The Differences Between Private, State and Federal Long Term Care Insurance

Long term care insurance provides coverage for extended stays in nursing homes, assisted living facilities and may allow policyholders to receive in home health care or participate in adult day care programs. Traditional health insurance generally does not provide coverage in these situations, but private, state or federal long term insurance might. Each has specific limitations and costs vary depending upon the type of policy you purchase, your health and your age. Here’s an overview of each:

Private. Private long term care insurance can be purchased by anyone through an insurance company. You can purchase insurance for yourself, for your parents and even for your children. Private long term care insurance has been around for 25 years, but has only recently been propelled into the consumer spotlight because many insurers who sold policies 10 – 15 years ago have been denying claims in droves. Unfortunately, underwriters had no point of reference when they underwrote these policies and grossly underestimated not only how much health care costs would rise in the years to come, but also how much longer Americans would live. It has become a national debate and the federal government is investigating the matter. Read our article on the History of Long Term Care Insurance.

State. A handful of states (Connecticut, California, Indiana and New York) have created long term care partnerships whereby the state has partnered with an insurer to provide residents with long term care insurance so that people don’t have to liquidate all of their assets before receiving care. There are currently about 200,000 policies in force in these four states and many other states are now considering programs of their own. Unfortunately, the programs are tied directly to Medicaid; so essentially, they are limited to the poor.

Federal. The federal government also provides long term care insurance for current and retired federal employees and their families. The program (the Federal Long Term Care Insurance Program – or FLTCIP) is currently underwritten by John Hancock and MetLife. However, as stated above, it is only available to federal employees and their families. For additional information on FLTCIP, see www.opm.gov/insure/ltc.

Case Studies: Exploring Long Term Care Insurance Options

Case Study 1: Private Long Term Care Insurance

John, a 65-year-old retiree, purchased a private long term care insurance policy 10 years ago. However, when he recently needed to enter a nursing home, his claim was denied by the insurer. This case highlights the challenges faced by individuals who purchased private long term care insurance policies without sufficient understanding of rising healthcare costs and life expectancy.

Case Study 2: State Long Term Care Partnership

Mary, a resident of California, took advantage of the state’s long term care partnership program. By purchasing a partnership policy, she was able to protect a portion of her assets while still qualifying for Medicaid coverage. This case showcases the benefits of state partnerships that aim to provide long term care insurance options for residents without forcing them to deplete their assets entirely.

Case Study 3: Federal Long Term Care Insurance Program

Mark, a retired federal employee, enrolled in the Federal Long Term Care Insurance Program (FLTCIP). When he required long term care services, his FLTCIP policy covered a significant portion of the expenses. This case emphasizes the availability of long term care insurance options specifically designed for federal employees and their families.