Federal Long-Term Care Insurance vs. Private Insurance

Getting older should be a time for relaxing and spending the days with family. For many, it also means thinking about long-term care. Long-term care (or LTC) are the services and facilities that help you get through your daily activities once age makes them too difficult. This could include staying in a nursing home or simply getting assistance for dressing, taking medication, and transportation.

Long-term care can be expensive, and that is why so many people think about using federal long-term care insurance vs private. Navigating long-term care insurance is difficult, and choosing between federal or private coverage can be particularly frustrating. That’s why helpful agents, like the ones at Policy Solver can be so helpful. Keep reading to learn more about long-term care insurance, starting with the question: what is federal long-term care insurance?

Federal Long-Term Care Insurance

Let’s begin by defining federal insurance before getting into the debate about federal long-term care insurance vs. private. To begin, let’s clarify that federal long-term care insurance is different from Medicare. Medicare, the health insurance program for those over the age of 65, does not cover long-term care.

Definition

As a simple definition, federal long-term care insurance is an insurance coverage program for federal government employees, Uniformed services members, or their qualified spouses that is meant to assist with the various parts of long-term care. It is essential that you understand that federal long-term care insurance is only available for those who are federal employees or who meet a similar category.

Examples

One of the most popular examples of federal long-term care insurance is the Federal Long-Term Care Insurance Program, also known as FLTCIP. To qualify for the FLTCIP, you must be a federal or U.S Postal service employee or annuitant, a retired or active uniformed service member, or a close relative such as a spouse of someone meeting those categories. If you qualify for Federal Employee Health Benefits (FEHB) you will most likely also qualify for FLTCIP.

The U.S Department of Veteran Affairs also offers some long-term care financial assistance for military veterans or their spouses. These are the two most common examples of federal long-term care insurance.

What It Covers

Long-term care insurance has certain services or facilities involved in order to qualify as long-term care. When it comes to the FLTCIP and other federal long-term care insurance programs, they cover informal caregiving from friends or family, your choice of care in an assisted living facility or nursing home, and modifications to your home or caregiving needs.

Advantages

Some advantages of federal long-term care insurance are that federal employees can start their LTC insurance journey whenever they wish. The fact that it provides eligibility for both active and retired employees and service members widens the scope of coverage, as does allowing spouses to be supported.

Federal long-term care insurance is often guaranteed to be renewed as long as you pay your premiums on time. Premiums are the monthly fees you pay to your insurance company or provider. Federal programs also often waive the need to pay premiums once you begin receiving your long-term care benefits. There are great benefits of insurance that you can get.

Disadvantages

The most obvious disadvantage of federal long-term care insurance is that it is only an insurance program for people in a select category with specific eligibility requirements. If you are not a current or retired service member or federal employee, you can not access federal long-term care insurance.

In addition, federal long-term care insurance does not typically offer a refund or discount if you never end up needing long-term care services. It is also not subsidized by agencies.

For these reasons, whether or not federal long-term care insurance is right for you should be carefully considered. Now let’s review: how does federal long-term care insurance compare to private long-term care insurance?

How Does Federal Long-Term Care Insurance Compare to Private Long-Term Care Insurance?

If you are a federal employee or qualify for federal long-term care insurance, you are probably wondering about federal long-term care insurance versus private. These are big questions, and the biggest areas in which private insurance seems better is in having better availability, lowered cost, and increased coverage. At the same time, federal insurance may be easier to obtain and renew as a long-time service member.

So, which one is better?

Federal Long-Term Care Insurance vs. Private

Let’s go into deeper detail as far as the differences between private and federal long-term care insurance. This will help you to clarify your own needs, although it will be beneficial to find a trustworthy insurance agent to help you navigate these differences once you’re ready to take the next step.

Availability

First up on the list of primary differences is availability. We have already discussed how federal long-term care insurance is available for active or retired service members, federal employees, and occasionally their spouses. This may seem like a wide array of coverage, but what about people who do not meet these qualifications? There are certain reasons for long-term care insurance rejection.

In contrast, anybody can get private long-term care insurance. All you need is an insurance provider, the ability to pay your premiums and other coverage, and a specific long-term care plan. In short, private insurance has better availability in that it is open to both federal and non-federal employees.

Cost

While neither option is cheap, there are some differences in cost that are important to know about. When it comes to both cases, you can expect to pay a variety of costs, from premiums to deductibles to copays. We’ve already covered premiums, which will be the monthly cost you pay until you actually use your benefits. Depending on overall health status, you could be paying premiums for years! It’s important you know how to choose between long-term disability vs long-term care insurance.

A deductible is the amount that you need to pay before insurance kicks in, and a copay is a payment you make for a service after insurance has covered everything else. The copay is usually a fraction of the cost of the overall service. When thinking about federal or private insurance, considering your ability to meet these payments is crucial.

With private insurance, it is estimated that a single 55 year old man who purchases a $165,000 policy will end up paying about $950 a year. Gender, health status, and marriage status can impact these payments, and they are unique for every situation. This is just an example to help provide perspective.

Federal long-term care insurance is harder to calculate, but will also include premiums and annual fees. An example of a premium calculator can help estimate cost and premium based on their standard and most common plans. This is a helpful tool, but makes it difficult to estimate right off the bat, unlike private insurance.

Overall Coverage

Generally speaking, long-term care refers to the personal care and assistance you need with daily activities. In the medical field, these are known as Activities of Daily Living, or ADLs. They consist of:

• Bathing
• Dressing yourself
• Using the bathroom
• Taking needed medication
• Eating
• Drinking
• The ability to move yourself from place to place

When you are unable to complete your own ADLs, be it due to a chronic illness, cognitive impairment or other medical condition, or accident, it is a clear sign that long-term care is needed. The type of care for people can include the need for:

• Informal caregivers and formal caregivers, including qualified relatives.
• Use of an adult day care center.
• Moving into an assisted living facility
• Nursing home care.
• Hospice care

Both private and federal insurance offer general long-term care insurance coverage for such instances, with some exceptions.

The biggest difference is that private long-term care insurance can be customized to a specific health insurance plan, while federal long-term care insurance cannot. Typically, federal insurance uses “prepackaged” or standard plans as their baseline for coverage. This means that the plans will already have coverage determined that can be tweaked later.

On the other hand, private long-term care insurance is more flexible and coverage can be added or taken away based on your prediction of your needs. That is also why working with an insurance agent is so beneficial. For example, you know about ADLs. But did you know about Instrumental Activities of Daily Living, also known as IADLs? They consist of:

• Ability to use a telephone
• Housekeeping
• Managing your medication
• Caring for a pet
• Leaving the house
• Grocery shopping or errands

These are still basic activities needed for life, but not as important as daily activities. Federal long-term care insurance will be less likely to cover such basic activities and services due to the fact that plans are less flexible and applied to broad groups of people. This is in opposition to private long-term care insurance, which can be tweaked to fit your specific situation. Make sure you remember this information when applying for disability insurance.