Print-Friendly Page Version

Change Type Sizes

• Facilities-Only or Comprehensive
• Daily Benefit Amount
• Benefit Period
• Waiting Period
• Inflation Protection Option

Inflation Protection Option

To help your benefits keep pace with inflation and the rising cost of care, the Federal Program provides you with two inflation protection options:

• Automatic Compound Inflation Option; or
• Future Purchase Option.
   

Automatic Compound Inflation Option (ACIO)

With this option, your DBA and remaining portion of your Maximum Lifetime Benefit will automatically increase by 5% compounded every year with NO corresponding increase in your premium. The increases continue even if you are eligible for benefits.

With health care costs continuing to rise almost every year, you should consider the Automatic Compound Inflation Option.

While the initial premiums are higher than Future Purchase Option premiums, you won’t have to think about buying additional long term care insurance coverage or worry about whether your coverage will keep pace with inflation. Your benefits will increase year after year, without causing an increase in your premiums.

After a period of time, your premiums would be less than Future Purchase Option premiums, which increase every time you accept an inflation increase.
 

Future Purchase Option (FPO)

With this option, you get an automatic inflation increase every two years on January 1st, unless you decline it. Your coverage must be in effect for at least 12 months in order for you to receive your first increase under this provision.

The premiums for your additional long term care insurance coverage will be based on your age at the time the increase takes effect. (Important note: the inflation increase offers stop after you decline a total of three increases or while you are eligible for benefits.)

The increase in your DBA and the remaining amount of your Maximum Lifetime Benefit is based on increases in the Consumer Price Index for Medical Care.

With each offer, you can switch to the Automatic Compound Inflation Option without proof of good health, as long as you are not eligible for benefits at that time and have not declined three increases in the past.

As your benefits increase, your Future Purchase Option premiums increase and eventually become greater than the Automatic Compound Inflation Option premiums. Since the Future Purchase Option premiums increase steeply during normal retirement ages, you should consider whether you will be able to afford the eventual higher premiums under the Future Purchase Option.

For additional information on the Automatic Compound Inflation Option and the Future Purchase Option, please see the Outline of Insurance Coverage.