Premium Stabilization Feature
This premium stabilization feature (PSF) is designed to reduce the potential need for future premium increases. Under this feature, there is an adjustable amount, the PSF amount, that is calculated as a percentage of premiums paid under the FLTCIP 3.0 group policy. Under certain conditions, the PSF amount may be used to offset your future premium payments or provide a refund of premium death benefit. The PSF has no cash surrender value or other monetary value except as a premium offset or refund of premium death benefit.
For detailed information on this feature, refer to the FLTCIP 3.0 Outline of Coverage in Book One: Program Details and Rates.
How this feature works
The PSF percentage is used to calculate the PSF amount that is available to you. We may adjust the PSF percentage due to actual and projected FLTCIP experience.
The PSF percentage will be changed no more than once annually, and will not exceed 100% or be less than 10%.
You will be notified when a PSF percentage change occurs. While the group policy is in effect, OPM must approve the change in the PSF percentage.
The portion of premium available as your PSF amount is calculated as follows:
The PSF amount is reduced dollar-for-dollar by benefit amounts paid on your behalf, so your PSF amount may be reduced to zero regardless of the PSF percentage.*The total amount of premium you paid out-of-pocket for FLTCIP 3.0 coverage, and the amount of any premium offset used for you under the premium stabilization feature.
Under the premium offset, your PSF amount will be used to pay for 50% of your monthly premium when:
- You have attained the age of 85.
- You have been enrolled in the FLTCIP 3.0 for at least 10 years.
- You have sufficient PSF amount available to pay 50% of your monthly premiums for at least the next 12 months based on current premium.
- You have not opted out of the premium offset.
The premium offset will continue until there is insufficient PSF amount available to pay 50% of your monthly premium due, or you contact us, in writing, and request to stop using this premium offset.
In the event that the premium offset is discontinued, we will provide you with written notice that you will be responsible for 100% of your monthly premium. If your premium is waived, the premium offset will not apply.
Refund of premium death benefit
If your FLTCIP 3.0 coverage is in force on your date of death, a refund of premium death benefit may be payable. Any PSF amount available will be paid as a refund of premium death benefit to your estate or a beneficiary you designated and who is on file with us, if the beneficiary is alive on your date of death.
The refund of premium death benefit will be based on the PSF percentage in effect on your date of death. To determine the amount available, we will process any outstanding claims received and recoup any claims overpayments.
Important notice regarding federal and state tax law
The payment of the PSF amount as a refund of premium death benefit may have federal and state tax implications for your estate or beneficiary. You may want to review this benefit with a qualified tax professional or attorney to determine any such tax impact.