- The Washington Times - Tuesday, February 12, 2002

Will the soon-to-be-launched federal family long term care insurance plan generate a nationwide demand for LTC policies that now cover only a tiny fraction of the population? Short answer: You better believe it.
Given the PR campaign the government plans, you better buy a policy, sell policies professionally or get out of the way of those who will be.
In fact, that steady drip, drip, drip sound you hear is coming from the boardrooms of major insurance companies, where top executives are salivating at the thought of an LTC insurance policy in (nearly) every pot.
Many insurance pros believe it will be much easier to sell LTC to companies and individuals now that Uncle Sam has rounded up a giant group that will soon be educated (scared) about what happens when you need LTC care if you aren't a millionaire or aren't covered by an LTC policy.
Starting next month, the government will launch a multimillion-dollar campaign (paid for by participating insurance companies) to educate the 20 million members of the federal-military family about LTC. Right now there are only 7 million Americans with LTC coverage.
There will be an early enrollment next month, followed by another longer open season later this year. For the next few months, active and retired feds will be given information about LTC at work, via e-mail and regular mail, through satellite conferences, town hall meetings and sessions at the office. Retiree groups will meet in firehouses, churches and libraries.
After the government makes its educational pitch to its 20 million extended family members, insiders expect the demand for coverage both individual coverage and company-sponsored plans will skyrocket.

Premium tax break
Federal retirees could save $300 to $500 per year if Congress would give them the same tax-break President Clinton extended to active duty workers. It allows them to pay premiums in pre-tax dollars, thus lowering their tax bill an average of $434. But only Congress can change the tax code (which presumably would affect private sector retirees, too) for retirees.
Bills to give retirees the tax break have been introduced by Virginia Republicans Rep. Tom Davis (H.R. 2125) and Sen. John Warner (S. 1022). But they need a lot more co-sponsors to get through Congress.

LTC tax break
Next question: Will active (and retired) federal and military personnel get the same pre-tax break when paying for their long term care insurance? It's available now to people who itemize, but not to most taxpayers who don't.
The Office of Personnel Management favors the concept to encourage more people to protect themselves with LTC coverage but it may be blocked by the Office of Management and Budget or the IRS.

It's all in the compounding
The president wants military personnel to get a 4.1 percent raise next January, and he has proposed 2.6 percent for federal civilian employees. So what's the big deal?
Ego and equity aside, the issue is compounding. A 1.5 percent pay raise can, over the lifetime of the average white collar civilian federal worker, be worth $40,000 or more. It boosts pay and increases the value of future raises. It increases the amount employees can invest in their thrift savings plan and boosts the lifetime value of their already indexed-to-inflation federal annuities.
Anytime anybody offers you a raise, even 1.5 percent, take it.

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