For more information, please visit http://www.aaltci.org

The first major open enrollment for the nation’s largest group long-term care insurance program begins April 4 (and runs until June 24).

Millions of federal employees are eligible, as are postal service employees, active military — spouses and (for the first time) same-sex partners.

The Federal plan has ‘simplified’ health underwriting (basically 9, Yes or No "knock out" questions).  That makes the program very attractive for many.

But, as a group plan, there are no discounts for good health, and no discounts for couples or partners when both apply (and 70% of long-term care insurance is purchased by couples).  Attached is a summary which includes rate comparisons from our 2011 LTC Insurance Price Index.  Couples (especially) who can health qualify for private long-term care insurance can generally obtain equal coverage for less money.  They can even get better coverage for less money(as we show some scenarios including the Shared Care option which is extremely valuable).  That’s an important message I hope you’ll convey to educate consumers.

The Federal plan currently has over 200,000 participants … and I hope that doubles with the new Open Enrollment. 

During the last major enrollment (2002), thanks to all the added awareness, sales of private long-term care insurance were higher than normal.  Obviously, we hope that happens again too.

If you have questions, please call the American Association for Long-Term Care Insurance.

The Association now has over 3,200 long-term care insurance professionals who can be found using our Online Look-Up. 

Jesse Slome, Executive Director
American Association for Long-Term Care Insurance

http://www.aaltci.org

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COBRA allows you to continue your healthcare coverage for up to 18 months. With COBRA certain people with a disability are allowed 11 additional months. And, even if you choose not to extend your health insurance coverage immediately after you leave your job, you have a grace period in which you can still enroll.

WHO QUALIFIES?
Former employees, spouses, former spouses and dependent children are eligible, regardless of their health. There are exceptions: You cannot get COBRA if your employer no longer offers health insurance to current employees. You’re also out of luck if the company goes out of business. Federal employees are covered by a law similar to COBRA.

HOW LONG DOES IT LAST?
COBRA provides up to 18 months of coverage from the time you leave your job or drop to part-time status. The coverage lasts up to 36 months after you no longer qualify as a dependent on an employee’s policy. That includes, for example, a child who reaches the cutoff age for coverage or a former spouse who gets a divorce from the employee.

HOW MUCH DOES IT COST?
Probably more than you expect. You have to pay the employee’s and the employer’s share of the premium — or an average of $12,680 for families this year — plus up to 2% in administrative costs. But legislation Congress passed earlier this year provides a 65% COBRA subsidy for up to nine months for people who lose their job between September 1, 2008, and December 31, 2009.

WHO SHOULD TAKE IT?
You can’t be rejected or charged more under COBRA because of your health, so it’s a good deal for people with medical conditions who might otherwise have a tough time finding affordable insurance. But if you’re healthy and live in a state with a competitive health-insurance market (which includes most states other than New York and New Jersey), you may find a better deal on your own.

Here is the video on Youtube:

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COBRA allows you to continue your healthcare coverage for up to 18 months. With COBRA certain people with a disability are allowed 11 additional months. And, even if you choose not to extend your health insurance coverage immediately after you leave your job, you have a grace period in which you can still enroll.

Todays question: What is COBRA and how does it work?

The simple answer is: Its an opportunity to continue your employer-sponsored health insurance when you lose your job.So, COBRA isnt the venomous, yet charming snake.
Under federal law, COBRA gives you the right to temporarily continue purchasing the group health insurance you had at work when you leave your job due to a qualifying event.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act – which explains why they call it COBRA.It applies if your company’s group health plan covers 20 or more workers, and in instances of a qualifying event. These events include having your hours cut, quitting your job, or being let go for a reason other than gross misconduct, like stealing. In general, COBRA allows you to continue your coverage for up to 18 months.

Certain people with a disability are allowed 11 additional months. And, even if you choose not to extend your coverage immediately after you leave your job, you have a grace period in which you can still enroll.

Lets say Gary loses his job due to cutbacks because nobody is buying his companys battery-operated flyswatters.

Because losing your job is a qualifying event, Gary can use COBRA to cover himself and his wife, provided she was covered in his health plan at work. Gary’s wife can continue to use COBRA if Gary becomes entitled to Medicare and gives up his group coverage, if there is a divorce or legal separation, or if he goes to that great golf course in the sky.

Dependent children who were covered by his plan can use COBRA in those same cases. They can also extend their coverage when they are no longer considered dependents.

When you use COBRA, you are responsible for paying 100% of the cost, plus an administrative fee. That means you pay what you paid as an employee, plus what your employer paid, plus 2%.

Individuals who are eligible for COBRA except those who left their jobs voluntarily may qualify for a 65% subsidy for nine months.

Lets say Gary is laid off from Global Flyswatters, Inc. between September 1, 2008, and December 31, 2009.

He is now qualified to get COBRA coverage for just 35% of the total cost even if he already declined it. That means, if Gary’s health insurance cost his company $300 a month, and cost Gary $200 a month, his total insurance cost was $500 a month.

Under the new stimulus plan, Gary would be eligible for COBRA for just $175 a month. He’s eligible as long as he isnt what they call a high-income individual that is, a single tax filer with an adjusted gross income of $125,000 or more, or a joint filer with income over $250,000. Not a problem for Gary. To sum it up, when you leave your job due to qualifying events, COBRA gives you the opportunity to continue purchasing the group health insurance you had for yourself and your dependents for a limited time when you leave your job due to a qualified event. Normally, you pay 102% of the cost. But with the new stimulus package, qualified individuals are entitled to a subsidy that covers 65% of the total.

Here is the video on Youtube:

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The Federal Long-Term Care Insurance Program (FLTCIP) provides long term care insurance to help pay for costs of care from simple ailments to complex syndromes. The Federal Long-Term Care Insurance Program reflects the long and careful efforts of the U.S. Office of Personnel Management and two insurance leaders – John Hancock and MetLife – to provide affordable group premiums and comprehensive benefits.

Recently, the U.S. Office of Personnel Management has signed a contract with John Hancock Life and Health Insurance Company to provide insurance for the Federal Long Term Care Insurance Program’s second 7-year contract term.

Part of the proposed federal health plan being discussed today by the U.S. Senate includes proposed long term care protection. The proposed Community Living Assistance Services and Supports Act (CLASS Act) would provide coverage paid by individuals who would have the ability to opt out.

The Federal Long Term Care Insurance Proposal is a great deal for current baby boomers but will burden the next generation of seniors with higher taxes. According to the document, the plan’s proponents believe a $65-per-month tax for individuals would be sufficient to provide a $50 average monthly benefit. However, the study reveals that the sound monthly premium level would be closer to $110 a month or over $1,300 a year per-individual.

The CLASS Act proposes a voluntary federal program that is sustainable and actuarially sound over a 75-year horizon. Based on the current assumptions, the independent actuaries project the new government fund will be insolvent by 2027 to pay for long-term care claims.

Anyone born after 1962 will realize the increase of taxes required to sustain this will be imposed when they realize the funds will run out.

The debate of health care reform continues.

The full 13 page letter to the U.S. Senate Committee on Health, Education, Labor and Pensions from P.J. Eric Stallard (Chairperson, Federal Long-Term Care Task Force of the American Academy of Actuaries) and Steven Schoonveld (Chairperson, Long-Term Care Insurance Section Council of the Society of Actuaries) can be found here in this PDF.

Actuarial Issues and Policy Implications of a Federal Long-Term Care Insurance Program

Here is the Executive Summary:

Our actuarial analysis indicates that the proposed structure and funding approaches in the CLASS Act, as introduced on June 9th, will not only be unsustainable within the foreseeable future, but are unlikely to cover more than a very small proportion of the intended population. In the absence of an actuarially sound requirement, we project that the Fund will be insolvent as early as 2021, or within 11 years. The opt-out and guaranteed issue provisions of the plan pose a significant and likely risk that, in a relatively short time period, the program will either need increased premiums and/or significant reductions.

The version of the bill reported on July 15th includes an amendment requiring an actuarially sound program over a 75-year period. We commend this change in the legislation, with the caveat that the requirement may not be possible to achieve unless the issues explored in this letter are addressed. There is considerable risk of adverse selection, which could necessitate future increases in premiums or reductions in benefits to maintain a sustainable program. As these changes are introduced there is a significant potential for increased adverse selection, necessitating further changes, which may make the program unsustainable. The premium estimates suggested below are optimistic as they assume only a modest level of adverse selection.

Our principal analysis is performed assuming an average daily cash benefit of $75 increasing annually with the Consumer Price Index (CPI). We have also provided an analysis using the minimum average daily benefit of $50 called for in the legislation, increasing annually with CPI. Furthermore, we have reviewed two potential premium structures, an entry-age level premium and an annual increasing premium approach.

We estimate that the actuarially sound average monthly premium level would be $160 using an entry-age level premium approach and assuming an average daily benefit of $75. Under an annual increasing premium approach, the average monthly premium would be $125 per month increasing annually with CPI. Based on the originally proposed $65 average monthly level premium, the fund would be insolvent by 2021. Under the increasing premium approach the fund would be insolvent by 2022.

Using a $50 initial minimum average benefit, we estimate that an actuarially sound average monthly premium level would be $110 under the entry-age level premium approach and $86 using the annual increasing premium approach. Based on the originally proposed $65 average monthly level premium, the fund would be insolvent by 2027. Under the increasing premium approach the fund would be insolvent by 2032.

Each of these premium estimates is significantly in excess of the $65 monthly average initially proposed in the CLASS Act. These estimates were based on a series of scenarios, using actuarial assumptions, which we will detail later in our comments.

A voluntary federal LTC program can be developed so that the program is sustainable and minimizes the impact of adverse selection. Such a program would require the use of a stronger actively-at-work definition, an underwriting approach for the coverage of non-working spouses, stronger participant opt-out/ opt-in restrictions, consistent eligibility definitions for benefits and potential program design changes that would result in more affordable premiums. These considerations, along with a strong marketing and education effort, could enable the development of an actuarially sound voluntary federal program that encourages broad participation and a sufficient spread of risks.

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Therefore, the results from a new analysis by the Commonwealth Fund comes as no surprise. As the rate of unemployment is as high as it has ever been in the last sixteen years, their study ‘Maintaining Health Insurance During a Recession: Likely COBRA Eligibility’ finds that only 9% of unemployed workers took up coverage under the Consolidated Omnibus Budget Reconciliation Act in 2006.

Laid-off workers who also lose their health insurance would need substantial financial assistance, covering 75% to 85% of their health insurance premiums, for their premium contributions to remain at the levels they paid while they were working, said the report by Michelle M. Doty, Dir. Survey Research, and his team.

The report also highlights that low-wage workers are at a particular disadvantage. Only 38% of of low-wage workers are eligible to receive COBRA benefits, because they don’t receive health insurance through their jobs. They tend to work for small firms aren’t required to offer COBRA, or are uninsured to begin with. Coverage options for low-income workers remain limited especially for childless adults because most lack a public coverage option. The authors say that policymakers should consider temporarily expanding Medicaid and SCHIP eligibility to unemployed adults with low incomes, with assistance for premium shares, to provide critical support to families.

66% of all current workers, if laid off, would be eligible to extend their health insurance under COBRA But for most people, COBRA payments are unaffordable, about four to six times higher than the amount of money they contributed to their health insurance when they were employed. According to the report, millions of the eligible could keep their coverage if they could get assistance with their premiums, which average $4,704 per year for an individual and $12,680 a year for a family.

“Americans are losing their jobs at an alarming pace and this report clearly shows that many people cannot afford to take on the expense of COBRA just as they lose their income,” said Commonwealth Fund President Karen Davis. “The number of uninsured Americans could grow markedly during this recession unless we take action to help unemployed Americans keep their health care coverage.”

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