Understand Your Options for Long-Term Care

Long-term care involves a variety of services to help people live as independently and safely as possible when they can no longer perform everyday activities on their own. Most long-term care is provided at home by unpaid family members and friends. It can also be in a facility such as a nursing home or in the community, such as in an adult day care center.

Long-term care can be expensive, and the cost is often paid with personal funds, including pensions, savings, and investments such as the TSP. According to the National Institute on Aging, https:// www.nia.nih.gov/, Americans spend billions of dollars a year on various services that provide supervision and assistance to individuals who need personal care. Another source of funding is government health insurance programs, such as Medicaid (Medicare and FEHB does not cover long-term care but may cover some costs of short-term care in a skilled care facility after a hospital stay.) Veterans may be able to receive long-term care in a variety of settings and information is available at https://www.va.gov/healthcare/about-va-health-benefits/ long-term-care/ or by calling 1-800-698-2411.

New applications for the Federal Long Term Care Insurance Program (FLTCIP) have been suspended as of December 2022, to allow time to assess current benefit offerings while establishing reasonable premium rates that will reflect the cost of the benefits that will be provided. Current enrollees’ coverage status will not change if premiums are paid. For those in a claim status, there is no change to coverage or the claims reimbursement process if benefits have not been exhausted. The FLTCIP website states the suspension will remain in effect for 24 months unless OPM issues a subsequent notice to end or extend the suspension. Learn more about FLTCIP at www.ltcfeds.com

If you are in the market for long-term care insurance coverage, you may purchase long-term care policies through a financial planner, an insurance broker or agent. When shopping for LTC insurance, it is important to understand the following terms:

• Elimination period. This is a waiting period from qualifying for long-term care benefits until the policy begins to cover the cost of care. This can be as short as 30 days or as much as 180 days. The cost of care will be paid out of pocket during this period.

• Benefit period. This is the length of time benefits will be paid. This could be as little as two years or as much as five years or even longer. Unlimited policies are very expensive and may be hard to find in a new policy.

• Daily benefit. This is the maximum amount the policy will pay for care per day. If the actual cost is less than the daily benefit amount, the length of coverage may be extended beyond the benefit period.

• Increasing payment. Some policies will offer an “increasing payment” feature to help offset the rising cost of care. This feature will allow the benefits to increase at a certain rate (i.e., 3%, 5%, etc.) every year automatically without a corresponding rate increase. There are also policies that offer the option to periodically purchase increasing benefits when the cost of care has increased. Along with your age at the time of purchase, these factors will determine the cost of your long-term care policy. You will also be subject to medical underwriting to qualify for a policy.

You may also cover some long-term care costs through a rider attached to a life insurance policy. This is different from a stand-alone long-term care policy as the benefits are directly tied to the amount of life insurance and, when used as a long-term care benefit, will reduce the insurance payout. For example, monthly benefits providing for a residential facility are typically based on a percentage of the life insurance amount. A $100,000 policy with a 2% benefit would give you $2,000 a month. A monthly benefit for home health care, when covered under the rider, is usually half of the nursing home benefit. One such policy is offered through Worldwide Assurance for Employees of Public Agencies (WAEPA). Information can be found at https://www.waepa.org/products/ chronic-illness-rider/.

It is important to consider the need for long-term care planning when the following demographic statistics show that:

• There were 55.7 million adults age 65+ living in the U.S. in 2020. This included 30.8 million women and 24.8 million men.

• America’s older population has grown by 38% since 2010, compared to an increase of 2% for the under-65 population.

• There were 104,819 people aged 100 and older in 2020—more than triple the number in 1980 (32,194). Not everyone needs or can qualify or afford longterm care insurance, however, it is important to consider long-term care planning when planning for your life after retirement.

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