A Peek at What Federal Long-Term Care Coverage May Look Like 

The number one question for potential enrollees, of course, is how much the coverage will cost.

OPM officials say they can't answer that question until the contract is granted later this year. In the meantime, they say, the best model for the federal program is the long-term care coverage provided by CalPERS, the California Public Employees' Retirement System.

While the CalPERS offerings for state and local government employees and retirees differ in several ways from the planned federal program, many features are comparable. Like CalPERS, the federal program will offer the choice of coverage for a set number of years or lifetime coverage, varying levels of benefits per day, optional inflation protection, and premiums fixed at the rate applying to the enrollee's age at the time of purchase.

The CalPERS premiums vary significantly depending on age and plan options, suggesting that the same will hold true in the federal program.

Choosing coverage for a specified number of years results in a pool of money; once that money is exhausted, coverage ends. For example, if an enrollee in the federal program chooses three years of coverage at $700 a week, a total of $109,200 will be available. Similarly, one of the CalPERS options is based on $100 per day for three years.

A CalPERS enrollee buying that coverage at age 40 pays $14 a month for a plan without inflation protection or $32 a month for 5 percent annual inflation increases. An enrollee buying at age 50 pays $22 or $52 a month, respectively; one buying at age 60 pays $42 or $88; and one buying at age 70 pays $95 or $162.

The lifetime coverage option is more expensive. A CalPERS enrollee buying lifetime coverage for $100 a day at age 40 pays $17 a month for a plan without inflation protection or $42 a month for one with it. An enrollee buying at age 50 pays $27 or $68 a month, respectively; one buying at age 60 pays $55 or $119; and one buying at age 70 pays $132 or $228.

Those rates reflect the CalPERS comprehensive option, in which the money can be used for all types of long-term care, as the federal program will allow.

Despite the cost advantage of enrolling when younger, the CalPERS experience has been that most enrollees join in mid- to late career. Less than 5 percent of its long-term care policyholders were 40 or younger when they joined, while two-thirds were 50 to 70 years old.

"What we get is people buying it from 45 to 65 and 70," Dan Schroepfer, chief of the CalPERS office of long-term care, told Federal Diary associate Eric Yoder. "When people start getting closer to retirement, you start looking at retirement planning, and this is one of those benefits you want to look forward to."

While interest in the federal program is high, experience shows that relatively few people sign up for such coverage when their employer offers it. OPM officials say that the sign-up rate among employee populations averages 3 percent to 6 percent, while among retirees it's 10 percent to 15 percent.

CalPERS, for example, has about 144,000 enrollees in its long-term care program, about 3 percent of a total eligible population of about 5 million.

"The big thing is getting people to recognize that the program is available and that they're not covered by their health insurance coverage," Schroepfer said. "A lot of people have the misconception that their health insurance or Medicare is going to pay for their nursing home care. That just isn't going to happen."

"The other thing is getting people to understand what long-term care is and what it covers," he said. "There is a confusion factor. The more you put in front of them, the more they have to make choices on, the more they will turn away from it."

The federal plan is taking that factor into account, officials say, by limiting the number of combinations and special rules available. But even in the most basic program, potential enrollees will have to make decisions regarding benefit levels, length of benefits and inflation protection.

"Cost and confusion are the two biggest reasons people don't buy this," Schroepfer said.