Steep increases force choices about long-term coverage

By Michelle Singletary

Special to The Herald

It’s not over yet.

Federal workers and retirees in the Federal Long-Term Care Insurance Program (FLTCIP) had until Sept. 30 to decide about their coverage.

This was forced by staggering premium increases announced by John Hancock Life &Health Insurance Co., which administers the program. The fallout has been fierce.

“We were shocked beyond belief,” one reader wrote. “My husband (77) and I (68) signed up in 2002. Imagine our ire when we were notified that our premiums would increase. To maintain current coverage, my husband’s premium would go up from $285 a month to over $560. Mine would increase from $136 to $400.”

Others feel they were low-balled by previous premiums.

“We have paid premiums for 15 years and now the insurance is nearly unaffordable, just when we are too old to find an alternative,” David and Marilyn Weaver wrote in a letter to OPM noting that her premium increased 126 percent from $267.73 per month to $605.07.

Even if you aren’t in the FLTCIP, this is a story you should be following.

Many people with private long-term care insurance policies have received similar notices of steep jumps in premiums. The advice to federal workers could also apply to you.

I’ve heard from people who feel long-term care insurance financially saved their family. Others complain companies sometimes stall so long in approving benefits that policyholders recover or die before receiving payouts. Still more people wonder how they can be assured that insurance companies will be around and able to pay claims that may not come for 20, 30 or 40 years.

Today, let’s focus on the federal program.

Yes, there was a Sept. 30 deadline. But enrollees have an opportunity to reconsider their options.

By mid-October, they’ll get a package that confirms coverage and the cost effective Nov. 1, according to Long Term Care Partners, a John Hancock subsidiary. They will have 30 days to make a change.

During the review period, people can request a change by calling the service center, 1-800-582-3337 or TTY 1-800-843-3557. You can’t make changes online, but you can send an email to appointments@ltcpartners.com to schedule a phone call.

Carolyn McClanahan, a physician who is also a certified financial planner, participated in an online discussion addressing various choices —including making premiums more affordable by reducing the length of coverage and the inflation-rate option.

Here’s one situation she evaluated:

A wife, 83, got her policy in 2002. She declined the premium increase to $354.05. She’s keeping her current monthly payment of $276.60, with a daily benefit of $219.20 reduced from $241.

Her husband, 86, who signed up in 2004, was offered a daily benefit of $225 for a monthly premium of $431.85. He declined the increase and will continue to pay his present monthly payment of $352.82, with daily benefits reduced from the current $225 to $206.07.

“Both of us are at an age that we might be in danger of needing the insurance we counted on,” the wife wrote. “It seems to me it would have been better to have saved the money in a bank.”

Given their ages, McClanahan said the couple could be fine with paying their current premiums and accepting the adjustment in benefits.

“Basically, their savings at this point would have covered about half a year of care for each of them versus over three years of care with the long-term care insurance benefit,” McClanahan pointed out.

A lesson: As you look at this insurance product or reconsider your coverage options, be sure not to sign up for more than you can afford. And you’d be wise to leave room in your budget for future premium increases.

— Washington Post Writers Group