- The Washington Times - Tuesday, July 29, 2008

Who doesn’t need long-term care insurance? Simple question, simple answer.

LTC is not for everybody. For instance, you probably don’t need to pay those pesky premiums if:

*Your parents and grandparents, possibly circus trapeze artists, lived into their 90s and were as spry as 25-year-olds when they departed as a result of a safety-net accident. And …

*The parents of your spouse, and their parents passed on good genes, clean living habits and were the sort who never had accidents. Maybe their good fortune ended in a sky-diving mishap. And …

*You have several million dollars to draw upon if you do have a stroke, or get hit by a car, or have some kind of accident or disease that temporarily (or permanently) requires you have help eating, dressing, bathing and getting you to and from doctors or hospitals.

As millions of baby boomers hit the aches-and-pains stage of life, state and local governments are increasingly concerned about who will pay for them when they need LTC. Uncle Sam is, too, which is why the government set up an LTC program several years ago. It hoped workers and retirees would sign up in droves (they didn’t) and that it would jump-start people inside and outside of government to look at LTC packages either for groups or singles.

LTC permits individuals to protect their assets (rather than being required to spend down everything to qualify for Medicaid) and to be less of a burden on loved ones. It also lets private insurance companies, rather than the taxpayers, pay more of the nation’s ever-mounting medical tab.

Sometime next year it is likely that a new company or companies will take over the Federal LTC program. It is currently underwritten by John Hancock and MetLife. They could continue as partners or be replaced by a solid outfit that offers better benefits and better premiums.

But better doesn’t necessarily mean lower. In fact, given the graying of the federal establishment, it wouldn’t be unwise to bet that premiums may be going up next year, regardless of who runs the program. The average age of the civil service has been creeping up for more than a decade. At one point the average age of new hires was in the early 20s. Now it is 31 or 32.

A now-retired LTC specialist said his company was one that originally bid on the federal program, then pulled out. He said the demographics - as in age group - were bad because of the huge number of retired feds, and survivors, who were eligible for coverage at group rates.

Last week, the Government Accountability Office issued a report on the state of LTC programs in 10 states. It noted there are problems with the large number of disputes between insurance companies and premium payers who have been denied benefits. And it said most states lack any umpire with muscle to solve those disputes.

The report also underscores the importance that widespread, good LTC coverage of the population would have on the financial health of federal, state and local governments. Shifting more of the costs to the private sector is the goal. But to get more customers, individuals must be convinced that the plans will deliver on their promises and won’t - or won’t be allowed to - raise premiums at the drop of a hat.

The plans also need to entice more young people (who are less likely to have to collect) into the group the plan will cover. Premiums are usually based on your age at signup time, so for that reason, earlier is better than later. Bottom line, this is a problem and an opportunity for the whole country, ranging from individuals (who hope they never have to go to a nursing home or have home care) to corporations and elected officials who dispense the taxpayers dollars.

(The GAO report, released last week but dated June 30, 2008, is called “Long-Term Care Insurance: Oversight of Rate Setting and Claims Settlement Practices.” It is report GAO-08-712. Or you can find it on the Internet: https://www.gao.gov/highlights/d08712high.pdf)

Fun reading? Not really. Not what you want to take to the beach or on your mountain vacation. But it’s important that the right people read and heed it.

Mike Causey, senior editor at Federal News Radio AM 1050, can be reached at 202/895-5132 or mcauseyfederalnewsradio.com.

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