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Relationship of Cost of Care and Benefits
Comparison of Automatic Compound Inflation Option and Future Purchase Option
The sets of graphs that follow compare the Automatic Compound Inflation Option (ACIO) and the Future Purchase Option (FPO). The FPO graphs reflect two scenarios: all FPO increases accepted and all FPO increases declined.
There are comparisons for three issue ages: 45, 55, and 65. The graphs compare your monthly premium and your Daily Benefit Amount over time. The length of time we have used for the issue age 45 graphs is 30 years; for the issue age 55 graphs is 25 years; and for the issue age 65 graphs is 20 years.
For the purposes of these graphs, we are assuming a 5%
annual inflation increase. The ACIO benefit automatically increases annually
while the FPO benefit increases are compounded and occur every two years (FPO
benefit increases are based on an inflation index that is designed to reflect
actual costs). The lengths of time are illustrative only and do not imply
that your coverage would end after the length of time shown.
Graphs for Comparing Inflation Options for ISSUE AGE 45
The two graphs below illustrate the monthly premium and the Daily Benefit Amount over time under the Automatic Compound Inflation Option (ACIO) and the Future Purchase Option (FPO). The graphs assume a Comprehensive plan, with an initial Daily Benefit Amount of $150, a 90 Day Waiting Period, and a 5 Year Benefit Period. The graphs below only illustrate the first 30 years of premium and benefits.
As you can see from the first graph, your ACIO premium does not increase as the benefit increases.With FPO, your premium starts out lower than with ACIO. But, as your benefit increases, your FPO premium increases and eventually becomes greater than the ACIO premium. Since the FPO premium increases steeply during normal retirement ages, you should consider whether you will be able to afford the higher premium under the FPO. At the time you begin to decline premium increases, your coverage doesn’t end, it just stops increasing.
The second graph shows how your Daily Benefit Amount increases over time under ACIO and how it increases under FPO if you do not decline the benefit increases and they take effect. However, if you decline the benefit increases, your FPO benefit will not increase and becomes substantially less than the ACIO benefit.
| Call: 1-800-LTC-FEDS (1-800-582-3337) (TTY: 1-800-843-3557) |
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