OPM Puts Finishing Touches on Long-Term Care Program 

By: Stephen Barr
The Washington Post, June 7, 2001 

In almost any discussion of long-term care insurance, the issue of medical underwriting comes up. Insurance companies try to limit their financial risk, so they often ask for health-related information from people applying for coverage.

As the Office of Personnel Management prepares to offer long-term care insurance to employees and retirees, it plans to negotiate with insurers underwriting standards that will determine who is eligible for coverage and who can be excluded. OPM also will try to calculate the effect of various underwriting options on the premiums that enrollees pay.

Under the law that created the program, coverage will be offered in October 2002 to active-duty members of the armed forces, civil service employees, retirees, spouses and certain family members. To test different approaches, OPM has drawn up underwriting options that it wants the insurance companies to consider when making their bids.

Three options under consideration for active-duty employees and their spouses are:

Guarantee issue underwriting. Under this option, employees would not be asked questions about their health but would simply show that they are working and collecting a paycheck. Spouses of employees probably won't be offered such an option, but OPM will not know for certain until it has negotiated a contract.

Modified guarantee issue underwriting. Under this option, the applicant answers a few health-related questions designed to show that the applicant can perform basic activities of daily living and has not been in a nursing home or receiving home health care services within the past year. Spouses who are not government employees may be asked to provide more information.

Short-form underwriting. The application would ask several health-related questions designed to determine whether a person might require long-term care benefits immediately or within a short period of time. For example, applicants could be asked if they had symptoms of Alzheimer's disease, multiple sclerosis or Parkinson's disease or had been diagnosed with a continuing mental disorder.

Options could be eliminated or modified as OPM negotiates contract provisions with insurers. One of OPM's top goals is to provide a long-term care benefit that can be purchased at premiums that are 15 percent to 20 percent less than what's available in the open market.

"We intend to select the underwriting approach that will provide the broadest possible coverage while producing premiums and an overall program design that is likely your best buy," OPM says on its Internet page (

Other than active-duty government workers and their spouses, people who are eligible for coverage will be subject to full underwriting procedures, according to OPM.

Retirees, for example, probably will have to answer numerous health-related questions. They also may have to provide medical records and answer questions in a personal interview. According to OPM, the underwriting process for retirees should not be markedly different from that faced by applicants who purchase polices in the open market.

But the National Association of Retired Federal Employees has questioned the fairness of using different underwriting standards for retirees and others. NARFE favors treating retirees and other applicants the same. The group argues that the economy of scale created by the large federal population should be used to make underwriting standards better for all participants.
In theory, about 20 million people could be eligible for coverage under the long-term care program.

Eligible groups include civil service employees and members of the uniformed services; retirees, survivor annuitants, and military reservists at the time they qualify for an annuity; adult children, including adopted children and stepchildren; spouses of employees and annuitants; and parents, parents-in-law and stepparents of employees.

The law authorizing the program gives OPM the authority to cover other relatives of employees. OPM may include these groups for coverage: parents, parents-in-law and stepparents of annuitants; unmarried former spouses of employees and annuitants who are entitled to a pension benefit; adult foster children of employees and annuitants; and unmarried brothers and sisters of employees and annuitants.

Under the timetable set up for the program, OPM will request bid proposals in mid-June and try to award a contract in October. By then, the underwriting standards and the cost of premiums should be settled.