid over 13 years. I expect her to live a long time as some of her elderly relatives lived to their late 80s or mid 90s. She is 81. It is my impression that seniors life expectancy "increases" once they are in an Assisted Living facility. My Mom's ALF has 8 residents. She moved in last spring and no one has passed away. This includes two residents over the age of 100, 4 in their 90s and 2 81 y.o.s. :shock:

That said, my LTC premium is being hit with a 125 % increase. I am considering taking the 125 % increase and maintaining my benefit level (period is Unlimited) or reducing the DBA by 20% which would mean a 60% increase (still keeping "Unlimited").

Am interested in what other LTC policy holders are considering.
It is very interesting that your mother has an unlimited benefit period. I don't think that was an option when my husband and I enrolled. That would make me much more likely to continue coverage. We only get three years of benefits. As pointed out in other threads, a lot of people could self-insure LTC for a couple years. The really scary and potentially catastrophic outcome is someone who needs many years of assisted living/nursing care. That is what I'd like -- not a 90-day waiting period and 3 years of benefits, but a 3-year waiting period and unlimited benefits.
student5
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Re: Premium increase for federal employee long term care insurance

Post by student5 »

Besides the escalating LTC premiums, I would prefer not to have someone jump up and down on my chest or even treat me for a severe pneumonia if I had a serious debilitating disease like full blown Alzheimer's.
edge
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Re: Premium increase for federal employee long term care insurance

Post by edge »

It is a common misconception that LTCs have a time period like a 'three year' policy. The policy is probably a 'benefit pool' policy and the 'time duration' was a benefit pool divided by the daily or monthly maximum.

Unlimited benefit pools are another reason why the LTC market is basically dead/dying.
delamer wrote:
Sandwich wrote:
carruthers209 wrote:It would be nice to hear from John Hancock customers who are using the long term care policy and get some feedback from them......
Hello,

My mother paid LTC premiums into the system from 2002 thru 2015 as a "qualified relative" of a federal employee. She has been receiving LTC benefits since last summer and she has relied on me to do all the paperwork for the claims and benefit processing. The monthly benefit check covers most of her Assisted Living fee .... she uses Social Security and pension to cover the remainder.

The initial paperwork was done during the 90 day waiting / elimination period and claims payments have been relatively smooth ... a couple of bumps with misplaced invoices and communications mishaps ... some frustration at times ... but all in all manageable ... as the benefits have not been delayed longer than a few weeks at a time.

She had a 12 - month review of her eligibility and received certification to continue benefits. Her benefits are for an "Unlimited" period.

Within the first year, her amount of benefits exceeded the amount of premiums paid over 13 years. I expect her to live a long time as some of her elderly relatives lived to their late 80s or mid 90s. She is 81. It is my impression that seniors life expectancy "increases" once they are in an Assisted Living facility. My Mom's ALF has 8 residents. She moved in last spring and no one has passed away. This includes two residents over the age of 100, 4 in their 90s and 2 81 y.o.s. :shock:

That said, my LTC premium is being hit with a 125 % increase. I am considering taking the 125 % increase and maintaining my benefit level (period is Unlimited) or reducing the DBA by 20% which would mean a 60% increase (still keeping "Unlimited").

Am interested in what other LTC policy holders are considering.
It is very interesting that your mother has an unlimited benefit period. I don't think that was an option when my husband and I enrolled. That would make me much more likely to continue coverage. We only get three years of benefits. As pointed out in other threads, a lot of people could self-insure LTC for a couple years. The really scary and potentially catastrophic outcome is someone who needs many years of assisted living/nursing care. That is what I'd like -- not a 90-day waiting period and 3 years of benefits, but a 3-year waiting period and unlimited benefits.
delamer
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Re: Premium increase for federal employee long term care insurance

Post by delamer »

edge wrote:It is a common misconception that LTCs have a time period like a 'three year' policy. The policy is probably a 'benefit pool' policy and the 'time duration' was a benefit pool divided by the daily or monthly maximum.

Unlimited benefit pools are another reason why the LTC market is basically dead/dying.
delamer wrote:
Sandwich wrote:
carruthers209 wrote:It would be nice to hear from John Hancock customers who are using the long term care policy and get some feedback from them......
Hello,

My mother paid LTC premiums into the system from 2002 thru 2015 as a "qualified relative" of a federal employee. She has been receiving LTC benefits since last summer and she has relied on me to do all the paperwork for the claims and benefit processing. The monthly benefit check covers most of her Assisted Living fee .... she uses Social Security and pension to cover the remainder.

The initial paperwork was done during the 90 day waiting / elimination period and claims payments have been relatively smooth ... a couple of bumps with misplaced invoices and communications mishaps ... some frustration at times ... but all in all manageable ... as the benefits have not been delayed longer than a few weeks at a time.

She had a 12 - month review of her eligibility and received certification to continue benefits. Her benefits are for an "Unlimited" period.

Within the first year, her amount of benefits exceeded the amount of premiums paid over 13 years. I expect her to live a long time as some of her elderly relatives lived to their late 80s or mid 90s. She is 81. It is my impression that seniors life expectancy "increases" once they are in an Assisted Living facility. My Mom's ALF has 8 residents. She moved in last spring and no one has passed away. This includes two residents over the age of 100, 4 in their 90s and 2 81 y.o.s. :shock:

That said, my LTC premium is being hit with a 125 % increase. I am considering taking the 125 % increase and maintaining my benefit level (period is Unlimited) or reducing the DBA by 20% which would mean a 60% increase (still keeping "Unlimited").

Am interested in what other LTC policy holders are considering.
It is very interesting that your mother has an unlimited benefit period. I don't think that was an option when my husband and I enrolled. That would make me much more likely to continue coverage. We only get three years of benefits. As pointed out in other threads, a lot of people could self-insure LTC for a couple years. The really scary and potentially catastrophic outcome is someone who needs many years of assisted living/nursing care. That is what I'd like -- not a 90-day waiting period and 3 years of benefits, but a 3-year waiting period and unlimited benefits.
The policy states maximum days of coverage based on the maximum daily benefit. I know that it doesn't have to be three years consecutively for the entire amount daily.

But if I was in a facility the charged at or above the maximum daily benefit for three years, my coverage would be nonexistent at three years plus one day, correct?
2cents2
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Re: Premium increase for federal employee long term care insurance

Post by 2cents2 »

I received the dreaded letter and I am trying to decide what to do.
I received 4 options--the first 3 of varying inflation protection. The fourth option is kind of interesting--it would provide for the current per day benefit amount up to the amount I have paid in to premiums up to this point (for the last 12 years) for no additional cost. The fourth option is being offered because the amount of the premium increase (to keep the current benefit) was more than doubled.
delamer
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Re: Premium increase for federal employee long term care insurance

Post by delamer »

If there is a plus to this, my husband and I have begun a serious conversation about our plans for how to handle the long-term care issue.
rgs92
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Re: Premium increase for federal employee long term care insurance

Post by rgs92 »

As a related matter, does anyone have John Hancock Long Term Care from a corporate employer and have any comments, experience, or even claims with it? We have their policies for both of us (for about 10 years now) and we voluntarily take the option of increasing premiums for greater coverage they offer every 3 years or so. We pay about $500 a month. It's something like $1.2 million of coverage per person for a 7 year stay.

Like I said, they offer higher coverage for a premium increase every few years (like an extra $100 a month). If you don't take them up on it, everything stays the same. There is no inherent inflation increase in coverage (or premium increases).
Thanks in advance for any comments.
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Re: Premium increase for federal employee long term care insurance

Post by edge »

Yes that's correct
delamer wrote:
edge wrote:It is a common misconception that LTCs have a time period like a 'three year' policy. The policy is probably a 'benefit pool' policy and the 'time duration' was a benefit pool divided by the daily or monthly maximum.

Unlimited benefit pools are another reason why the LTC market is basically dead/dying.
delamer wrote:
Sandwich wrote:
carruthers209 wrote:It would be nice to hear from John Hancock customers who are using the long term care policy and get some feedback from them......
Hello,

My mother paid LTC premiums into the system from 2002 thru 2015 as a "qualified relative" of a federal employee. She has been receiving LTC benefits since last summer and she has relied on me to do all the paperwork for the claims and benefit processing. The monthly benefit check covers most of her Assisted Living fee .... she uses Social Security and pension to cover the remainder.

The initial paperwork was done during the 90 day waiting / elimination period and claims payments have been relatively smooth ... a couple of bumps with misplaced invoices and communications mishaps ... some frustration at times ... but all in all manageable ... as the benefits have not been delayed longer than a few weeks at a time.

She had a 12 - month review of her eligibility and received certification to continue benefits. Her benefits are for an "Unlimited" period.

Within the first year, her amount of benefits exceeded the amount of premiums paid over 13 years. I expect her to live a long time as some of her elderly relatives lived to their late 80s or mid 90s. She is 81. It is my impression that seniors life expectancy "increases" once they are in an Assisted Living facility. My Mom's ALF has 8 residents. She moved in last spring and no one has passed away. This includes two residents over the age of 100, 4 in their 90s and 2 81 y.o.s. :shock:

That said, my LTC premium is being hit with a 125 % increase. I am considering taking the 125 % increase and maintaining my benefit level (period is Unlimited) or reducing the DBA by 20% which would mean a 60% increase (still keeping "Unlimited").

Am interested in what other LTC policy holders are considering.
It is very interesting that your mother has an unlimited benefit period. I don't think that was an option when my husband and I enrolled. That would make me much more likely to continue coverage. We only get three years of benefits. As pointed out in other threads, a lot of people could self-insure LTC for a couple years. The really scary and potentially catastrophic outcome is someone who needs many years of assisted living/nursing care. That is what I'd like -- not a 90-day waiting period and 3 years of benefits, but a 3-year waiting period and unlimited benefits.
The policy states maximum days of coverage based on the maximum daily benefit. I know that it doesn't have to be three years consecutively for the entire amount daily.

But if I was in a facility the charged at or above the maximum daily benefit for three years, my coverage would be nonexistent at three years plus one day, correct?
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Re: Premium increase for federal employee long term care insurance

Post by edge »

You should know that 96% or so of claims are below 220k. If you know something the carrier doesn't then that high of a pool may make sense. Be aware that carriers are shrinking pools even for existing customers to reduce their claim exposure.
rgs92 wrote:As a related matter, does anyone have John Hancock Long Term Care from a corporate employer and have any comments, experience, or even claims with it? We have their policies for both of us (for about 10 years now) and we voluntarily take the option of increasing premiums for greater coverage they offer every 3 years or so. We pay about $500 a month. It's something like $1.2 million of coverage per person for a 7 year stay.

Like I said, they offer higher coverage for a premium increase every few years (like an extra $100 a month). If you don't take them up on it, everything stays the same. There is no inherent inflation increase in coverage (or premium increases).
Thanks in advance for any comments.
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Re: Premium increase for federal employee long term care insurance

Post by skepticalobserver »

delamer wrote:The really scary and potentially catastrophic outcome is someone who needs many years of assisted living/nursing care. That is what I'd like -- not a 90-day waiting period and 3 years of benefits, but a 3-year waiting period and unlimited benefits.
I searched for LTCi that offered a much longer waiting period. I found one for a year. The premiums, however, were not significantly lower than 90 day policies. Also, I was told that many (all?) states draw the line at one year.

I've been looking at Federal LTCi for sometime, as spouse/annuitant. I think it's one of the few (only?) policies that offer unlimited care.

As a point of interest, the ACA had a provision for a smallish (I think around $50+) daily at home long-term care (CLASS ACT, https://en.wikipedia.org/wiki/Community ... pports_Act). It was enacted and then repealed as unworkable.
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Re: Premium increase for federal employee long term care insurance

Post by delamer »

I just checked the federal LTC website. At my age, to get unlimited coverage of $400/day inflation adjusted at 5%, the annual premium would be about $15,000. Astounding.

I can see why I didn't remember an unlimited option being offdered when I signed up; I probably dismissed it immediately due to the cost.
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Re: Premium increase for federal employee long term care insurance

Post by ikowik »

delamer wrote:If there is a plus to this, my husband and I have begun a serious conversation about our plans for how to handle the long-term care issue.
Absolutely yes! Not just between us (with my wife) but with my grown-up and independent daughter who would be the beneficiary of anything we leave behind. Should we roll the dice and bet on the the likelihood of not needing many (>5) years of LTC or be cautious and enroll in LTC insurance, knowing the downside of paying high premiums which are likely to increase sharply in the coming years?
My thanks to all who replied.
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Re: Premium increase for federal employee long term care insurance

Post by TimeRunner »

ikowik wrote:Should we roll the dice and bet on the the likelihood of not needing many (>5) years of LTC or be cautious and enroll in LTC insurance, knowing the downside of paying high premiums which are likely to increase sharply in the coming years?
My thanks to all who replied.
From the article I linked to in post higher up in this thread: "Presumably it would be helpful to know the average time in long-term care for the general population. One of the most recent and authoritative studies of LTCI comes from the Center for Retirement Research at Boston College. It collects and reanalyzes data from at least six previous studies. My simple average computed across the studies (dropping one outlier number), shows an average mean duration of care for men and women of less than 9 months!" YMMV, of course.
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Re: Premium increase for federal employee long term care insurance

Post by ikowik »

TimeRunner wrote:
ikowik wrote:Should we roll the dice and bet on the the likelihood of not needing many (>5) years of LTC or be cautious and enroll in LTC insurance, knowing the downside of paying high premiums which are likely to increase sharply in the coming years?
My thanks to all who replied.
From the article I linked to in post higher up in this thread: "Presumably it would be helpful to know the average time in long-term care for the general population. One of the most recent and authoritative studies of LTCI comes from the Center for Retirement Research at Boston College. It collects and reanalyzes data from at least six previous studies. My simple average computed across the studies (dropping one outlier number), shows an average mean duration of care for men and women of less than 9 months!" YMMV, of course.
I agree, the average stay in LTC is less than an year, but that is the average. If we know our duration of need for LTC, it would be so much easier to plan for ! The idea of insurance is to hedge against the risk of the extraordinary. Other posters here have mentioned the 6 foot man drowning in a river with an average depth of 4 feet, and the need for unlimited policies which have reasonable premiums but with waiting periods of 3 years.
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Re: Premium increase for federal employee long term care insurance

Post by Benton Bair »

As an alternative way to manage LTC, what's your opinion of using whole life insurance that offers indemnity payouts for critical care, chronic care and terminal care?
delamer
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Re: Premium increase for federal employee long term care insurance

Post by delamer »

Benton Bair wrote:As an alternative way to manage LTC, what's your opinion of using whole life insurance that offers indemnity payouts for critical care, chronic care and terminal care?
I am not familiar with this, although whole life tends to make me nervous. Do you have a link describing how these policies work?
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Re: Premium increase for federal employee long term care insurance

Post by ikowik »

Benton Bair wrote:As an alternative way to manage LTC, what's your opinion of using whole life insurance that offers indemnity payouts for critical care, chronic care and terminal care?
I agree with delamer. My one experience with While/Universal/Variable Life was when I was much younger. Quickly realized I understood little of it, but the numbers did not seem to "add up"; so I took my losses and got out after an year.

For those interested in LTC cost trends, Genworth has a survey published in 2015

https://www.genworth.com/dam/Americas/U ... 15_gnw.pdf
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Re: Premium increase for federal employee long term care insurance

Post by friar1610 »

Several people asked in earlier posts if anyone has had any experience with either the Federal LTC program or with John Hancock. The link below is to a post by Doug Nordman ("Nords") who runs a military retirement web site, posts on the Early Retirement/Financial Independence boards and who may (I can't recall) have been a poster on Bogleheads in the past. In the post below he relates his experiences dealing with John Hancock. His father had a John Hancock policy (although not part of the Federal program) and he found them very difficult to deal with.

http://the-military-guide.com/wont-buy- ... insurance/

In addition, the Early Retirement web site also has a thread going on this subject:

http://www.early-retirement.org/forums/ ... 82783.html
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Re: Premium increase for federal employee long term care insurance

Post by skepticalobserver »

Benton Bair wrote:As an alternative way to manage LTC, what's your opinion of using whole life insurance that offers indemnity payouts for critical care, chronic care and terminal care?
This morning the talk show host Ric (Fredrick) Edleman discussed the cost of LTCi, leading with the JH situation. His recommendation for those over fifty was “hybrid” life policies—whole life policies with LTC riders. Edleman didn’t discuss specific products. The hybrids I’ve looked at offer the worst of two worlds: poor ROI on the premium and LTC payments which, after taking into account elimination periods, results in just getting your premium back. Moreover, the LTC distribution is not a lump sum but rather allocated monthly over two or three years. Also, these policies had “service day” rather “calendar day” waiting periods—a total screw job.

Of course Ric might be selling a better product.

There are annuity products with LTC riders. I haven't look at these.
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Re: Premium increase for federal employee long term care insurance

Post by Nords »

friar1610 wrote:Several people asked in earlier posts if anyone has had any experience with either the Federal LTC program or with John Hancock. The link below is to a post by Doug Nordman ("Nords") who runs a military retirement web site, posts on the Early Retirement/Financial Independence boards and who may (I can't recall) have been a poster on Bogleheads in the past. In the post below he relates his experiences dealing with John Hancock. His father had a John Hancock policy (although not part of the Federal program) and he found them very difficult to deal with.

http://the-military-guide.com/wont-buy- ... insurance/

In addition, the Early Retirement web site also has a thread going on this subject:

http://www.early-retirement.org/forums/ ... 82783.html
Thanks, Friar!

I've been the conservator of my father's finances for over five years now (Alzheimer's). He "won the long-term care insurance lottery" with a John Hancock policy that paid out more than 25:1 over the premiums he paid in, but they dragged me through the knothole to both make the claim and to supervise the payout. If his 1992 policy was that painful to claim then I can only imagine how miserable it'll be for caregivers who are filing claims on today's policies.

I see hope in the potential of hybrid life-insurance/LTC policies only because the current LTC policy finances are unsustainable.

My spouse and I have our own income from military pensions and assets, so we've chosen to self-insure.

I'm happy to answer conservator questions here or via PM/e-mail. There's probably an entire book's worth of material about "Things I wish I'd known before becoming a conservator".
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Re: Premium increase for federal employee long term care insurance

Post by Iorek »

For what it's it worth, I think it's important for feds to distinguish LTCi generally and the fed offering.

There are lots of questions about whether to get LTCi generally, but then there additional questions about whether, if you want LTCi, you should get the fed version or your own policy.

Note that most LTCi is sold with the idea that premiums will remain the same, but in many cases state insurance commissioners have granted at least one post issuance rate increase where the insurance co. can show it really needs it to avoid solvency issues (at least that's my rough understanding of the general approach they use). So if you buy an individual policy you should understand there is a decent possibility, perhaps a probability, that rates will rise at least one time over the lifetime of your policy.

On the other hand my understanding is the the fed program is designed to re-set rates every 5-7 years. So if you buy now you really have no idea at all what sort of premiums you will be paying 20 years from now, because rates are almost guaranteed to adjust several times in that time frame.
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Re: Premium increase for federal employee long term care insurance

Post by friar1610 »

I've finally had a chance to sit down and analyze my letter. I've had the insurance since it was first available, about 13 years ago. I originally opted for the $150/day coverage for both me and my wife. 90 day waiting period; 3 year benefit period for me; 5 years for her. The plan originally had a 5% annual inflation adjustment. When the last increase came along in 2010 we opted to reduce the inflation kicker to 4% to keep the premiums substantially the same. The daily benefit has increased to $265/day over the years. To keep the same coverage (with the 4% kicker) my premium would increase 56%. My wife's woul increase 126%!
(We are 71/almost 70, respectively.)

I took a look at USAA's web site and saw that their General Agency is partnered with John Hancock (!) for LTCi. The sample premiums they show are more expensive for less coverage than sticking with FLTCIP. I've looked at AARP's site but they want contact info to give you any details, so that means a call from an insurance agent. I may pursue that but if anyone here has any AARP/New York Life experience I'd love to hear it.

My instinct at this point is to go with one of the options that keeps the coverage, albeit with a lower annual inflation adjustment but that's not a final decision yet. The inflation adjustments offered for my wife are really lousy: 4% for the 126% premium increase; 2.65% for a 63% increase but only .9% to keep the premiums the same. (I would get 2.25% if I were to keep my premium the same.)

I noticed a lot of comments on the Washington Post web site (in response to their article) saying that enrollees had originally been told the premiums would never change. I went back and looked at my original documentation and that was not the case.

I may just have to stop going to the gym so I won't live so long! :(
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Re: Premium increase for federal employee long term care insurance

Post by TimeRunner »

friar1610 wrote:I may just have to stop going to the gym so I won't live so long! :(
Keep going to the gym. I think the answer for me is to not live in Long Term Care so long. I'd rather have no policy and die quickly than a long policy and live a physically and/or mentally debilitated life...but that's just me. YMMV.
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Re: Premium increase for federal employee long term care insurance

Post by Nords »

friar1610 wrote:I've finally had a chance to sit down and analyze my letter. I've had the insurance since it was first available, about 13 years ago. I originally opted for the $150/day coverage for both me and my wife. 90 day waiting period; 3 year benefit period for me; 5 years for her. The plan originally had a 5% annual inflation adjustment. When the last increase came along in 2010 we opted to reduce the inflation kicker to 4% to keep the premiums substantially the same. The daily benefit has increased to $265/day over the years. To keep the same coverage (with the 4% kicker) my premium would increase 56%. My wife's woul increase 126%!
(We are 71/almost 70, respectively.)

My instinct at this point is to go with one of the options that keeps the coverage, albeit with a lower annual inflation adjustment but that's not a final decision yet. The inflation adjustments offered for my wife are really lousy: 4% for the 126% premium increase; 2.65% for a 63% increase but only .9% to keep the premiums the same. (I would get 2.25% if I were to keep my premium the same.)
When my father bought his policy in late 1992, it included 20 years of 5% inflation adjustments. He started his long-term care claim in early 2011, and Hancock continued their annual inflation adjustments through 2012 (during the claim period).

Around 2002 (when I retired from active duty) I offered to enroll him in the FLTCIP (as a family member). Interestingly his premiums from Time/Fortis (later acquired by Hancock) were already lower than the FLTCIP policy.

His first care facility projected annual fee increases of 4%-6%, and they stayed close to that projection during the five years he was with them. His current care facility is a little further outside of town (cheaper), it's just been acquired by a larger chain, and it hasn't offered any cost projections yet. His first place is a skilled nursing facility and the second is a memory care facility with slightly different services.

I guess if the choice is dropping the policy or dropping the inflation rider then I'd give up the inflation protection.
TimeRunner wrote:
friar1610 wrote:I may just have to stop going to the gym so I won't live so long! :(
Keep going to the gym. I think the answer for me is to not live in Long Term Care so long. I'd rather have no policy and die quickly than a long policy and live a physically and/or mentally debilitated life...but that's just me. YMMV.
Bold words.

The good news is that the most widely-quoted statistics were based on a 20-year-old data set, and recent research indicates that long-term care needs are shorter than previously thought. Medicare covers a higher percentage of the expense than previously credited because some of the long-term care expenses are considered to be rehab in a skilled nursing facility. (Another 90 days of "insured" expenses are part of the policy's exclusion period.) Various therapies (occupational, physical, speech) and some meds have preserved some of my father's cognition for longer than expected, and those have nothing to do with long-term care or its insurance. At age 82 he's also physically very healthy and mobile. He still has thoughts and feelings and preferences and pretty much the full range of human experience... without the ability to form memories.

I've projected my father's spend-down to last for another eight years before Medicaid. (That's a total of 13 years of long-term care.) His father lived for over 14 years in a care facility (dementia, perhaps Alzheimer's) and was still a few months away from Medicaid when he died (influenza) at age 97.

I suspect that the person who you'll someday become may be more interested than you are now in prolonging your quality of life (and perhaps even your longevity). That has nothing to do with long-term care or long-term care insurance. However the insurance (and your monthly income, and your assets) will certainly affect the quality of life of your caregivers. If those caregivers are your loved ones then it'll already be quite stressful for them to care for you. (Most of the time you won't notice the stress-- your dementia takes care of that.) Their life will be stressful enough without having to worry over your finances and deal with Medicaid or other community services.

So, for the sake of those you love, have a plan that includes your life in a care facility or at home. (Try Bob DeMarco's "Alzheimer's Reading Room" for advice on the latter.) I'm experiencing a third-generation bag job on eldercare, yet its stress is reduced a little by the fact that my father happened to have enough insurance (and income, and assets) to afford it.

If your plan is "die faster", well, look up the media's reporting of the death of Admiral Chester Nimitz (the son of the WWII admiral) in 2002. Depending on your perspective he was either a man firmly in control of his fate or a coercive and abusive control freak who committed murder & suicide. (His solution came to my attention through my submariner network, where there's been quite a bit of spirited discussion of his choices.) I'm sure all aspects of the situation were quite stressful for the rest of his family, and they probably would have preferred more home care & hospice.
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Re: Premium increase for federal employee long term care insurance

Post by TimeRunner »

I'm all for Hospice, I just want to avoid hopeless LTC nursing home style, so yes, I do hope to live large and die quickly. A man can dream. :wink:

On a more useful note, an article of interest (7/26/16) to those currently enrolled in FLTCIP: Most long-term insurance care enrollees are eligible for little-known benefit, at https://www.washingtonpost.com/news/pow ... n-benefit/
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Re: Premium increase for federal employee long term care insurance

Post by friar1610 »

TimeRunner wrote: On a more useful note, an article of interest (7/26/16) to those currently enrolled in FLTCIP: Most long-term insurance care enrollees are eligible for little-known benefit, at https://www.washingtonpost.com/news/pow ... n-benefit/
That option was offered in the mailing I received. In my case (and my wife's) it would amount to roughly 80-90 days of care. Personally, I will probably bite the bullet and continue the regular coverage (but at a lower annual inflation adjustment) and hope for the best. Getting old and thinking about these things ain't fun.
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Re: Premium increase for federal employee long term care insurance

Post by OutInThirteen »

Looks like I dodged the bullet on this one! The Washington Post article linked above states that those with policies covering nursing home care only will not see a premium increase. I'm wondering when my letter will come, if any.
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Re: Premium increase for federal employee long term care insurance

Post by TimeRunner »

Not to sidetrack the thread too far, but if you are not familiar with Hospice care, here's a recent article about a Hospice care nurse and some of her patients: http://www.newyorker.com/magazine/2016/ ... pice-nurse

No subscription required to read AFAIK.
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Enkidu
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Re: Premium increase for federal employee long term care insurance

Post by Enkidu »

I just received my rate increase letter and benefit option form. My wife and I have had policies for about five years and have a 12% rate increase for the same benefit amount. We have 3 years of coverage and used the Future Purchase Option (FPO). Inflation is not included in the premium, but the price adjusts every 2 years, most recently in January 2016.

I was presented with four options and I looked for a way to evaluate them. The good old benefit cost ratio seems to work pretty well and is easy. Here are my options:
.....................................Current............1...............2..............3..............4
Daily benefit amount.........$210.00........$210.00.......$201.30......$190.16......$206.00
Monthly premium...............$83.30..........$93.28........$88.30........$83.30........$90.80
Benefit/Cost.....................2.52.............2.25...........2.28...........2.28............2.26

Option 1 is the default and will go into effect if we don't do anything. According to the Benefit/Cost ratio, options 2,3, and 4 are slightly better values, and options 2 and 3 are virtually identical. I am inclined to choose option 2 because it is a better value than option 1 and still preserves a daily benefit amount that is reasonable for my area. My wife's options stack up the same way according to the B/C ratio, though the values are a bit different because her age is slightly different.

I looked at several more complicated ways to evaluate the options but still come to the same conclusion: the default option is the poorest value. I don't want to give the insurance company the idea that policy holders are insensitive to price increases by accepting the default option when option 2 is a slightly better value.
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