The Foreign Service Journal, December 2004

Retiree Issues BY BONNIE BROWN, RETIREE ACTIVITIES COORDINATOR Long-Term Care Insurance Q: What is long-term care? A: Long-term care is for people with ongoing physical illness- es, disabilities and/or cognitive impair- ments. It includes assistance with activ- ities of daily living, home health or adult day care, as well as care in a nursing home or assisted-living facility. Q: Will I need LTC? A: It is hard to predict, but studies indicate that about half of all women and a third of men over the age of 65 will spend some of their final years in a nursing or retirement home. Q: What do LTC policies cost? A: LTC insurance can be costly. The cost depends on a num- ber of factors, including age, state of health, amount of daily benefits, themax- imum benefit period, and inflation pro- tection. In purchasing coverage, consid- er not only your current financial situa- tion, but also your future income in retire- ment and projected increases in the cost of premiums. When choosing benefit amounts, find out howmuch nursing and assisted living facilities, as well as home health care agencies, charge for services in the areawhere you think youwill retire. Q: How do people pay for LTC? A: They pay for LTC by using personal or family resources, purchasing LTC insurance, or, if at the poverty level, with Medicaid assistance. Medicare does not pay for most LTC needs.. Q: Should I buy LTC insurance? A: You should not buy LTC insurance if you cannot afford the premiums, have limited assets or have difficulty paying for basic living expens- es. You should consider buying it if you have significant assets, some of which you want to protect, and you want to pay for your own care and maintain some level of independence. As a rule of thumb, pre- miums should not exceed 10 percent of your annual income. Q: What kinds of LTC policies are available? A: LTC insurance can be pur- chased from private insur- ance companies, through an employer or association, or through the federal LTC program. Most policies are sold to indi- viduals. Group policies, generally sold through employers and associations, may offer certain advantages; they may not have qualifyingmedical requirements, and retirees, spouses and parentsmay also qualify. Additionally, federal law gives tax advantages to people who buy certain long-term care insurance policies under the Health Insurance Portability and Accountability Act of 1966. Q: What should I look for in an LTC policy? A: Since plans offer different combinations of health bene- fits, it is important to shop among poli- cies, companies and agents to get cover- age that best fits your needs. LTC poli- cies differ inwhich services they cover and how they cover these services. For exam- ple, one planmay pay for home care from licensed facilities only, while others will pay for other licensed health-care providers, such as practical nurses. Some plans may pay for care in any state- licensed facility; othersmay limit the kinds of facilities covered. Look carefully at any exclusions or limitations and the “triggers” used by plans to determine whether ben- efits should be paid. These triggers gen- erally include the inability to perform a certain number of activities of daily liv- ing (bathing, continence, dressing, eating, toileting and transferring) and cognitive impairment ormental incapacity, such as Alzheimer’s disease. Finally, compare the benefit amounts and length of coverage, and look at when benefits start and whether there is inflation protection. Q. Does AFSA have a long-term care insurance program? A: Yes, AFSA is now offering group rates brokered by the Hirshorn Company for nine insurance carriers. The long-termcare offerings fea- ture excellent coverage with more com- petitive premiums than the federal plan. The Hirshorn Company offers personal- ized service in choosing a company and plan that fits members’ needs. Contact Hirshorn representative Carl Shaiefer at 1 (800) 242-8221 or cshaifer@hirshorn. com. On theAFSAWeb site go to the LTC Coverage Page to learn about coverage choices, including the federal plan, and the AFSA LTC Quote Request Form. Q: How can I find out about the federal long-term care program? A: The Federal Long Term Care Insurance Program is admin- istered by Long TermCare Partners, LLC, a joint venture company between John Hancock Life Insurance Company and MetLife, the country's largest carriers of group long-term care insurance. The OPM Web site contains information about LTC insurance at www.opm. gov/insure/ltc/faq/apply.asp#2 Certified LTC insurance consultants are available to answer questions at the toll-free number: 1 (800) LTC-FEDS (800-582-3337) weekdays from8 a.m. to 7 p.m. Information is also available at www.ltcfeds.com. ▫ DECEMBER 2004 • AFSA NEWS 9 Q & A