Long-term care isn’t something most people want to think about, but it’s something many of us will need. A lot of Feds assume Medicare or FEHB will cover expenses such as assisted living, full-time nursing support, or help with daily activities at home. Unfortunately, these services typically fall outside the scope of traditional health coverage and are not covered. Without proper planning, they can become one of the most expensive parts of retirement.
The Federal Long-Term Care Insurance Program (FLTCIP) was designed to help manage these costs. It gives federal employees, retirees, and eligible family members access to long-term care insurance at group rates. Administered by John Hancock and sponsored by the U.S. Office of Personnel Management, FLTCIP helps cover services like in-home care, adult day care, assisted living, and nursing home stays.
Enrollment is open to federal and U.S. Postal Service employees and annuitants, active and retired members of the uniformed services, and qualified relatives. But here’s the big catch: FLTCIP has been suspended to new applicants since December 19, 2022, and that freeze is expected to last through at least the end of 2026. However, if you’re already enrolled or exploring long-term care insurance more broadly, understanding FLTCIP pros and cons can still help guide the decision-making process.
Pros and Cons of Federal Long-Term Care Insurance
Like any long-term care (LTC) policy, FLTCIP has its advantages and drawbacks. Understanding both can help you decide whether it supports your retirement goals, or if another option might serve you better.
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Potential Advantages:
- Group‑negotiated premiums and underwriting. Federal enrollees benefit from group purchasing power and simplified underwriting not typically available in the private LTC market.
- Comprehensive coverage. FLTCIP pays for in‑home care, adult day care, assisted living, and nursing home stays, offering flexible benefit options based on your needs.
- Personal and financial security: For those without family caregivers, FLTCIP provides reassurance that long-term care costs will be covered when the need arises.
Potential Drawbacks:
- Premiums can be high and may rise dramatically over time— FLTCIP premiums increased most recently on January 1, 2024. For those who opted not to reduce benefits, the average increase was 86%.
- Limited customization— While flexible, FLTCIP doesn’t allow as much benefit customization as many private or hybrid LTC policies.
- History of rate hikes and application suspensions— Premium spikes occurred in 2010, 2016, and 2024. Additionally, new enrollments have been suspended since 2022.
Does FLTCIP Fit Your Retirement Goals?
When deciding whether FLTCIP makes sense for your needs, it’s important to look at it in the context of your full retirement plan. This includes reviewing your personal savings, available assets, and Thrift Savings Plan (TSP) withdrawals. Some Feds may find that they’re able to self-insure. In other words, they can afford to pay out of pocket if care is needed. Others may find that the cost of care could seriously drain their retirement funds. In this case, insurance may help protect what they’ve built.
In addition, single Feds often benefit from knowing they have a plan in place for their care, while married couples might feel more comfortable relying on shared resources or caregiving between spouses.
For some, private long-term care or hybrid life insurance policies may offer more flexible benefits or predictable pricing, especially since FLTCIP is currently closed to new enrollees.
Smart Steps Before You Decide
Before making any decisions about long-term care insurance, it’s important to run the numbers. A CERTIFIED FINANCIAL PLANNER™ professional can help you analyze different care scenarios and weigh the impact on your retirement income, taxes, and estate plans.
It’s also worth comparing other long-term care options. Some private policies offer features like guaranteed premiums, cash value, or return-of-premium riders that FLTCIP doesn’t include. Hybrid life insurance policies that combine a death benefit with long-term care coverage may also be worth considering.
The team at Serving Those Who Serve is here to provide Feds with the personalized guidance they need to make sound financial decisions. Reach out to us today at [email protected].
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
