In late 2022, the Federal Long-Term Care Insurance Program (FLTCIP) stopped accepting new enrollment applications and announced the suspension would continue for the next 24 months. The suspension also applied to requests by current enrollees to increase existing coverage. Now the OPM has announced that the current suspension will be extended for another 24 months through December 2026.
According to the OPM, the suspension is in the best interest of the FLTCIP due to the rising cost of long-term care services which has resulted in premium increases. In fact, current FLTCIP enrollees were impacted by a premium increase for 2024 and had to choose between paying more for the same coverage or lowering their coverage.
What You Need To Know About Private LTC Insurance
If you were planning to add FLTCIP coverage to your retirement plan, you have two choices: wait 24 months to see if the suspension will end or buy a Long-Term Care (LTC) policy from a private-sector insurance carrier. While shopping for a policy it’s important to understand that there are ways to reduce your coverage benefits to lower your premium.
For example, a policy with a five-year maximum payout will be less expensive than an open-ended policy. Or, you can also lower your premium by extending the policy waiting period before you collect benefits. Then again, many private LTC policies offer a 10% to 20% good health discount plus discounts for couples who purchase shared-care insurance. These advantages are not available with FLTCIP coverage.
“There are a number of advantages to purchasing an annuity with a Long-Term Care rider.”
Affordable Alternatives To LTC Insurance
Short-Term Care (STC) insurance, also known as Convalescent Insurance, is one option. Policies typically cover in-home care, assisted living, and nursing homes for 12 months or less. Premiums range from $100 to $200 per month depending on your age, health, and the policy terms.
If you have a family history of certain types of medical issues, consider Critical Care insurance. Also known as Critical Illness Insurance, it covers specific emergencies like heart attack, stroke, cancer, coronary bypass, and organ transplants. Typically, you’ll receive a lump sum payment to cover out-of-pocket costs, and the premiums are highly affordable.
Annuities With LTC Riders
There are a number of advantages to purchasing an annuity with a Long-Term Care rider. It gives you a stream of guaranteed retirement income while the LTC rider can be used tax-free to pay for non-medical, custodial care in a nursing home. If it turns out that the person insured never needed the LTC coverage, beneficiaries can likely collect the accumulated value of the annuity. To learn more, connect with an FRC® trained advisor.
