The federal government has suspended for two years its sale of long-term care insurance policies to its employees. Some industry experts question whether the program ever will return in its current form.
The long-running initiative, called the Federal Long Term Care Insurance Program (FLTCIP), was halted when John Hancock Life & Health Insurance Company, the carrier that operated the program, warned the federal Office of Personnel Management (OPM) that current premiums are unsustainable and it likely would have to request significant rate hikes. OPM provides benefits to federal employees of all agencies.
The program will stop accepting new applications beginning on December 19. Hancock will continue to cover existing policyholders and pay claims. However, current policyholders will be unable to increase their coverage during the suspension.
The federal benefit covers about 267,000 people and likely is the largest group long-term care insurance program in the nation. But recently, OPM has been selling only about 6,000 new policies annually, representing only about 0.1 percent of its workforce. One reason: the government does not aggressively market the benefit to its workers.
The suspension is just the latest blow to an industry that has been shrinking for decades.
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