WASHINGTON – The federal government hopes its new Long Term Care Insurance Policy will serve as a model for the private sector, where only 2 percent of Americans currently have long-term health care policies.
But federal workers unions say the plan falls far short of an ideal.
The insurance, to be administered by the Office of Personal Management, could ultimately provide up to 20 million government employees with assistance for long-term services such as nursing homes and assisted-living care, through a wide choice of benefit options and premiums.
But the National Treasury Employees Union and the American Federation of Government Employees, who together represent 750,000 employees, both criticized the plan.
“The plan is not a good deal for federal employees,” said Diane Witiak, an AFGE spokeswoman. “The government ought to pay part of the premiums and be doing more for its employees if it aims to be a model employer.”
NTEU President Colleen Kelley said in a statement that the plan should be extended to include grandparents, brothers and sisters, foster children and domestic partners. Doing so would have the added benefit of lowering costs in the long run, she said by expanding the pool of eligible participants.
OPM officials said it is too early to make any judgments about the program, which just got under way in March. Several hundred applications have been filed, but they note that 750,000 federal employees have already signed up to receive a series of bulletins that will further detail the insurance policy.
“The response has been much stronger than we thought it would be and we expect our product to be very successful,” said Frank Titus, the assistant director for long-term care at OPM.
The agency said 60 percent of Americans 65 and older are in need of long- term care. It is trying to educate younger Americans on the need for long-term care insurance — nursing home care averages $56,000 a year — as the population ages.
“One of the greatest risks to individual’s retirement savings is the unanticipated costs of long-term care,” said Bertram Scott, president of TIAA- CREF Life Insurance Co., at a Senate hearing last week. “Unfortunately, many people underestimate the cost of care and are often enlightened when the issue hits close to home.
“If you’re approaching age 50, you should give purchasing long-term care very serious thought,” Forte advised.
The federal program, in its “early enrollment” stage until May 15, will be offered to current and retired federal and postal employees as well as members of the military. Certain family members, such as spouses and adult children, could also apply for coverage. Open season will begin July 1 and extend through the end of the year.
The government hopes the program will influence the private sector to create similar programs to help defray rising health-care costs.
“The 77 million baby boomers will literally break state and federal budgets — unless they take personal responsibility for their care and purchase long-term insurance,” said Sen. John Breaux, D-La., before a hearing of the Senate Special Committee on Aging, which he chairs.
“If the new federal long-term care insurance program is successful and proves to be popular, then it will serve as a model for other companies and employers,” Breaux said. “The old adage, `lead by example’ definitely applies here.”
The Long-Term Care Security Act, signed by President Clinton in 2000, required that OPM create a new, long-term care insurance program for all employees.
Titus said his staff has been working hard to get the plan in place. After soliciting bids from insurance carriers, the government in December selected a proposal submitted by a joint venture between John Hancock and MetLife, called Long Term Care Partners, LLC.
The program was launched March 25, when OPM Director Kay Cole James became its first member. In a column last week in The Washington Times, James wrote that giving federal workers the option of buying their own insurance was “empowering millions of federal employees with the freedom to live independently from government assistance.”
“This philosophy is fully in line with the principle of compassionate conservatism espoused and followed by President Bush,” she wrote.