Sign up for the Federal Long-Term-Care Insurance Program?

Federal employees should compare their options before enrolling in the nation's largest group plan.

I’m a 58-year-old federal employee, and I am considering signing up for the federal employees' long-term-care insurance program. Is it a good deal?

It’s always worthwhile to take a look at your options if your employer offers long-term-care insurance. Although employers do not subsidize premiums the way they shoulder some of the cost of traditional health insurance, you may benefit from a group policy discount. Some employers offer group plans that ask limited medical questions, which could make it easier to qualify for coverage than it would be if you bought a policy on your own.

At age 58, you’re in the sweet spot for purchasing long-term-care coverage. People in their late fifties tend to have more disposable income, thanks to higher salaries and decreased family obligations when the kids leave home. And they are still young enough to buy long-term-care insurance at affordable prices. Premiums are usually much higher if you wait until your mid to late sixties or older to buy insurance, and you take the risk that you might develop a medical condition that makes you uninsurable. As you near retirement, it’s a good time to think about how you would pay for the potentially astronomical cost of long-term care, which is not covered by Medicare or traditional health insurance. Long-term care can be delivered in your home, in a community-based day program, in an assisted living facility or in a nursing home.

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If you or your spouse is a federal employee or active-duty service member, now is a particularly good time to look into the Federal Long Term Care Insurance Program, the nation’s largest group plan. It’s especially timely if you have certain medical conditions that make it difficult to qualify for affordable coverage on your own. See the Federal Program’s Web site for more information about who qualifies for coverage and how much the policies cost.

The federal plan is offering an open-enrollment period until June 24, which enables people to sign up for coverage with fewer health questions than they usually need to answer (called “abbreviated underwriting” in insurance-speak). This is the program’s first open-enrollment period with simplified underwriting since 2002. But you still won’t qualify for coverage if you have a chronic health condition, such as Alzheimer’s disease, multiple sclerosis, Parkinson’s or other specified medical conditions. And you may need to provide additional medical information in certain circumstances (if, for example, you use crutches and/or a multi-prong cane). See the application for the full list of criteria.

If you’re in good health, however, it’s worthwhile to compare the cost of the federal program to the cost of buying the insurance on your own. (The same advice applies to non-federal workers who have access to long-term care through their employer). Many group policies don’t offer spousal discounts or discounts for good health, so you might find a better deal with an individual long-term-care policy. You can find a long-term-care expert through the American Association for Long-Term Care Insurance and can learn more about long-term-care coverage by reading Long-Term-Care Rate Hikes Loom and Long-Term Care You Can Afford.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.