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CAUSEY: Time to reconsider long-term-care plan

- The Washington Times - Monday, May 25, 2009

Looking for the perfect gift for your spouse, kids, siblings and parents? Get yourself a good long-term-care insurance policy. And pray — for yourself and your loved ones — that you never need it.

Most of us buy life insurance because we reluctantly concede that someday it will pay off.

Most of us buy health insurance hoping we won't need it but knowing that eventually we will use it.

But most of us buy travel insurance, fire insurance, auto insurance, long-term disability and long-term care (LTC) insurance hoping it will never pay off.

Airplane crashes typically have a bad outcome. Losing a house and your belongings to a fire is not what something you hope for. And being unable to work — and draw a paycheck — or being unable to bathe, feed or dress yourself is not something anybody looks forward to.

Although the federal government is a model employer in many ways, its health insurance program doesn't cover what LTC insurance does. Nor does Medicare. You must be nearly broke before you can go on Medicaid, and it does not pay for the kind of assisted-living coverage most people would want for themselves or a loved one.

LTC is on a lot of people's minds these days, because the program offered to active and retired civil servants (and in some cases, their parents) is about to change. Premiums did not go up during the just-expired seven-year contract. But they are going up in January for many people. The increases will range from 5 percent to 25 percent, depending on age and the options people choose.

The new benefits will be outlined shortly by the Office of Personnel Management. So will premiums.

Arthur Stein, a certified financial planner who specializes in investments and insurance, says most people need LTC coverage. He recommends that they get a policy from a top-rated firm and that the policy have an automatic 5 percent inflation add-on each year.

Mr. Stein says that many federal and postal workers can get a better deal — that is, equal benefits with lower premiums — by going outside the government program. This is especially true if they are younger and healthy enough to pass what are often more stringent underwriting requirements in a non-group private plan.

While full details of the new federal LTC offering (backed by insurer John Hancock) are yet to come, Mr. Stein summarized your options this way:

• Remain in your current benefit structure subject to rate increases that may apply.

• Keep your premiums at about the same as what you pay now by making changes to your current benefits.

• Or take advantage of a one-time opportunity to switch to the new benefit options without underwriting.

That last point is important, especially if you are not in good health or are older and likely to need LTC sooner rather than later.

Some of the known changes in the new, seven-year contract include:

• A new two-year benefit (individuals can now buy them for three years, five years, or lifetime coverage).

• A higher daily benefit available in $50 increments, from $100 to $450 per day.

• Payment for informal care to family members (who did not normally live with the insured person at the time of the claim.) In that instance, informal care could be paid for up to 500 days.

Triple play

Bills that would make it easier for federal employees to retire, telework and return to government after retirement are on the Senate fast track, cleared by the committee that controls civil service legislation last week.

One proposal would require federal agencies to open up more teleworking opportunities for employees. A little more than 100,000 of the about 1.5 million nonpostal federal workers telecommute on a regular basis.

Sponsor Sen. Daniel K. Akaka, Hawaii Democrat, says having more people telecommute is critical to the government's plan to keep key services up and running during emergencies ranging from swine flu to a terrorist attack.

A second bill would change retirement computation rules so that workers under the old Civil Service Retirement System could switch to part time at the end of their careers without taking a pension hit. Most of the government's workers are under the newer Federal Employees Retirement System. But the majority of people who are within 10 years of retirement are under the old program.

Finally, the Senate Homeland Security and Governmental Affairs Committee has given the green light to a bill that would remove a major barrier preventing some retired federal workers from returning to government. At present, in many instances, retirees must take a lower salary than called for by their civil-service grade. That salary is offset by the amount of the employee's federal annuity.

The bill would give retired feds the same break as private-sector retirees who can be hired by the government and allowed to keep both their private pension and their full federal salary.