A U.S. Government Accountability Office (GAO) report attributed the lower than anticipated participation primarily to low enrollment by U.S. Postal Service employees and those on active military duty. While the enrollment data marks it as the nation’s largest long-term care insurance program, the take-up rate for eligible employees remained at only 5%, some 36% lower than the target initially established by Long Term Care Partners, a joint venture of John Hancock Life Insurance Co. and Metropolitan Life Insurance Co.

According to Long Term Care Partners LLC, , “the terrorist attacks in the fall of 2001 resulted in slower sales of discretionary products, such as long-term care insurance, and also resulted in temporarily reduced access to federal employees, military members, and Postal Service employees for marketing purposes during the open enrollment period.”

According to OPM officials, “the federal program also reached out to retired federal employees, retired military members, and retired Postal Service employees.”

The program (which was authorized in September 2000 and  launched in March 2002) offers group long-term care products to federal employees under a seven-year contract with Long Term Care Partners LLC. As of March 2005, 218,890 employees, retirees, and family members were enrolled.

Table : Estimated Eligible Population and Actual Enrollees in the Federal Long Term Care Insurance Program, by Category: (note: Only Postal Employees listed)

Category: Active Postal Service employees;
Estimated eligible population as of October 15, 2001: Number: 800,000;
Estimated eligible population as of October 15, 2001: Percentage of total eligible: 4;
Enrollees for new policies sold from March 25, 2002, through March 31, 2005: Number: 6,352;
Enrollees for new policies sold from March 25, 2002, through March 31, 2005: Percentage of total enrollees: 3.

Among the GAO’s initial findings:

– Lower than expected per-enrollee claims payments. The program has paid 39% of what it expected to pay over the first three years of the program. GAO said further study was necessary to determine if these lower claims levels amounted to a short-term aberration. The majority of claims are unlikely to be submitted for many years.

– During the 3-year period covered by GAO study, the average age of enrollees in the federal program at the time of enrollment was 56 years old, which is younger than the average age of 60 for individual products reviewed and older than the average age of 52 for group products reviewed. More women than men purchased coverage in the federal program during the 3-year period.  

OPM indicated that it intends “to provide updated information on claims experience and premium setting in its written recommendation to Congress before entering into a new contract for administration of the Federal Long Term Care Insurance Program, in accordance with the Long-Term Care Security Act”

The Office of Personnel Management (OPM) recently issued proposed regulations to amend the Federal Long Term Care Insurance Program (FLTCIP) regulations. The proposed regulations will make miscellaneous changes, corrections, and clarifications to the FLTCIP regulations. Postal Employees, retirees and family members who bought the government-backed Long Term Care insurance policy (FLTCIP) should check out a proposed change for its interpretation of eligibility rules.