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Help Protect Your Family with the Federal Long Term Care Insurance Program
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Uniformed Services Members: Help Protect Your Family with the Federal Long Term Care Insurance Program
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Caregiving: The FLTCIP Offers Support When You Need It Most
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Select a question below:

  • How are Federal Long Term Care Insurance Program (FLTCIP) premiums established?
  • The goal in establishing the premium rates is to calculate rates that will be sufficient to pay claims plus expenses, now and over the future lifetime of enrollees. Calculating premiums requires using a series of assumptions that quantify the risk that certain things will happen in the FLTCIP over the course of time.

    The key risk assumptions relate to claims (how many people will qualify for benefits and begin submitting claims, when, and for how long?), investment results (how much money will be earned by investing the premiums?), lapse results (how many people will voluntarily drop their coverage over the course of time?), and mortality (how many people will die while enrolled?). These risks vary for enrollees depending on their ages when they enroll, and the risks change as people age while enrolled. Different plan designs require different risk assumptions as well (for example, there are different risk assumptions made for a three-year benefit period and an unlimited benefit period). There are also expense assumptions—how much it will cost to administer the FLTCIP and pay fees to the insurer(s).
  • What happens to the money?
  • All of the premiums collected for the FLTCIP go into an account that is held by the insurer just for the FLTCIP. The insurer cannot use this account for anything except the FLTCIP. This account is called an Experience Fund. The only sources of money for the Experience Fund are the premiums that are collected from participants and the fund's investment earnings. Money in the Experience Fund can only be used to pay claims and cover expenses and fees for the FLTCIP. The assumptions for projecting future experience and the value of the Experience Fund are monitored by the U.S. Office of Personnel Management (OPM) and the insurance carrier to evaluate whether the fund, along with future premiums and investment income, is adequate to pay expected claims, expenses, and fees over the course of time. If the fund has enough money to cover the FLTCIP's expected needs, no corrective action is needed. If the fund is not adequate, analysis is done to determine which plan designs and age groups may need rate adjustments.

    By the same token, if the fund has more money than might reasonably be needed to cover the FLTCIP's expected obligations, premiums may be reduced or benefits may be improved for the participants. The key thing to remember is that all premium collected goes into the Experience Fund, and the Experience Fund can only be used to cover the FLTCIP's needs and obligations and for the benefit of the FLTCIP participants. If the FLTCIP changes insurer(s), the fund moves to the new insurer(s).
  • Has the Federal Long Term Care Insurance Program (FLTCIP) ever had a premium increase?
  • Yes.

    Since 2002, John Hancock Life & Health Insurance Company has offered long term care insurance coverage to eligible members of the Federal family. In the past 10 years, we have raised rates for the following Federal Long Term Care Insurance Program (FLTCIP) inforce benefit booklet series:

    Benefit Booklet Series Years Available for Sale Year of Increase Percentage of Increase
    FLTCIP 1.0 2002-2009 2010 A 25% maximum increase was implemented for enrollees with the Automatic Compound Inflation Option (ACIO), whose age at purchase was 69 or younger.
    FLTCIP 1.0

    FLTCIP 2.0

    2016 An overall average increase of 83% was implemented. The increase varied based on an enrollee's age at the time of enrollment, plan originally purchased, and plan design.
    • A 126% maximum increase was implemented for enrollees who originally purchased FLTCIP 1.0.
    • A 66% maximum increase was implemented for enrollees who originally purchased FLTCIP 2.0.

    Coverage under the FLTCIP is guaranteed renewable. This means FLTCIP coverage cannot be canceled based on a change in an enrollee's health or age. As long as premiums are paid and benefits have not been exhausted, coverage will continue. However, it is important to note that premiums may increase in the future if you are among a group of enrollees whose premium is determined to be inadequate.

    If it is determined that a premium increase is necessary, enrollees will be notified of the new premium amount and provided with at least one of the following options:
    • You may maintain your current benefits and pay the new increased premium.
    • You may reduce your benefits so your premium payments are not increased.
    • If you meet certain age and rate increase amount minimum thresholds, you may be eligible to convert your coverage to paid-up coverage. Your new maximum lifetime benefit will be reduced to the total amount of premiums you have paid for your coverage, or 30 times your daily benefit amount, whichever is greater. Note: If you had previously received benefits under the plan and then recovered, no benefits will be paid in excess of your remaining MLB.
  • Why did the FLTCIP need rate increases?
  • Because long term care insurance is a complex, experience-based product, many factors are considered at the time premium rates are established. Examples include the frequency and severity of particular medical conditions, expected lifespan of enrollees, length of time an enrollee is expected to keep his or her coverage, cost of care, estimated returns on investment, and overall program expenses. As the program matures, these factors can change over time. Unfortunately, analysis of the Federal Long Term Care Insurance Program (FLTCIP), using updated assumptions based on identified trends and actual claims experience, indicated that the FLTCIP premiums were not sufficient to meet the program's future, projected claims costs. As a result, there was a need to increase premiums.

    The FLTCIP is not unique in seeing the need to raise premium rates. As industry experience emerges, and is compared to original good-faith pricing assumptions, many long term care insurers have seen a need to raise premiums, both for new business and for some or all of their existing insureds.
  • Will my premiums increase in the future?
  • The FLTCIP premium rates were established using guidelines set by the National Association of Insurance Commissioners and are intended to be adequate under moderately adverse conditions. FLTCIP premiums, however, are not guaranteed. Your premium will not change because you get older or your health changes or for any other reason related solely to you. Premiums may only increase if you are among a group of enrollees whose premium is determined to be inadequate.

    OPM, John Hancock, and Long Term Care Partners, the program's administrator, review the FLTCIP Experience Fund status report every six months to assess the financial health of the program—in particular, whether funds under management adequately reflect the future claims expected for the FLTCIP.


Apply today

Apply Today!

Federal family members can apply for coverage anytime—you do not have to wait for the next open season. Premiums are based on your age and the premium rates in effect at the time we receive your application—the younger you are when you apply, the lower your premium will be.

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