Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.

May 22, 2002

"Is The New Federal Long-Term Care Insurance Program Good For You?"

Host: It's never pleasant to think about what's going to happen to us when we get old. It can be expensive -- and planning for it is one of those things you pretty much have to do. On this edition of "The Road To Riches," personal finance expert Jordan Goodman talks about a new federal plan for long-term care.

In late March, a new program offering long-term care insurance was rolled out for the first time ever to about 20 million members of the federal workforce and their families. The program was created by legislation, and the contract to offer it was won by Metropolitan Life Insurance and John Hancock Insurance. They are now embarking on a massive campaign to explain this policy to the millions of people who may be eligible. Here’s a look at what the program offers and how it compares to what is available privately:

The Federal Long-Term Care Insurance Program (FLTCIP):
• Can be purchased by any federal employee, or their family, including postal service, military and any federal agency job. You can also get it if you are the son or daughter, or brother or sister, of one of these federal employees. If you are a current federal employee, you can pay premiums out of payroll deduction.
• Pays for nursing home, assisted living, adult day care, home care, or informal care provided by friends and family members up to the maximum you choose -- 3 years, 5 years, or lifetime coverage.
• There is no upper age limit on applying for it, and once you start receiving benefits, you don’t have to pay premiums any more.
• The Federal government does not pay for, or subsidize, these premiums, or guarantee benefits.
• You have to go through medical underwriting when you apply for the policy because they won’t insure you if you have major medical preconditions.

When comparing it to what is available in the private sector, the federal plan usually comes up short. Here are a few of the ways it isn’t as good:
• FLTCIP has more limited choices and no protection against inflation, like most private plans offer.
• FLTCIP does not offer a premium discount for a married couple or a discount if you are in great health.
• FLTCIP requires a company-appointed care coordinator and limits home care to 75 percent of the daily benefit, which is not as comprehensive as private policies.
• Usually, the FLTCIP charges a higher premium than a major private insurer. For example, the federal plan charges $912 a year for a married person, age 55 in good health, while Unum would charge $498 for the same person.

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