Long-term insurance


Q. Regarding the Federal Long Term Care Insurance Program (FLTCIP), I had not thought about the lack of underwriting as a problem of being part of a pool of risky participants — at least for those of us who joined first. Do you think this is any more of a risk than our health care plans? Is the difference the number of participants rather than their level of health concerns?

Can you elaborate on what it means that if you are protecting your own interests, you may be contributing to the demise of the program, and that what’s good for you may not be what’s good for the FLTCIP? Insurance companies are for profit. I don’t think participants intend to do something for the good of a company at cost to themselves. Are we doing just that by continuing in FLTCIP?

And for those of us in CSRS, what does it mean that no long-term care insurance does not mean no long-term care? Where would the funds for long-term care come from without the insurance? I realize that at this point, assuming current nursing costs (let alone future rates) once the new contract goes into effect, at least half the long-term care costs would need to be supplemented by personal funds. How could you possibly pay for it in the future?
A. I can’t estimate the relative difference in the effects of relaxed underwriting standards on the FLTCIP and the Federal Employees’ Group Life Insurance benefit programs. That’s not something that I’ve studied, or plan to study. I’m a financial planner and I write my columns from that perspective – with the interests of the clients I serve in mind. I’m not sure why it is useful to try and judge which program is better or worse in a particular respect. Each of the programs is what it is and should be evaluated by each participant, or prospective participant, for its usefulness in meeting personal needs.

It is important to note that, like any insurance pool, the FLTCIP relies heavily on broad participation from a representative cross section of the eligible population to remain viable. If you, in order to protect your interests, decide to drop out of the program, you are likely diminishing that participation. This is because you are less likely to drop out if you are moving to qualify for benefits. When it comes to insurance, pursuing your own interests often comes at the expense of the interests of the program.

There are a variety of ways to obtain or pay for long-term care without insurance. Personal funds, public programs like Medicare and Medicaid, private health insurance, hospice, and not least: family and friends, for example. Basically the way it has been done for most of human history.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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