Elder care: Federal long-term care program set to begin July 1

More than 20 million people will be eligible for the new federal program

Elder care is rapidly replacing child care as the No.1 dependent-care issue. Many people are looking to long-term care insurance to offset the often-devastating consequences of assisted care.

The new Federal Long Term Care Insurance Program, sponsored by the U.S. Office of Personal Management, will be receiving a lot of publicity beginning this summer. As a result of the Long Term Care Security Act, which was signed into law Sept. 19, 2000, more than 20 million people will be eligible for coverage, making this the largest employer-sponsored long-term care insurance program in the country.

The government recognized and appreciated the need for this employee benefit and will showcase this plan in an effort to encourage other employers to implement their own long-term care plans. Employers should be prepared for lots of questions on this.

John Hancock and MetLife have joined together to form a new company devoted exclusively to administrating the federal program.

Open enrollment is from July 1 through Dec. 31. An educational campaign will focus on what long-term care is, the likelihood of needing it, options to pay for it, and how the Federal Long Term Care Insurance Program can help.

Coverage through the program is being offered on a voluntary basis. Premiums will be paid fully by the enrollees through direct bill, bank draft or payroll deduction. A choice of four pre-packaged plans will be offered, as well as the ability to customize benefits.

Individuals eligible to apply for this coverage are:

federal and postal employees and members of the uniformed services;

federal annuitants, surviving spouses of deceased federal or postal employees, or those receiving survivor annuities; individuals receiving compensation from the Department of Labor who are separated from the federal service; members or former members of the uniformed services entitled to retired or retainer pay; and retired military reservists;

current spouses of employees and annuitants;

adult children at least 18 years old (including adopted children and stepchildren) of living employees and annuitants;

parents, parents-in-law and stepparents of living employees.

As in all health plans, the applicant's health condition often determines eligibility or availability of coverage. Federal and postal employees, members of the uniformed services and their spouses will only be required to answer just a few health-related questions.

Spouses will have to answer two additional questions. If requesting an unlimited benefit period, answers to more specific health-related questions will be required. All others will require full underwriting.

For those declined due to health conditions, a choice of non-standard insurance (different benefits at a higher premium) or a services only, non-insurance package will be offered.

Full details on the plans and non-standard plans will be announced about June 25. Private or group long-term care coverage may be a better alternative for some people. There are no discounts for couples, or for healthy, married people.

Private insurance may be a better deal for them.

On the other hand, if someone is single and not in very good health, the federal plan would work well.

Employers everywhere will have former federal employees and their spouses eligible for this coverage. It is imperative for employers to be educated on the benefits and limitations of the federal plan before employees enroll.

With the federal government paving the way, this should serve as a model for employers across the country who may want to add this type of insurance product for their own employee benefit program.

(Cathy Powell is a health insurance specialist with Ollis & Company.)