Federal employee long term care premium increase. Which option should I choose?

[Tdubs]

The LTC program for federal employees has just sent out the details of a planned hike to LTC premiums (or cut in benefits) under John Hancock. I have three options: (1) keep my current benefits and accept a significant hike in premiums; (2) keep my current premiums and accept a benefits cut as well as a cut in the inflation index; (3) stop premiums and accept a lifetime maximum payout of $25k. The federal plan is reviewed every seven years. So, no promises after that.

See: https://www.fedweek.com/fedweek/most-fl ... -coverage/

Details: I have a policy for myself and my DW. We are 64 and I will retire in the near future. She is already retired.

My current premium is $163/mo. Daily benefit = $216.43, Unlimited benefit period, and 1.65% automatic cost adjustment annually.

Option 1: Premium increases to $200 in 2024, $246 in 2025 and $300 in 2026. Daily benefit and cost adjustment stay the same.
Option 2: Premium is held to 163/mo but daily benefit is reduced to $176 and cost adjustment is reduced to 0.2%.
Option 3: Stop premium and have a lifetime benefit of $26k

My DW current policy is $165/mo. Daily benefit is $278, 5 year benefit period, maximum lifetime benefits are $508k.

Option 1: Premium increases to $188 in 2024, $215 in 2025, and $246 in 2026. Daily benefit, benefit period, and inflation adjust stay the same.
Option 2: Premium is held at $165, and the daily benefit remains the same. However, the inflation adjustment is reduced to 0.35 annually.
Option 3: Stop premium and have a lifetime benefit of $24k.

Which option would you choose?

The net value of our retirement and after tax accounts will be about $1.3M. About $120k of that will cover a SS bridge to 70 for me. House is paid for. Our SS and my pension will more than cover our annual expenses, but I don't see that we are close to self-insuring.

P.S. Going back and shopping for a new policy is not an option for my DW.

[TheRoundHeadedKid]

Maybe shorten your benefit period to be the same as your DW? What is the reason to be different?

[tj]

Ick, I got hit with this also:

Current Plan

The plan you are currently enrolled in.

$77.67/mo $479.84 daily 5 Years FPO $875,708.00

Option 1

Accept FPO offer and pay premium increase

$118.35 $535.17 daily 5 Years FPO $976,685.25

Option 2

Decline FPO offer and pay premium increase

$103.39 | $479.84 daily 5 Years FPO $875,708.00

Option 3

Reduce benefit amount to keep premium near current level

$77.67 | $363.89 daily 5 Years FPO $664,099.25

Option 4

Choose paid-up, limited benefit; no future premiums due

$479.84 daily $14,395.20

[Tdubs]

Maybe shorten your benefit period to be the same as your DW? What is the reason to be different?

That wasn't presented as an option, I guess I could ask. I signed up my DW at a later time than my plan and thought better of an unlimited policy.

[Sandwich]

...
Option 1: Premium increases to $200 in 2024, $246 in 2025 and $300 in 2026. Daily benefit and cost adjustment stay the same...

Which version of FLTCIP do you have ?

I have Version 2.0 with the FPO "Future Purchase Option", DBA = $ 275, unlimited benefit period. My offer lists 2024 premium amounts only (none listed for 2025 or 2026).

At first glance, I am leaning toward the option of maintaining the same daily benefit amount even with a 55% increase in monthly premium from
$ 154.17 (2023) to $ 240.22 (2024).

Numberswise, paying $ 1,000+ more for premium per year to maintain the DBA amount "feels" better, to me, than keeping the same premium amount but have a "potential reduction" of $ 27,000 in benefit claims over a year.

[Tdubs]

...
Option 1: Premium increases to $200 in 2024, $246 in 2025 and $300 in 2026. Daily benefit and cost adjustment stay the same...

Which version of FLTCIP do you have ?

I have Version 2.0 with the FPO "Future Purchase Option", DBA = $ 275, unlimited benefit period. My offer lists 2024 premium amounts only (none listed for 2025 or 2026).

At first glance, I am leaning toward the option of maintaining the same daily benefit amount even with a 55% increase in monthly premium from
$ 154.17 (2023) to $ 240.22 (2024).

Numberswise, paying $ 1,000+ more for premium per year to maintain the DBA amount "feels" better, to me, than keeping the same premium amount but have a "potential reduction" of $ 27,000 in benefit claims over a year.

Mine is 2.0 Comprehensive and the three-year phase-in of the premium is the same for both policies. I'm leaning toward Option 1 too, though the 85% increase in premium for my policy is hard to swallow.

[rich126]

I don't have any LTC policies. What kind of assumptions are you making in terms of costs/time frame?

Most people live 28 months in LTC at an average cost of $45-70K. Obviously this can vary greatly. My father never needed it at all. My mother had medical issues but only was in LTC for less than a year and my father did have a policy but this was a while ago (15 years).

If you have $1M that isn't going to be use for expenses, it seems like it would cover ~10 years of LTC. Obviously if you have a decent policy I can see keeping that.

Right now you are paying $4K a year and are 64. Just a guess but most don't need LTC until they are much older so you probably have another 15 years of paying the premiums that are likely to go up and up so that is ~$60K+. Daily benefit of roughly $175 is $64K. Two years of LTC needs would likely put you ahead (if you can consider this being ahead). You wfe's policy is for a max of 5 yrs or about $300K and you have $1M.

I could see this going either way. I've avoided LTC policies because the rates just go up and up and people get to a point where it is a lot of sunk costs and are kind of stuck. Either walk away and lose the previous premiums, or stick with constantly rising premiums. When I reviewed numbers it seemed like my wife and I would both need to be in LTC for 3 years (the policies had a 3 year max) to get back the premiums. While insurance isn't a "winning" thing but to avoid a bigger loss, the money has to come from somewhere and the payouts aren't unlimited in costs/time.

Good luck. Sadly we have to deal with this type of medical insurance.

[Tdubs]

I don't have any LTC policies. What kind of assumptions are you making in terms of costs/time frame?

Most people live 28 months in LTC at an average cost of $45-70K. Obviously this can vary greatly. My father never needed it at all. My mother had medical issues but only was in LTC for less than a year and my father did have a policy but this was a while ago (15 years).

If you have $1M that isn't going to be use for expenses, it seems like it would cover ~10 years of LTC. Obviously if you have a decent policy I can see keeping that.

Right now you are paying $4K a year and are 64. Just a guess but most don't need LTC until they are much older so you probably have another 15 years of paying the premiums that are likely to go up and up so that is ~$60K+. Daily benefit of roughly $175 is $64K. Two years of LTC needs would likely put you ahead (if you can consider this being ahead). You wfe's policy is for a max of 5 yrs or about $300K and you have $1M.

I could see this going either way. I've avoided LTC policies because the rates just go up and up and people get to a point where it is a lot of sunk costs and are kind of stuck. Either walk away and lose the previous premiums, or stick with constantly rising premiums. When I reviewed numbers it seemed like my wife and I would both need to be in LTC for 3 years (the policies had a 3 year max) to get back the premiums. While insurance isn't a "winning" thing but to avoid a bigger loss, the money has to come from somewhere and the payouts aren't unlimited in costs/time.

Good luck. Sadly we have to deal with this type of medical insurance.

Yes, when I took the unlimited policy, it was during my pre-Bogleheads life and I didn't evaluate the value of taking if for shorter periods. Had two family members who were in long-term care way past five years. It definitely influenced my thinking. I'm going to have to call on Monday and ask if I can shorten it to five years.

[jeffyscott]

If you have $1M that isn't going to be use for expenses, it seems like it would cover ~10 years of LTC. Obviously if you have a decent policy I can see keeping that.

I'm surprised that someone with $1 million extra available, plus SS, plus a Federal pension considers themselves not be close to self insuring. In any case, I guess the question for them is how far short of self-insuring are they?

I'm guessing that they'd not consider option 3 for both to get them there, since it only adds $50K to their assets. But perhaps option 2 for just one and option 3 for the other would get them to the point of feeling comfortable that they can self-insure for the remainder? Which one takes option 2 might depend on the survivor benefits of the pension?

I could see this going either way. I've avoided LTC policies because the rates just go up and up and people get to a point where it is a lot of sunk costs and are kind of stuck. Either walk away and lose the previous premiums, or stick with constantly rising premiums.

Same, I avoided it due to the open-ended ability of the insurance company to constantly raise rates, that we'd be paying for perhaps 20-30 years before ever getting any benefit from it. In addition, the only policies were not open ended on the benefit side, with relatively modest caps of a few years and a few hundred thousand dollars. Also there's the issue that the insurance company gets to decide whether or not your condition is bad enough to require long term care.

If I could pay a reasonable premium for the opposite, e.g. self-pay for something like 3 years and/or $300K and then the insurance kicks in and covers the cost for however long the care is needed after that (or at least the next several million dollars), that would be more worthy of consideration.

It appears that the OP has one open-ended policy. I don't know that I'd be willing to pay the premiums required to keep that at the current benefit level. or even at the $163 per month premium, but keeping that and dropping the more limited one might be worth considering?

OTOH, perhaps covering the female in an opposite sex couple is of more value than covering the male? Females tend to live longer and, I think, have longer average assisted living or nursing home stays.

Right now you are paying $4K a year and are 64. Just a guess but most don't need LTC until they are much older so you probably have another 15 years of paying the premiums that are likely to go up and up so that is ~$60K+.

To keep current benefit levels, they will soon be paying about $6500 per year. It's about $4600 next year, $5500 in 2025, then $6500. So at least about $100K over the 15 years.

[MichDad]

As a retiree with the federal LTCI plan, I suppose I'm about to face a similar choice. When this last happened a few years ago, I opted to keep my premiums steady and to accept a reduction in the inflation adjustment. While I haven't yet received my letter, I expect I'll make the same choice this time around.

When we retired in 2018, we had saved about 30 percent more than our original plan. In the five and a half years since we retired, despite lots of spending, our financial assets are about 15 percent higher than at retirement. So, I figure we could self-insure to a higher degree than originally planned.

MichDad

[stan1]

While I haven't yet received my letter, I expect I'll make the same choice this time around.

You can login to the ltcfeds site and see the options they've given you.

[tj]

While I haven't yet received my letter, I expect I'll make the same choice this time around.

You can login to the ltcfeds site and see the options they've given you.

Indeed, that's how I found my options.

[Tdubs]

While I haven't yet received my letter, I expect I'll make the same choice this time around.

You can login to the ltcfeds site and see the options they've given you.

Indeed, that's how I found my options.

Yes, I saw a news article about it and logged on to see my options.

https://www.fedweek.com/fedweek/most-fl ... -coverage/

[finite_difference]

Even at the higher monthly premiums, it seems like $250/month is a good deal for LTC?

As long as you can comfortably afford it, $3k/year per person seems like a pretty great deal.

[AzWDC]

I am a retired Federal employee. When hired, I signed up for LTC for my spouse and myself. I have always accepted the full premium increases to maximize the benefits. I have not yet received the 2023 annual notice about any increases and the options.

I will continue to choose max benefits and max costs. This is based in how I viewed LTC even before I was hired. This was a decision I only wanted to make once - because how I framed the problem has not changed. Of course, if I win a billion $ in a lottery, I'll cancel the LTC.

The problem LTC solves for me is how to maximize good care if I cannot take care of myself, WHILE not running out of money. It does not matter to me if I "statistically" may not use it or use it to the limits of the insurance. Statistics are useful in the aggregate, not so useful in individual applications.

For those who point out that, if in the past, one had just saved enough money to self-insure and therefore LTC insurance would not be necessary: one cannot know, decades before the need, what one's circumstances will be. If one has now saved enough to self-insure, then canceling the LTC is an option, but other considerations (curtailment of current lifestyle, heirs, and so on) may affect the decision.

I suspect that Bogleheads have a strong survival (of the successful) bias in that we seldom read of members writing of their failures which greatly hurt their lives.

[Tdubs]

If you have $1M that isn't going to be use for expenses, it seems like it would cover ~10 years of LTC. Obviously if you have a decent policy I can see keeping that.

I'm surprised that someone with $1 million extra available, plus SS, plus a Federal pension considers themselves not be close to self insuring. In any case, I guess the question for them is how far short of self-insuring are they?

I'd always viewed the first $1M as the insurance for the survivor to live on. If I go first, half my pension disappears as would her SS. If that happened early in my seventies, she might need a fair amount of it to live on. But maybe you are right that I could look at some of the existing nest egg for LTC. BTW, I've not been in the federal government a long time. The pension is a nice bonus in retirement, but not large.

[AzWDC]

I'd always viewed the first $1M as the insurance for the survivor to live on. If I go first, half my pension disappears as would her SS. If that happened early in my seventies, she might need a fair amount of it to live on.
[/quote]

This is exactly how I viewed it when planning for retirement all those years ago. When one spouse dies, the other is left with less income; maybe much less. As it turns out, my spouse is profoundly disabled, but does not yet meet the criteria for LTC. The additional costs for in-home support and items not covered by medical insurance are about $12000/year. He became disabled in his mid-50s.

I am glad I planned for worst-case scenarios all those years ago.

[OpenMinded1]

Delete

[Tdubs]

I'd always viewed the first $1M as the insurance for the survivor to live on. If I go first, half my pension disappears as would her SS. If that happened early in my seventies, she might need a fair amount of it to live on.

This is exactly how I viewed it when planning for retirement all those years ago. When one spouse dies, the other is left with less income; maybe much less. As it turns out, my spouse is profoundly disabled, but does not yet meet the criteria for LTC. The additional costs for in-home support and items not covered by medical insurance are about $12000/year. He became disabled in his mid-50s.

I am glad I planned for worst-case scenarios all those years ago.

Sorry for the challenges you face, but a good example why we consider worst-cases and not averages.

[jeffyscott]

If you have $1M that isn't going to be use for expenses, it seems like it would cover ~10 years of LTC. Obviously if you have a decent policy I can see keeping that.

I'm surprised that someone with $1 million extra available, plus SS, plus a Federal pension considers themselves not be close to self insuring. In any case, I guess the question for them is how far short of self-insuring are they?

I'd always viewed the first $1M as the insurance for the survivor to live on. If I go first, half my pension disappears as would her SS. If that happened early in my seventies, she might need a fair amount of it to live on. But maybe you are right that I could look at some of the existing nest egg for LTC. BTW, I've not been in the federal government a long time. The pension is a nice bonus in retirement, but not large.

Ah, your circumstances are quite different from what I'd assumed...which was career federal employee and thus a significant pension.

[Sandwich]

.... The problem LTC solves for me is how to maximize good care if I cannot take care of myself, WHILE not running out of money. It does not matter to me if I "statistically" may not use it or use it to the limits of the insurance. Statistics are useful in the aggregate, not so useful in individual applications.

For those who point out that, if in the past, one had just saved enough money to self-insure and therefore LTC insurance would not be necessary: one cannot know, decades before the need, what one's circumstances will be.

+ 1,

I anticipate that long-term care costs will increase as the baby boomers age into the 85+ bracket.

Having LTC with an unlimited benefit period provides at least a base of amount of funds that can be counted on while "self-insuring" for the remainder using pension, social security, and TSP and retirement account balances.

For the last several years, I have declined the "Future Purchase Option" as I calculate being able to self-insure with retirement income streams for amounts above the daily benefit amount. I plan on continuing these calculations as these periodic purchase options are available.

[AzWDC]

I was hired as a Fed in 2005. I chose the max benefit for LTC. That was only (!) 5 years, annual increases of coverage of 3.9%, with a capped lifetime payout. Currently, my lifetime payout maximum is $606,000. John Hancock LTC.

When I was hired, I was told the premiums would never go up. A few years later, I was told (I think by OPM but I don't remember clearly) that the premiums would go up or coverage go down. The alternative was a cancellation of the insurance as Hancock's payout levels were unsustainable. Similar to the OP, at that time, I was offered the choice of:
1. Continuing with the coverage (with increases in payout amount of 3.9% annually), with increased premiums.
2. Decreased coverage while holding the premiums level.
3. Cancelling the insurance.

In 18 years, the premiums have increased only 3 times. I expect them to increase with the next notification. Currently, I pay $3000/year and my spouse slightly less as he is younger.

I think that there is a large range of variables which make everyone's situation different. Part of this is that, over time, the same employer will likely offer employees different benefit packages. If I could have obtained unlimited length of LTC benefits, I would have.

[OpenMinded1]

If you have $1M that isn't going to be use for expenses, it seems like it would cover ~10 years of LTC. Obviously if you have a decent policy I can see keeping that.

I'm surprised that someone with $1 million extra available, plus SS, plus a Federal pension considers themselves not be close to self insuring. In any case, I guess the question for them is how far short of self-insuring are they?

I'd always viewed the first $1M as the insurance for the survivor to live on. If I go first, half my pension disappears as would her SS. If that happened early in my seventies, she might need a fair amount of it to live on. But maybe you are right that I could look at some of the existing nest egg for LTC. BTW, I've not been in the federal government a long time. The pension is a nice bonus in retirement, but not large.

Ah, your circumstances are quite different from what I'd assumed...which was career federal employee and thus a significant pension.

The latest retirement system for Federal Employees (FERS) requires more reliance on their 401K-type plan (TSP) and Social Security. The pension leg is much smaller than under the previous system (CSRS).

[OpenMinded1]

As a retiree with the federal LTCI plan, I suppose I'm about to face a similar choice. When this last happened a few years ago, I opted to keep my premiums steady and to accept a reduction in the inflation adjustment. While I haven't yet received my letter, I expect I'll make the same choice this time around.

When we retired in 2018, we had saved about 30 percent more than our original plan. In the five and a half years since we retired, despite lots of spending, our financial assets are about 15 percent higher than at retirement. So, I figure we could self-insure to a higher degree than originally planned.

MichDad

Yes, I haven't done that so far, but probably will this time around since the increase is substantial. I have an an annual inflation adjustment of 4% on mine and 5% on my wife's. Noted that it says that I would need to reduce my adjustment to 2.15% and my wife's to 2.8% to keep the same premiums. That's probably what I'll do.

[Hitchcock_Fan]

Noted that it says that I would need to reduce my adjustment to 2.15% and my wife's to 2.8% to keep the same premiums. That's probably what I'll do.

I’m in the same boat. I need to reduce the inflation adjustment to keep the same premium. Other than that, the benefits are the same (actually went up slightly). I will probably choose that option versus the premium increase about 85% for me and 50% for my wife.

[OpenMinded1]

Noted that it says that I would need to reduce my adjustment to 2.15% and my wife's to 2.8% to keep the same premiums. That's probably what I'll do.

I’m in the same boat. I need to reduce the inflation adjustment to keep the same premium. Other than that, the benefits are the same (actually went up slightly). I will probably choose that option versus the premium increase about 85% for me and 50% for my wife.

My wife and I have been getting the 5% and 4% annual adjustments respectively since we enrolled in 2014, and there were no huge premium increases during that time. So at least there's that.

[tj]

Hmm - I'm wondering if Option 3 makes sense. I take a 24% cut in benefits for the same premium, a 33% increase in cost to keep the same benefits, or a 52% increase to accept the FPO.

I'm assuming that I could just use future FPO's to increase the benefits, but maybe taking Option 3 would be a perma-decline of FPOs?

Option 1

Accept FPO offer and pay premium increase

$118.35 $535.17 daily 5 Years FPO $976,685.25

Option 2

Decline FPO offer and pay premium increase

$103.39 | $479.84 daily 5 Years FPO $875,708.00

Option 3

Reduce benefit amount to keep premium near current level

$77.67 | $363.89 daily 5 Years FPO $664,099.25

[OpenMinded1]

Hmm - I'm wondering if Option 3 makes sense. I take a 24% cut in benefits for the same premium, a 33% increase in cost to keep the same benefits, or a 52% increase to accept the FPO.

I'm assuming that I could just use future FPO's to increase the benefits, but maybe taking Option 3 would be a perma-decline of FPOs?

Option 1

Accept FPO offer and pay premium increase

$118.35 $535.17 daily 5 Years FPO $976,685.25

Option 2

Decline FPO offer and pay premium increase

$103.39 | $479.84 daily 5 Years FPO $875,708.00

Option 3

Reduce benefit amount to keep premium near current level

$77.67 | $363.89 daily 5 Years FPO $664,099.25

Why do you assume you can use future purchase options (FPOs) to increase benefits?

[MichDad]

As a retiree with the federal LTCI plan, I suppose I'm about to face a similar choice. When this last happened a few years ago, I opted to keep my premiums steady and to accept a reduction in the inflation adjustment. While I haven't yet received my letter, I expect I'll make the same choice this time around.

When we retired in 2018, we had saved about 30 percent more than our original plan. In the five and a half years since we retired, despite lots of spending, our financial assets are about 15 percent higher than at retirement. So, I figure we could self-insure to a higher degree than originally planned.

MichDad

I just logged into my LTI account and reviewed our three options. As predicted, I chose Option 2, to keep our premiums level. It cut our inflation adjustment in half. Option 1 would have increased our premiums by about 90 percent over the next three years to maintain our current level of protection. Because our retirement assets have grown modestly since retirement, I feel we can afford to self insure to a higher extent.

MichDad

[ChrisC]

My DW current policy is $165/mo. Daily benefit is $278, 5 year benefit period, maximum lifetime benefits are $508k.

Option 1: Premium increases to $188 in 2024, $215 in 2025, and $246 in 2026. Daily benefit, benefit period, and inflation adjust stay the same.
Option 2: Premium is held at $165, and the daily benefit remains the same. However, the inflation adjustment is reduced to 0.35 annually.
Option 3: Stop premium and have a lifetime benefit of $24k.

Which option would you choose?

My policy (as well as my wife's) is similar to the above. I'll be 70 at the end of this year (and we enrolled in FedLTCi in 2003) and pay $167/mo; DBA of $322, 5 year benefit period, and max benefits of $604K.

I have similar options but I'm planning to select option 1. The premium increase is relatively modest from a dollar standpoint and I don't want to lower the inflation adjustment, currently at 2.65% to 1.60% (as option 2 would prescribe to keep my premium level current). I forgot the last time I decided to keep premium level current, but that option downgraded my inflation adjustment from 4% to 2.65% -- my thinking back then was that general inflation was relatively low and I didn't think I needed that level of inflation adjustment protection (though I later learned that health care price inflation is generally much higher than consumer price inflation).

I can afford to self-insure, with or without help from LTCi, but I view this as insurance that, if used, would transfer some risk to the insurer, perhaps avoid my family from scrambling around for deploying my financial assets to take care of things, and currently dovetails nicely with the hit I would take if I'm a resident at the CCRC I'm currently waitlisted and go into LTC there.

[tj]

Hmm - I'm wondering if Option 3 makes sense. I take a 24% cut in benefits for the same premium, a 33% increase in cost to keep the same benefits, or a 52% increase to accept the FPO.

I'm assuming that I could just use future FPO's to increase the benefits, but maybe taking Option 3 would be a perma-decline of FPOs?

Option 1

Accept FPO offer and pay premium increase

$118.35 $535.17 daily 5 Years FPO $976,685.25

Option 2

Decline FPO offer and pay premium increase

$103.39 | $479.84 daily 5 Years FPO $875,708.00

Option 3

Reduce benefit amount to keep premium near current level

$77.67 | $363.89 daily 5 Years FPO $664,099.25

Why do you assume you can use future purchase options (FPOs) to increase benefits?

Because that's literally what it does.

[Tdubs]

Called in and asked if I could change my policy to five years from unlimited. They won't provide a quote until after the current decision period. I guess I will go with option 1 (current benefits, higher premium) for now. Maybe later I will lower the plan period to five years.

[stan1]

I sent in an email to them with the following question:

Under the Option 1 and Option 2 presented to me for the current premium increase, how long would the new premiums be in effect? Option 1 shows premium increases in 2024, 2025, and 2026. What happens in 2027? Option 2 leaves my premium the same at a lower COLA. Will these premiums cover through the end of the seven year contract, or might there be more premium changes in 2027?

The answer I got back was:

The final phase of the premium increase takes effect on January 1, 2026. While we do not expect additional premium increases on current enrollees during the current FLTCIP contract period, premiums are not guaranteed. Premiums may only change if you are among a group of enrollees whose premium is determined to be inadequate and OPM approves the change.

Summary their expectation is that these premium increases will cover the contract period. While premiums aren't guaranteed it sounds like they are not planning a premium true up mid way through this contract.

[Tdubs]

I sent in an email to them with the following question:

Under the Option 1 and Option 2 presented to me for the current premium increase, how long would the new premiums be in effect? Option 1 shows premium increases in 2024, 2025, and 2026. What happens in 2027? Option 2 leaves my premium the same at a lower COLA. Will these premiums cover through the end of the seven year contract, or might there be more premium changes in 2027?

The answer I got back was:

The final phase of the premium increase takes effect on January 1, 2026. While we do not expect additional premium increases on current enrollees during the current FLTCIP contract period, premiums are not guaranteed. Premiums may only change if you are among a group of enrollees whose premium is determined to be inadequate and OPM approves the change.

Summary their expectation is that these premium increases will cover the contract period. While premiums aren't guaranteed it sounds like they are not planning a premium true up mid way through this contract.

That's the same language they used when they last increased premiums. It is probably true, but you never know.

[OpenMinded1]

Hmm - I'm wondering if Option 3 makes sense. I take a 24% cut in benefits for the same premium, a 33% increase in cost to keep the same benefits, or a 52% increase to accept the FPO.

I'm assuming that I could just use future FPO's to increase the benefits, but maybe taking Option 3 would be a perma-decline of FPOs?

Option 1

Accept FPO offer and pay premium increase

$118.35 $535.17 daily 5 Years FPO $976,685.25

Option 2

Decline FPO offer and pay premium increase

$103.39 | $479.84 daily 5 Years FPO $875,708.00

Option 3

Reduce benefit amount to keep premium near current level

$77.67 | $363.89 daily 5 Years FPO $664,099.25

Why do you assume you can use future purchase options (FPOs) to increase benefits?

Because that's literally what it does.

I meant to say, "Why do you assume you can use FUTURE, future purchase options (FPOs) to increase benefits?" You can't know what future, future purchase options will be offered because you haven't seen them yet. They haven't been offered yet. That will happen in the future. I'm probably just misunderstanding what you are trying to say. What would stop someone from going with Option 3 now, and then increasing their benefits when they know they have problems that will soon require long term care. Do any of the options above increase your benefits in the future above what you would have under the plan you have now. Added: Your options are a lot different than mine. My options #1 and #2 also involve an annual benefits increase based on a percentage. The percentage in my option #2 is lower than I have currently, but it would allow me to keep the premiums the same as they are now.

[tj]

Hmm - I'm wondering if Option 3 makes sense. I take a 24% cut in benefits for the same premium, a 33% increase in cost to keep the same benefits, or a 52% increase to accept the FPO.

I'm assuming that I could just use future FPO's to increase the benefits, but maybe taking Option 3 would be a perma-decline of FPOs?

Option 1

Accept FPO offer and pay premium increase

$118.35 $535.17 daily 5 Years FPO $976,685.25

Option 2

Decline FPO offer and pay premium increase

$103.39 | $479.84 daily 5 Years FPO $875,708.00

Option 3

Reduce benefit amount to keep premium near current level

$77.67 | $363.89 daily 5 Years FPO $664,099.25

Why do you assume you can use future purchase options (FPOs) to increase benefits?

Because that's literally what it does.

I meant to say, "Why do you assume you can use FUTURE, future purchase options (FPOs) to increase benefits?" You can't know what future, future purchase options will be offered because you haven't seen them yet. They haven't been offered yet. That will happen in the future. I'm probably just misunderstanding what you are trying to say. What would stop someone from going with Option 3 now, and then increasing their benefits when they know they have problems that will soon require long term care. Do any of the options above increase your benefits in the future above what you would have under the plan you have now.

I'm 38 years old. It seems extremely unlikely that I won't continue to be offered FPOs - which are based on inflation - unless choosing the Option 3 is in fact permanent opt out of future FPO's in addition to the benefit reduction.

[OpenMinded1]

Hmm - I'm wondering if Option 3 makes sense. I take a 24% cut in benefits for the same premium, a 33% increase in cost to keep the same benefits, or a 52% increase to accept the FPO.

I'm assuming that I could just use future FPO's to increase the benefits, but maybe taking Option 3 would be a perma-decline of FPOs?

Option 1

Accept FPO offer and pay premium increase

$118.35 $535.17 daily 5 Years FPO $976,685.25

Option 2

Decline FPO offer and pay premium increase

$103.39 | $479.84 daily 5 Years FPO $875,708.00

Option 3

Reduce benefit amount to keep premium near current level

$77.67 | $363.89 daily 5 Years FPO $664,099.25

Why do you assume you can use future purchase options (FPOs) to increase benefits?

Because that's literally what it does.

I meant to say, "Why do you assume you can use FUTURE, future purchase options (FPOs) to increase benefits?" You can't know what future, future purchase options will be offered because you haven't seen them yet. They haven't been offered yet. That will happen in the future. I'm probably just misunderstanding what you are trying to say. What would stop someone from going with Option 3 now, and then increasing their benefits when they know they have problems that will soon require long term care. Do any of the options above increase your benefits in the future above what you would have under the plan you have now.

I'm 38 years old. It seems extremely unlikely that I won't continue to be offered FPOs - which are based on inflation - unless choosing the Option 3 is in fact permanent opt out of future FPO's in addition to the benefit reduction.

I not saying that you might not be offered FPOs. I'm saying you might not be offered FPOs that let you increase your benefits.

I also added this to my original post. Your options are a lot different than mine. My options #1 and #2 also involve an annual benefits increase based on a percentage. The percentage in my option #2 is lower than I have currently, but it would allow me to keep the premiums the same as they are now. The annual percentage increase in my option #1 is the same as it is now, but that option requires a substantial premium increase. In other words, my option #1 is roughly my status quo except for the premium increase.

[tj]

Why do you assume you can use future purchase options (FPOs) to increase benefits?

Because that's literally what it does.

I meant to say, "Why do you assume you can use FUTURE, future purchase options (FPOs) to increase benefits?" You can't know what future, future purchase options will be offered because you haven't seen them yet. They haven't been offered yet. That will happen in the future. I'm probably just misunderstanding what you are trying to say. What would stop someone from going with Option 3 now, and then increasing their benefits when they know they have problems that will soon require long term care. Do any of the options above increase your benefits in the future above what you would have under the plan you have now.

I'm 38 years old. It seems extremely unlikely that I won't continue to be offered FPOs - which are based on inflation - unless choosing the Option 3 is in fact permanent opt out of future FPO's in addition to the benefit reduction.

I not saying that you might not be offered FPOs. I'm saying you might not be offered FPOs that let you increase your benefits.

I also added this to my original post. Your options are a lot different than mine. My options #1 and #2 also involve an annual benefits increase based on a percentage. The percentage in my option #2 is lower than I have currently, but it would allow me to keep the premiums the same as they are now. The annual percentage increase in my option #1 is the same as it is now, but that option requires a substantial premium increase. In other words, my option #1 is roughly my status quo except for the premium increase.

my understanding is that an FPO increases the benefits. That's what it does. You accept an increase in payment for more benefits. If you decline it, you keep the same benefit for the same payment. This is completely separate from the unilateral premium increases.

[tj]

What would stop someone from going with Option 3 now, and then increasing their benefits when they know they have problems that will soon require long term care.

They can only increase it by accepting an inflationary offered FPO. It's not like they can just choose whatever number they want in the future.

[stan1]

What would stop someone from going with Option 3 now, and then increasing their benefits when they know they have problems that will soon require long term care.

They can only increase it by accepting an inflationary offered FPO. It's not like they can just choose whatever number they want in the future.

I don't think any assumptions can be made that an FPO would be offered at any point in the future. With the seven year contracts features like that could be eliminated. I think it is unlikely FPO would be eliminated, because the FPO would increase premiums paid into the program, but no guarantee.

[OpenMinded1]

Because that's literally what it does.

I meant to say, "Why do you assume you can use FUTURE, future purchase options (FPOs) to increase benefits?" You can't know what future, future purchase options will be offered because you haven't seen them yet. They haven't been offered yet. That will happen in the future. I'm probably just misunderstanding what you are trying to say. What would stop someone from going with Option 3 now, and then increasing their benefits when they know they have problems that will soon require long term care. Do any of the options above increase your benefits in the future above what you would have under the plan you have now.

I'm 38 years old. It seems extremely unlikely that I won't continue to be offered FPOs - which are based on inflation - unless choosing the Option 3 is in fact permanent opt out of future FPO's in addition to the benefit reduction.

I not saying that you might not be offered FPOs. I'm saying you might not be offered FPOs that let you increase your benefits.

I also added this to my original post. Your options are a lot different than mine. My options #1 and #2 also involve an annual benefits increase based on a percentage. The percentage in my option #2 is lower than I have currently, but it would allow me to keep the premiums the same as they are now. The annual percentage increase in my option #1 is the same as it is now, but that option requires a substantial premium increase. In other words, my option #1 is roughly my status quo except for the premium increase.

my understanding is that an FPO increases the benefits. That's what it does. You accept an increase in payment for more benefits. If you decline it, you keep the same benefit for the same payment. This is completely separate from the unilateral premium increases.

Okay, I think I understand what you are saying. You are saying that by definition an FPO increases benefits, and you don't see why you won't continue to be offered them in the future. So in my case I wasn't offered an FPO because none of my offers increase my benefits above what they already would be if the options weren't offered, and I just continued as is. If I didn't receive one this time, why are you so sure you will receive them in the future? Anyway, we have probably beat this to death, so I'm not going to say any more about it.

[sjar]

I have a friend who was able to get LTC insurance as part of a benefit offered by his employer around 20 years ago when he was around 35. His premium was $180 for a year and has gone upto $250 a year recently. ( yes, per year ) This is for a plan that covers home care/ nursing/ respite services upto $90 a day with a lifetime max of $260K…
He told me recently that he was thinking of cancelling this as the plan has a feature of refund of premiums not used (upto 50% ) and that he feels he will never need this. I told him absolutely not to do that as it is a great deal even after considering the refund he might get. I believe I gave him the correct advice but would like to know what folks here think.

[tj]

I meant to say, "Why do you assume you can use FUTURE, future purchase options (FPOs) to increase benefits?" You can't know what future, future purchase options will be offered because you haven't seen them yet. They haven't been offered yet. That will happen in the future. I'm probably just misunderstanding what you are trying to say. What would stop someone from going with Option 3 now, and then increasing their benefits when they know they have problems that will soon require long term care. Do any of the options above increase your benefits in the future above what you would have under the plan you have now.

I'm 38 years old. It seems extremely unlikely that I won't continue to be offered FPOs - which are based on inflation - unless choosing the Option 3 is in fact permanent opt out of future FPO's in addition to the benefit reduction.

I not saying that you might not be offered FPOs. I'm saying you might not be offered FPOs that let you increase your benefits.

I also added this to my original post. Your options are a lot different than mine. My options #1 and #2 also involve an annual benefits increase based on a percentage. The percentage in my option #2 is lower than I have currently, but it would allow me to keep the premiums the same as they are now. The annual percentage increase in my option #1 is the same as it is now, but that option requires a substantial premium increase. In other words, my option #1 is roughly my status quo except for the premium increase.

my understanding is that an FPO increases the benefits. That's what it does. You accept an increase in payment for more benefits. If you decline it, you keep the same benefit for the same payment. This is completely separate from the unilateral premium increases.

Okay, I think I understand what you are saying. You are saying that by definition an FPO increases benefits, and you don't see why you won't continue to be offered them in the future. So in my case I wasn't offered an FPO because none of my offers increase my benefits above what they already would be if the options weren't offered, and I just continued as is. If I didn't receive one this time, why are you so sure you will receive them in the future? Anyway, we have probably beat this to death, so I'm not going to say any more about it.

Were you offered FPOs in the past? Or did you buy a policy without FPOs?

[OpenMinded1]

Went ahead and chose the option to reduce my annual adjustments to 2.15% and my wife's to 2.8% to keep approximately the same premiums. To keep the annual adjustments that my wife (5%) and I (4%) currently have, our combined premiums would have increased from about $308 to $538 per month over the next three years. The max lifetime benefit, and I think the daily benefit, will increased a little bit with the option we chose option goes into effect in January.

Noted that insureds can change their mind and switch to a different option up until Nov. 9.

[tj]

Went ahead and chose the option to reduce my annual adjustments to 2.15% and my wife's to 2.8% to keep the same premiums. To keep the annual adjustments that my wife (5%) and I (4%) currently have our combined premiums would have increased from about $308 to $538 per month over the next three years.

Noted that insured can change their mind and switch to a different option up until Nov. 9.

It sounds like you opted for the annual COLA adjustments option rather than the FPO option when you originally applied. I don't receive any annual adjustments, the annual benefit is a fixed number, unless I accept an FPO that would increase it.

[OpenMinded1]

Went ahead and chose the option to reduce my annual adjustments to 2.15% and my wife's to 2.8% to keep the same premiums. To keep the annual adjustments that my wife (5%) and I (4%) currently have our combined premiums would have increased from about $308 to $538 per month over the next three years.

Noted that insured can change their mind and switch to a different option up until Nov. 9.

It sounds like you opted for the annual COLA adjustments option rather than the FPO option when you originally applied. I don't receive any annual adjustments, the annual benefit is a fixed number, unless I accept an FPO that would increase it.

That's probably true. It was a while ago that we purchased it, so we don't remember whether an FPO option was offered or not. We had to be interviewed by a nurse and given a cognitive function test before we could get our policies. I wonder if you might have to go thru something like that (again?) if you decided to increase your coverage with an FPO in the future. I have no idea.

[stan1]

I made my decision to keep current premium.

I hopefully have awhile to go before I might claim this benefit and expect trend of large cost increases every 7 years will continue. I think the maximum benefit I have now will cover me, and I seriously hope that modern technology and views of end of life care will continue to evolve in ways that make lengthy nursing home stays even less likely. Medicaid is my safety net and I'm fine with that choice for a true outlier situation.

As one example out of infinite possible outcomes, recently my 89 year old mother spent her final 50 days in a nursing home. Medicare rehabilitation benefits covered first 20 days plus 10 more partial days but she didn't rehabilitate so next 20 days were on full private pay. Last 10 days she was also on hospice. So in this case LTCI with a 90 day waiting period would have paid out zero.

Obviously a very personal decision. Having a medical power of attorney who shares your views, and will follow through with them is very important. A patient and family members often have many difficult choices. Decisions have consequences. In my mom's situation she declined a feeding tube, which her family members fully supported as a rational choice given her condition, diagnosis, expected quality of life, and age. Other patients might make a different decision when faced with that choice.