Federal Long-Term Care Insurance Program
The Federal Long-Term Care Insurance Program covers services that individuals may need because they are unable to care for themselves due to a chronic mental or physical condition. Included are services such as nursing home care, home health care, assisted living facilities, adult day care and personal/homemaker care. The coverage is provided by LTC Partners, LLC, and underwritten by the John Hancock Life & Health Insurance Company under contract with the Office of Personnel Management.
Coverage is voluntary and enrollees pay the entire cost of the premiums; there is no government contribution.
The FLTCIP is “guaranteed renewable”—as long as you pay your premiums, it cannot be changed because you have aged, due to personal health changes or for any other reason related solely to you (except if you request and are approved for a higher level of benefits as described in Benefit Choices, below). However, premiums may increase, with OPM’s consent, for those within a group of enrollees whose premiums are determined to be inadequate to cover projected costs of benefits. See Changes in Benefits and Premiums, below.
Eligible persons may apply to enroll at any time, subject to underwriting. Full underwriting applies to all but newly hired or newly eligible employees and spouses except during an open season, when abbreviated underwriting applies to all employees and spouses. See Underwriting, below. The FLTCIP has had only two open seasons, however, one at the program’s introduction in 2002 and one in 2011. The “enrollee decision period” held in mid-2016 was not an open season because it allowed only changes in benefit elections by persons already enrolled.
Individuals eligible to apply for this insurance coverage are:
• Federal employees, including employees of the U.S. Postal Service and Tennessee Valley Authority. In general, an employee in a position eligible for Federal Employees Health Benefits program coverage is eligible for FLTCIP (whether enrolled in FEHB or not—the key is eligibility). TVA employees are eligible for FLTCIP even though they may not be eligible for FEHB.
• Federal annuitants, surviving spouses of deceased federal or postal employees or annuitants who are receiving a federal survivor annuity, individuals separated from the federal service who are eligible for a deferred annuity, individuals separated from the federal service who are receiving compensation from the Department of Labor.
• Members of the uniformed services who are on active duty or full-time National Guard duty for more than 30 days, active members of the Selected Reserve (but not members of the Individual Ready Reserve), former members of the uniformed services and retired military reservists who are entitled to retired or retainer pay, regardless of whether they are currently receiving military retired pay.
• Current spouses of employees, annuitants and survivor annuitants, and spouses in common law marriages recognized by the state of residence.
• Domestic partners (both same-sex and opposite-sex) of federal and postal employees and annuitants and active and retired members of the uniformed services (see below).
• Adult children (at least 18 years old, including natural children, adopted children and stepchildren but not foster children) of living employees, annuitants and survivor annuitants.
• Parents, parents-in-law, and stepparents of living employees and their spouses (but not of domestic partners or annuitants).
There is no upper age limit for who can apply for this insurance but there is a minimum age; you must be at least 18 years old at the time you submit your application.
Domestic Partners—Under 5 CFR 875, domestic partners of FLTCIP-eligible federal and U.S. Postal Service employees and annuitants are eligible to enroll if they meet standards that define “domestic partner” for this purpose as a committed relationship between two adults, of either the opposite or the same sex, in which the partners:
• are each other’s sole domestic partner and intend to remain so indefinitely;
• have a common residence, and intend to continue the arrangement indefinitely;
• are at least 18 years of age;
• share responsibility for a significant measure of each other’s financial obligations (including where one is the sole earner);
• are not married to anyone else;
• are not a domestic partner of anyone else; and
• are not related in a way that would prohibit legal marriage in the jurisdiction in which they resided when the partnership was formed.
A Declaration of Domestic Partnership form is at www.ltcfeds.com/epAssets/
documents/Declaration_of_SSDP.pdf. Use of the form is not mandatory but is recommended since any substitute would have to include the same information required on the form. An employee or his or her partner must file their declaration with the employee’s agency and it will be kept in the employee’s official personnel folder or equivalent. Annuitants or their partners must file their declaration with their retirement system, typically through OPM. Both must certify they understand that willful falsification of information within the documentation may lead to disciplinary action, loss of insurance coverage and/or the recovery of the cost of benefits received related to any falsification. The employee or annuitant must be eligible for FLTCIP coverage, although need not be enrolled, for a partner to apply. Partners undergo the same underwriting as other eligible applicants and similarly are not guaranteed coverage. Dissolution of a partnership must be disclosed to the employing agency or to OPM but does not affect coverage already in place. Also see Benefits Administration Letter 15-901 at www.opm.gov/retirement-services/publications-forms/benefits-administration-letters.
Eligible individuals may apply at any time.
Newly hired employees and their spouses have 60 days to apply and use abbreviated underwriting. Afterward, they must undergo full underwriting.
If you are an active employee eligible for the program and have newly married, your spouse is eligible to apply within 60 days and be subject only to abbreviated underwriting. You, however, are not eligible for abbreviated underwriting because of your marriage; full underwriting will be required for you if you choose to apply. After 60 days, your spouse may apply for coverage but will be subject to full underwriting. Your new qualified relatives (such as parents-in-law) may apply for coverage with full underwriting at any time following the marriage.
Application forms are available through personnel offices, by calling (800) 582-3337, TTY (800) 843-3557, and at www.ltcfeds.com/apply; online application also is available at that site.
Abbreviated underwriting applies to newly hired employees and their spouses within the first 60 days of the hiring or to a spouse newly married afterward, as described above. The abbreviated underwriting application has seven health-related questions designed to determine who may be immediately eligible for benefits or eligible for benefits within a short time. Newly eligible spouses must answer two additional questions regarding their mobility and any need for help with everyday tasks. All other applicants are subject to full underwriting at all times (other than during one of the rare open seasons, when abbreviated underwriting applies to all employees and spouses). This means that they must answer numerous health-related and lifestyle-related questions in addition to the questions asked in abbreviated underwriting. (Note: Domestic partners and adult children of domestic partners are eligible as “qualified relatives” and therefore must complete a full underwriting application.)
Changes in Benefits and Premiums
The original seven-year contract in the FLTCIP program expired April 30, 2009. At its expiration, OPM awarded a new seven-year contract to the original benefit provider, LTC Partners LLC, although only one of the original two underwriting insurance companies, John Hancock, chose to continue.
The second contract provided for several changes in benefits effective October 1, 2009. Terms of the original contract remained available for new enrollments up to that point, with the new provisions effective for those enrolling afterward. Because of benefit enhancements in certain areas (such as home health care reimbursements and coverage for informal care provided by family members under certain conditions), premiums overall were slightly higher for coverage elected under the second contract than under the original contract for an equivalent package of benefit options and age at purchase.
In addition, under the second contract, premiums increased as of March 2010 for most enrollees on grounds that trends and claims experience indicated that the prior premiums would not be sufficient to meet the future projected costs of the benefits. The increases affected those with automatic compound inflation protection elected before the enrollee turned age 70, regardless of whether the enrollment was under the original or the second contract.
Those enrolling after October 1, 2009, may not elect several options that were available under the original design, including a choice of facilities-only coverage and an option for a 30-day waiting period. Those who enrolled before that date were given an opportunity to continue, reduce or cancel their coverage, or elect from the new benefit options with no underwriting required unless they chose to increase the value of their benefits.
Rates increased for those enrolling after July 31, 2015, again on grounds that existing premiums would not cover projected costs. Those increases applied to all options but did not affect those already enrolled as of that date.
Upon the expiration of the second contract, OPM entered a third seven-year contract with the same provider effective May 1, 2016, with premium increases, for the same reason, effective November 1, 2016 for most enrollees. Not affected were those enrolled in the Alternative Insurance Plan (see below); those who had enrolled at or after age 80; or anyone enrolling after July 31, 2015.
An “enrollee decision period” was held in July through September 2016 giving those affected by the increases the choice of: accepting a reduction in benefits to fully offset the premium increase; accepting roughly half the premium increase along with a lesser reduction in benefits; accepting the full premium increase while retaining existing benefits; or, if eligible, stopping premiums and keeping paid-up coverage with reduced benefits (see Benefit Choices, below). No underwriting was required for those choices. Affected enrollees also could revise their benefit selections in other ways, subject to full underwriting for increases in coverage. For those who made no election by the deadline, existing coverage continued subject to the higher premium rates.
Enrollees can choose a maximum benefit, the length of the policy, and the type and level of inflation protection. Those factors, plus the age at application, affect premium levels. A calculator for determining premiums is at www.ltcfeds.com under Planning Tools. That site also has information on the average costs of care by location.
Note: As explained above, those who were enrolled before October 2009 could retain certain options elected under the original contract that have not been available for those enrolling since that time.
Benefit Amount—Your maximum daily benefit can range from $100 to $450 a day in $50 increments. (Under the original contract, benefits ranged from $50 to $300 a day in $25 increments, and weekly benefits were allowed.)
Length of Policy—The length of your policy can be two years, three years, five years, or lifetime coverage. (Under the original contract, no two-year option was available). For other than lifetime coverage, the period and the maximum benefit create a pool of money. The insurance will pay benefits until your pool of money is exhausted, a process that may be shorter or longer than the length of the policy depending on your actual expenses. A lifetime benefit has a limitless pool of money.
Inflation Protection—Two inflation-protection features are available.
Under automatic compound inflation protection, you choose to have your benefit increase by either 4 percent or 5 percent every year, compounded annually. The increases are effective at the anniversary of the effective date of that coverage, regardless of actual inflation. (Under the original contract, only a 5 percent level was available).
Under the future purchase option, every two years you have the option to increase your benefits based on a medical inflation index. Your premiums increase as your benefit increases; they further are based on the age you are at the time of election, not the age at which you first took out the policy. You can switch from the future purchase option to the automatic compound inflation-protection option without proof of good health at the time of a notification if you have not declined more than two notifications in the past and are not eligible for benefits at that time. Premiums for those who make this change will be based on their age at that time and premiums already paid in, not on the rates for new enrollees. If you decline more than two offers, you still can apply for future inflation increases but would have to show satisfactory evidence of insurability.
Waiting Period—The waiting period—also called an elimination period or deductible—is the number of days of covered care that you (or other insurance coverage you may have) must pay for before the insurance begins to pay. The period is 90 calendar days, with no incurred expenses required. Days need not be consecutive or related to the same condition. (Under the original contract, a 30-day waiting period was available, and waiting periods for coverage elected then and retained are measured in days during which you are eligible for benefits and receiving covered services.)
Home Health Care—Home health care is reimbursable at up to 100 percent of the daily benefit amount (75 percent for coverage elected under the original contract and retained).
Informal Care—Under the comprehensive plan, informal care provided by family members who do not normally live with the insured at the time of claim is covered up to 500 days at 75 percent of the elected daily benefit amount (for coverage elected under the original contract and retained, only 365 days of coverage is available).
Bed Reservations—Charges incurred for bed reservations are reimbursed at 100 percent of the daily benefit amount for up to 60 days (up to 30 days for coverage elected under the original contract and retained).
Catastrophic Coverage—For coverage elected under the original contract and retained, benefits may be reduced if a war (declared or undeclared), act of war, or act of terrorism is determined to be a catastrophic event. Coverage elected under the later contracts has no catastrophic event provision.
Changing Coverage Levels—You can request a decrease in your coverage at any time to anything currently available under the program, and your premiums (which will be based on your age at time of original enrollment) will also decrease. For example, if you have the five-year benefit period, you can decrease to a three-year benefit period. You do not have to undergo new underwriting in order to decrease your coverage. However, you don’t get paid-up benefits.
At any time, you also may request an increase in your coverage by contacting LTC Partners. To receive approval of a request for an increase outside an open season, you must provide, at your expense, evidence of your good health that is satisfactory to LTC Partners. The amount of an increase is subject to what is then available under the program. If you request and LTC Partners approves an increase in your daily benefit amount (not counting any increase due to inflation protection), your additional premium will be based on your age and the premium rates in effect at the time the increase takes effect. Other coverage increases you request that LTC Partners approves will cause your entire premium to be based on your age and the premium rates in effect at the time the increase takes effect.
The Coverage Change Application is available through personnel offices and at www.ltcfeds.com/apply.
Canceling Coverage—You may cancel your coverage at any time. If you cancel during the initial “free look” period, your premiums will be refunded to you. If you cancel your coverage at any other time, cancellation will take effect on your requested cancellation date or at the end of the period covered by your last premium payment, whichever occurs first. You will not receive any refund of premiums paid, other than any premiums paid in advance for the period following the effective date of your cancellation of coverage, and you will not have to pay any more premiums unless you owed retroactive premiums.
The FLTCIP program doesn’t provide paid-up benefits for those who cancel coverage. However, a paid-up benefit feature can apply if the insurer increases a premium by more than a fixed percentage above the premium on initial purchase. The percentage varies according to the enrollee’s age at enrollment and the applicable percentages are at www.ltcfeds.com—search for “contingent benefit upon lapse.” In such a case the enrollee can stop paying premiums and the coverage will be converted into a paid-up policy with a maximum lifetime benefit that is the larger of: the total amount of premiums the enrollee has paid; or 30 times the daily benefit amount. This option was available to most enrollees affected by the 2016 increase in premiums as described in Changes in Benefits and Premiums, above.
Coverage Termination—Your coverage will terminate on the earliest of the following dates:
• the date you specify to the carrier that you wish your coverage to end;
• the date of your death;
• the end of the period covered by your last premium payment if you do not pay the required premiums when due, after a grace period of 30 days; or
• the date you have exhausted your maximum lifetime benefit, if applicable. (However, in this event, care coordination services will continue.)
Reinstating Coverage—Under certain circumstances, your coverage can be reinstated. The carrier will reinstate your coverage if it receives proof satisfactory to it, within six months from the termination date, that you suffered from a cognitive impairment or loss of functional capacity before the grace period ended that caused you to miss making premium payments. In that event, you will not be required to submit to underwriting. Your coverage will be reinstated retroactively to the termination date but you must pay back premiums for that period. The premium will be the same as it was prior to termination.
If your coverage has terminated because you did not pay premiums or because you requested cancellation, the carrier may reinstate your coverage within 12 months from the termination date at your request. You will be required to reapply based on full underwriting, and the carrier will determine whether you are still insurable. If you are insurable, your coverage will be reinstated retroactively to the termination date and you must pay back premiums for that period. The premium will be the same as it was prior to termination.
Premiums are based on your age when you buy the coverage, the benefit amount, the length of the policy, the type of inflation protection chosen, and, for coverage elected under the original contract and retained, the length of the waiting period and the choice of facilities-only versus comprehensive coverage.
Premiums cannot be increased on an individual basis but can be increased, with Office of Personnel Management approval, for a group whose premiums are determined to be inadequate to cover expected future claims. See Changes in Benefits and Premiums, above. Enrollees pay the entire premium cost; there is no government contribution. A premium calculator is at www.ltcfeds.com under Planning Tools.
Note: FLTCIP premiums, including premiums for the Alternative Plan or the Service Package, cannot be paid with pretax money from a flexible spending account, although certain expenses not reimbursed by the FLTCIP related to long-term care are reimbursable from an FSA. Long-term care insurance premiums and certain long-term care costs are payable from a health savings account that is part of a high-deductible health plan (see FEHB Plan Options in Section 1 of this chapter).
Tax Break for Some Retirees—Section 845 of the Pension Protection Act of 2006 allows pretax payment of FLTCIP premiums (among certain other forms of insurance) for retired “public safety officers.” OPM in Benefits Administration Letter 07-201 at www.opm.gov/retirement-services/publications-forms/benefits-administration-letters, determined that the Civil Service Retirement System and the Federal Employees Retirement System are eligible retirement plans under the act and that retired public safety officers are deemed to have made an FLTCIP premium conversion election for this purpose.
As a result, retired public safety officers whose CSRS or FERS annuity payments include a direct premium payment to the FLTCIP carrier may self-identify eligibility for, and self-report, a tax exclusion to the Internal Revenue Service. To qualify, the distribution must be paid directly from the retirement system to the insurance provider. Premiums of up to $3,000 for coverage of the enrollee, spouse or dependents can be excluded, but only for amounts that otherwise would be included in taxable income, and the amount excluded cannot be used to claim a medical expense deduction.
IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits, defines public safety officers as including law enforcement officers, including those of the Capitol Police and Supreme Court Police, firefighters, Customs and Border Protection officers, air traffic controllers, nuclear materials couriers, and diplomatic special security agents of the State Department. That publication, at www.irs.gov/pub/irs-pdf/p721.pdf, also contains additional information on this tax advantage. Consult a tax adviser for guidance.
Transferring or Retiring—If you are paying FLTCIP premiums via payroll deduction and transfer to a new agency, contact LTC Partners as soon as you know where and when you will be transferring in order to arrange payroll deductions there. Depending on the timing of the premiums and the payroll cycles, a payment might be missed; in this case LTC Partners will send a bill directly to you. Payroll deductions cannot be adjusted to catch up for missed payments.
If you do not let LTC Partners know about the transfer, it will continue to request deductions from the previous payroll location until three deductions have been missed. At that point, you will be taken off payroll deduction and switched to direct billing of premiums. If premiums are not paid on a timely basis, it will cancel the coverage. Note: When there is a mass transfer that the servicing payroll location has communicated to LTC Partners, individuals do not need to report the transfer.
Similarly, if you are retiring, deductions will not transfer automatically from payroll deductions to annuity deductions; you must contact LTC Partners to make the needed arrangements. Also, deductions cannot be taken from “interim” payments received until an annuity is finalized. During this period (which may last a number of months after retirement until full benefits begin), you will be billed directly for premiums due. Annuity deductions cannot be adjusted to catch up for missed payments.
If you are paying FLTCIP deductions through direct billing or through automatic bank withdrawal, you do not need to contact LTC Partners if you transfer agencies, retire, or leave the government, unless a change affecting those payment arrangements is involved.
Leave Without Pay—If you go on extended leave without pay (including due to furlough; see Furloughs in Chapter 9, Section 1), you may change from payroll deduction to direct billing or to payment via electronic funds transfer. If LTC Partners does not receive premium for one or two pay periods, it will adjust future premium deductions, increasing by no more than $50 per pay period to recover the missed premiums. Three consecutive pay periods of missed premiums will result in a direct billing. If premiums are not collected or a final bill is not paid within a 30-day grace period, it will send a termination letter. You would have 35 days from the date of the letter to pay the premium; otherwise you will be disenrolled retroactively to the last pay period in which the premium was paid.
Military Duty—If you are called to active military duty, you can keep FLTCIP coverage but must keep your premium payments current; you cannot incur a debt for the premiums during the time in a non-pay status. If you will be deployed overseas, it may not be feasible for you to receive and pay direct bills on a timely basis, which risks cancellation of coverage. If you have payroll deduction of premiums, you can have premiums deducted from active duty pay by contacting LTC Partners. If you currently pay premiums through automatic bank withdrawal or direct bill, you will need to complete a billing change form to get premiums deducted from your military pay.
Alternative Insurance Plan/Service Package
Some applicants who are not approved to enroll in the insurance they originally applied for will be offered an Alternative Insurance Plan. It offers nursing home only coverage with a 180 day waiting period and two-year benefit period. The Alternative Insurance Plan also has higher premiums. This plan is not available to those who use the full underwriting application. If you apply for and are denied the standard insurance and are not offered the Alternative Insurance Plan, you will be offered a Service Package. This is true for everyone who applies—those using the abbreviated underwriting application and those using the full underwriting application. The Service Package is not insurance. It provides access to a care coordinator, general information and referral services, and access to a discounted network of long-term care providers and services. It costs $59 per year for an individual or a couple.
Individuals who are offered both can decide which, if either, they wish to purchase.
Types of Care Covered
Comprehensive coverage under the FLTCIP includes:
• nursing home care, assisted living facility care, and hospice care at up to 100 percent of the chosen daily benefit amount;
• respite care (temporary care if your normal caregiver needs time off) at up to 100 percent of the chosen daily benefit amount (limited to 30 times your daily benefit amount per calendar year, but the waiting period does not apply);
• bed reservations at up to 100 percent of the chosen daily benefit amount (limited to 60 days per calendar year);
• home care, adult day care, formal caregiver services, and hospice care at up to 100 percent of the chosen daily benefit amount (the waiting period does not apply to hospice care);
• informal caregiver services by people who didn’t normally live in the enrollee’s home at the time the enrollee became eligible for benefits (benefits for care provided by family members are limited to 500 days lifetime); and
• a stay-at-home benefit covering services such as care planning visits, home modifications, emergency medical response systems, durable medical equipment, caregiver training, and home safety checks (limited to 30 times the daily benefit amount, but the waiting period does not apply).
Note: Those electing coverage under the original contract had the option for a facilities-only coverage plan; also, different coverage levels applied to some benefits under that contract. See Benefit Choices, above.
The FLTCIP does not cover:
• illnesses, treatments, or medical conditions arising out of participation in a felony, riot, or insurrection; from an attempted suicide while sane or insane; or from self-inflicted injuries;
• care or treatment for alcoholism or drug addiction;
• care or treatment provided in a government facility unless required by law;
• care received in a hospital except in designated nursing home or hospice units;
• any service or supply reimbursable under Medicare;
• services or supplies for which you are not obligated to pay in the absence of insurance; or
• services provided by any person who normally lives in your home at the time you become eligible for benefits.
Benefit Eligibility Determination and Appeals
You are eligible for benefits if, after your coverage becomes effective:
• a licensed health care practitioner has certified within the last 12 months that you are unable to perform, without substantial assistance from another person, at least two activities of daily living for an expected period of at least 90 days due to a loss of functional capacity; or you require substantial supervision due to your severe cognitive impairment;
• LTC Partners agrees with that certification; and
• LTC Partners approves a written plan of care established for you by a licensed health care practitioner or its care coordinator.
Activities of daily living include eating, toileting, transferring (as from bed to chair), bathing, dressing, and bowel and bladder control. A cognitive impairment is impairment in short-term or long-term memory, orientation as to person, place and time, or deductive or abstract reasoning such that the person needs substantial supervision by another person to prevent him from harming himself or others.
In general, benefits will not be paid for care received in a government facility, such as a Department of Defense or Department of Veterans Affairs medical center. The “catastrophic coverage” limitation under policies elected under the original contract and retained might affect benefits paid in the event of war.
You will not have to pay premiums after you have met a condition for eligibility and you use the care coordination program during the waiting period you select. If you do not use the care coordination program, you will pay premiums during your waiting period, but will stop paying them after you satisfy your waiting period.
To apply for benefits, call (800) 582-3337, TTY (800) 843-3557; a representative will provide information about the procedures and the needed documentation. Also see www.ltcfeds.com/claims/claims_forms.html.
After you apply, LTC Partners may contact you, your physician or other persons familiar with your condition, may access medical records and may have you examined by a licensed health care professional and/or conduct an on-site assessment.
LTC Partners will send you written notice of its decision on whether you are eligible for benefits no later than 10 business days after it receives all the information it needs. If LTC Partners determines that you are eligible, the notice will state the effective date and will include claim forms. At least once a year, but no more often than every 30 days, LTC Partners will reassess whether you continue to be eligible for benefits.
If LTC Partners determines that you are not eligible for benefits, the notice will provide the reason(s) for the denial and will let you know how to request a review, which must be filed within 60 days from the date of the denial. If the denial is upheld—an answer will be provided within 60 days after LTC Partners receives the review request—you may appeal to an appeals committee whose members are agreed upon by OPM and LTC Partners.
If the appeals committee upholds the denial, that denial may be eligible for review by an independent third party. For example, appeal to an independent third party is available when the appeals committee upholds a denial of your eligibility for benefits because its review indicates that you can perform at least five out of six activities of daily living. However, appeal to an independent third party is not available for example when the appeals committee upholds a denial of your claim for benefits because you exhausted your maximum lifetime benefit.
The decision by the independent third party is final and binding on LTC Partners.
After you have gone through this administrative review process, you may seek judicial review of a final denial of eligibility for benefits or a claim. The amount of recovery available is limited to the benefit payable; no punitive, compensatory or other damages are allowed.
Note: These procedures apply only if you have valid coverage under the FLTCIP. If the carrier determines that your coverage was based on an erroneous application and voids the coverage, these provisions do not apply. The carrier will provide you with information on your review rights in its letter voiding your coverage.
The FLTCIP meets the requirements of the Health Insurance Portability and Accountability Act (HIPAA). This means you can deduct the premiums to the extent that your total qualified medical expenses exceed 7.5 percent of your annual adjusted gross income (up to dollar limits determined by age) and that the benefits you receive are not considered income for tax purposes.
Some states offer tax incentives designed to encourage the purchase of long-term care insurance. Check with your state’s insurance department.
For More Information
Further information on the program can be obtained from LTC Partners, phone (800) 582-3337 or TTY (800) 843-3557 and at www.ltcfeds.com and www.opm.gov/healthcare-insurance/long-term-care.