Long-term care gets champion on the Hill

As the life span of the average citizen increases, the number of Americans requiring daily living assistance is sure to skyrocket. More than 5 million Americans have significant physical limitations due to illness or disability, and many of these people require long-term care.

Long-term care refers to care provided by a nursing home or an assisted-living facility to an individual who cannot care for himself. Many employers provide group long-term care insurance for their employees, but Uncle Sam does not.

Legislation recently has been introduced in the Senate and the House calling for the establishment of a program under which long-term care insurance would be made available to federal employees and annuitants at group rates. The House bill (H.R. 1111), introduced by Rep. Constance Morella (R-Md.), a fed-friendly member of Congress, is called the Federal Civilian and Uniformed Services Long Term Care Insurance Act of 1999.

Under this plan, the federal government would not pay for the insurance; instead, insured individuals would foot the bill. The government's role would be to collect premiums, negotiate rates and mediate disputes. Because insurance companies selected to participate would have an exclusive right to sell to federal workers, they might offer lower rates than they would ordinarily.

Insurance carriers also would realize administrative savings because they would not have to bill each insured policyholder. They would collect premiums for all policyholders from the Office of Personnel Management, which would withhold premiums from policyholders' pay or annuity.

Such policies would contain a cost-of-living adjustment provision so that benefit levels would keep pace with inflation. There is a presumption in the proposed legislation that OPM could negotiate lower rates because of its buying power. That remains to be seen.

According to the bill, coverage would be guaranteed renewable and could not be canceled by the carrier except for nonpayment of charges. Policies would be issued for five-year terms and would be renewed automatically unless the insurance company elected not to continue in the program. If a carrier was not happy with the program, it could give notice of intent not to renew at the end of the five-year term. Then OPM would have to solicit bids from other carriers, and policyholders would not be guaranteed the same rate that they had been paying.

Consequently, the bill's "guaranteed renewable" provision is not as good as it sounds. I hope Congress will change this.

There also is a provision in this legislation that requires carriers to reimburse OPM for its administrative costs. I am not sure I like this provision either. If you were in the insurance business, would you be interested in a policy like this? Such a provision might discourage insurance companies from participating. Congress should change this language as well.

Under the proposed legislation, individuals would be able to buy long-term care insurance for themselves or eligible family members. Eligible individuals would include active (permanent) employees, annuitants, active members of the uniformed services, retired members of the uniformed services and relatives of eligible individuals. Relatives covered by this legislation would include a spouse, a parent or any other relative authorized in the regulations that OPM would issue.

OPM would be given wide latitude as to what relatives to include. Benefits would be payable to insured individuals who were unable (without substantial assistance from another individual) to perform at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity. These activities include eating, using the bathroom, bathing and dressing. Most long-term care policies require an inability to perform at least three activities of daily living. Keeping it at two would make it easier to collect benefits, but the premiums probably would be higher.

The plan would prohibit OPM from having contracts in effect with more than three qualified carriers at any time. To be considered a qualified carrier, a company would have to be licensed to issue group long-term care insurance in all the states and the District of Columbia.

I hope Congress passes this legislation. The cost to the federal government would be minimal, and it would permit federal employees to buy long-term care insurance at group rates for the first time. It is hard to see why anyone would oppose this legislation. But with national elections coming up, politics might rear its ugly head. Let us hope it doesn't.

--Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.

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