Government sets example on group long-term care

In order to address the growing need for elder care among American workers, President Bill Clinton has signed the Long-Term Care Security Act.

This new legislation authorizes the creation of group long-term care insurance for all federal workers and their families.

The Long-Term Care Security Act provides families of federal employees access to long-term care insurance through the Office of Personnel Management.

The OPM will negotiate with private insurers for access to long-term care benefits in order to obtain the best value for federal workers and their families.

The OPM also will ensure that the policies have consumer protections, such as full portability, and enrollees will have the option to purchase policies that protect against inflation and nonforfeiture.

Contracts written under the new law must be fully insured and must comply with the requirements of long-term care contracts under Internal Revenue Code Sec. 7702B.

Those requirements specify that long-term care contracts:

provide only coverage of qualified long-term care services;

are guaranteed renewable;

do not provide for a cash surrender value or other money that can be paid, assigned, or pledged as collateral for a loan or borrowed;

provide that all refunds of premiums and dividends or similar amounts (except refunds upon the death of the insured or complete surrender or cancellation of the contract) are to be applied as a reduction in future premiums or to increase future benefits; and

generally do not pay or reimburse expenses incurred for services or items that are reimbursable under Medicare (unless Medicare is the secondary payer).

Qualified long-term care services are defined as "necessary diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services, and maintenance or personal care services," which are provided to a chronically ill individual.

Such services must be provided pursuant to a plan of care prescribed by a licensed health care practitioner and certified within the preceding 12 months as necessary services.

Covered services under the law will include personal care, home health care, adult day care and nursing home care.

It is the president's hope that by making high-quality private long-term care coverage available to the federal family at negotiated group rates, the federal government will continue to serve as a model to other employers across the nation.

The passage of this legislation further legitimizes the concept of private long-term care insurance.

At the same time, it creates a wider awareness of the acute need for long-term care protection in the United States through individual plans or employee benefits.

(Andrea Croley, MS, RHU, is an employee benefits specialist with Croley Insurance & Financial Inc.)