Time’s Running Out to Enroll for Long-Term Care Insurance by December 2
As of January 1, 2006, John Hancock Life Insurance Company will be Penn’s new provider for Long-Term Care Insurance. If you enroll in the new Long-Term Care plan by Friday, December 2, 2005, you’ll have guaranteed acceptance into the plan. What does this mean? It means that if you’re an eligible, actively-at-work faculty or staff member, you won’t have to provide proof of your good health in order to receive Long-Term Care Insurance. To enroll, learn more, or request an enrollment kit:
• Call John Hancock at 1-800-711-2899and speak with a Customer Service Consultant,Monday through Friday from 8:30 a.m. to 6:30 p.m.
• Visit the University of Pennsylvania Long-Term Care website at http://penn.jhancock.com (username: penn; password: mybenefit).
You can also visit the website to view the presentation given by John Hancock at the on-campus meetings held on November 8 and 16 (go to http://penn.jhancock.com/longtermcare/penn/meeting.html, username: penn; password: mybenefit). In addition, you can review the following Questions and Answers for more information about Penn’s Long-Term Care Insurance plan.
—Division of Human Resources
Questions and Answers on New Long-term Care Insurance
Q1: Why do I need long-term care insurance? Doesn’t my health plan, long-term disability plan or Medicare cover these expenses?
A. Long-term care is personal care or supervision needed by persons of all ages for an extended period of time. It may be needed due to an accident or illness, or the effects of aging. Long-term care expenses are typically not covered by either your health plan or long-term disability plan. Medicare provides some benefits, but for a limited time period.
Q2: How much of a discount will I receive if I enroll in this plan vs. an individual policy that I purchase on my own?
A. All of the plan design choices that are available in long-term care plans make it difficult, if not impossible, to provide an apples-to-apples comparison. Generally, group plans are less expensive than individual policies.
Q3: It was stated that two out of five adults need Nursing Home Care. What is the average length of stay?
A. The average length of stay in a nursing home is 2.5 years.
Q4: How much time do I have to apply for the plan with guaranteed acceptance? What about new faculty and staff and family members?
A. Eligible employees of the University have until December 2, 2005 to apply for coverage with guaranteed acceptance. New employees will have 30 days after they become benefits eligible to apply with guaranteed acceptance. After that, all employees may apply at any time, but they will have to provide proof of good health. Family members and retirees are not eligible for a guaranteed acceptance period. They must provide evidence of good health regardless of when they apply.
Q5: Can family members apply for coverage even if the employee doesn’t?
A. Yes, eligible family members may apply whether or not the eligible faculty or staff member applies. Each individual may also select his/her own benefit choices.
Q6: How long is the waiting period and what is the rationale for having one?
A: The waiting period to begin collecting benefits after meeting the qualification requirements is 90 calendar days. Once this waiting period is satisfied, the insured will not have to meet this requirement again. It is important for the insured or his/her family members to contact John Hancock as soon as possible once it is suspected that a long-term care situation exists.
The reason for waiting periods is to keep insurance more affordable and to avoid duplicate coverage since part of the first 90 days may be covered by medical plans or Medicare in some instances.
Q7: If I enroll in the plan now, can I change the coverage options at a later date?
A: Yes, you may decrease your coverage at a later date. If you would like to increase your coverage, you will have to apply for the increase and will have to provide evidence of insurability. If your application is accepted, the premium for the increase will be based on your issue age at the time of the increase. If you are declined for the increase, you will retain your original coverage.
Q8: If I lower my coverage amount, will I forfeit the premiums that I paid for the higher benefit?
A: Yes, if you lower your coverage amount, there will not be a refund of premiums.
Q9: What is the Future Purchase Option (FPO)?
A: The Future Purchase Option (FPO) is inflation protection built into the program for those who did not elect the Automatic Benefit Increase (ABI). The FPO has the following features:
• Voluntary coverage increase offered without proof of good health every three years, if eligible.
• Premiums for coverage increase are based on current issue age at time of offer.
• You may skip any increase offer and still be offered subsequent increases.
• The increase amount to the Nursing Home Daily Maximum Benefit (DMB) will be at least 5% compounded annually for the applicable period (rounded to nearest $5). For example, if you purchased a $100 DMB, you will be offered $15 of additional coverage ($100 x 5% compounded annually = $15.76 rounded to $15).
• The Lifetime Maximum Benefit (LMB) will increase in proportion to the DMB.
Q10: If I skip two FPO offers, how much coverage will I be offered the next time?
A: If you skip two FPO offers, you will still be offered 5% of your DMB compounded annually at your current issue age. You will not have the opportunity to make up the difference from the offers that you declined. For specific examples and calculations, please contact the Customer Service Area.
Q11: What is the Automatic Benefit Increase (ABI)?
A: The Automatic Benefit Increase (ABI) is inflation protection that is optional at the time of enrollment for an additional cost. The ABI has the following features:
• Each year the Nursing Home DMB will increase at a rate of 5% compounded annually.
• The premium will remain level even though the DMB increases.
• The LMB will increase in proportion to the increase in the Nursing Home DMB.
Q12: Is a 5% increase enough in light of the fact that health care costs have been experiencing double digit increases?
A: Yes, 5% increases are sufficient for long-term care. Long-term care costs tend to be more closely tied to the Consumer Price Index than health care spending.
Q13: Can the informal care benefit be paid to a family member?
A: Yes, the informal care benefit may be paid out to a family member. But, it’s limited to a calendar year maximum of 30 times the informal care daily maximum benefit (DMB). It is not designed for use every day; it is intended to provide some flexibility.
Q14:How long do I have to pay into the plan to reach the benefit level that I selected?
A: You do not have to pay into the plan for any length of time before reaching the maximum benefits. You are eligible for the maximum benefits that you selected immediately upon your effective date of coverage.
Q15:If I qualify for a claim, collect benefits and then recover, what happens?
A: After 24 months of recovering and paying premiums, your lifetime maximum benefit can be completely restored. Should you qualify for a claim in the future, you will not have to satisfy the waiting period again.
Q16:If my spouse and I both elect coverage, can we share a pool of benefits?
A: No, the John Hancock program is not designed to allow spouses to combine and share their benefits. They are each subject to individual benefits and maximums.
Q17:How much of a DMB should I purchase and should I purchase the ABI?
A: This is a personal decision and depends on many factors such as your age, your geographic location and how much you can afford. John Hancock’s Customer Service Representatives, while they cannot give advice, are able to do some calculations and modeling to assist you with your decision.
Q18: If I do not elect the non-forfeiture option and stop paying premiums, will I lose what I’ve already paid into the program?
A: Yes, if you do not elect the non-forfeiture option and stop paying your premiums, you will forfeit the premiums that you paid into the program. If, at some point, you want to re-enroll, you will have to apply for coverage at your current age and provide evidence of good health.
Q19:Do I still have to pay premiums if I begin collecting on the benefit?
A: No, premiums are waived while you are eligible to collect the benefit.
Q20:Are premiums paid for with before-tax or after-tax dollars?
A: Premiums for long-term care insurance are currently paid for with after-tax dollars and the benefits are tax-free. This is scheduled to come up before Congress for review. Premiums may be deductible in certain instances.
Q21:How often has John Hancock increased premiums in the past? Will the premiums increase in the future? Is there a rate guarantee?
A: John Hancock has never increased premiums for long-term care insurance and they’ve been writing policies since 1988. Even if John Hancock were to raise rates, which is unlikely, the new rates would have to be put in for an entire class or group and approved by state insurance regulators. Even then, the current Penn rates have a guarantee that they cannot be increased for seven years.
Q22: I participate in the Health Care Pre-Tax Expense Account. Am I able to pay Long-Term Care premiums from the money in this account?
A: No, insurance premiums are not an eligible expense under the Health Care Pre-Tax Expense Account.
Coordination With Other Policies
Q23: I am currently covered under the University’s group plan with CNA. Can the premiums that were paid to CNA be transferred to the John Hancock Plan?
A: No, the contract between the University and CNA did not include a transfer of reserves provision so the premiums cannot be moved.
Q24:Should I continue with my CNA policy or enroll in the John Hancock program?
A: This is a personal decision and depends on many factors such as your age and how much premium you can afford to pay. Since you purchased your CNA policy at a younger age, it may make sense to hold onto that policy and purchase a supplemental policy with John Hancock if you would like to increase your coverage.
Q25: If I keep my CNA policy and purchase a John Hancock policy, will the benefits from both plans coordinate with each other?
A: Yes, because both are group policies, the benefits will coordinate with each other. Benefits from group plans will not coordinate with individual policies, though. The total of the two policies will not pay out more than the expenses incurred.
For More Information
Q26: Whom should I contact for more information?
A: For more information, please contact the John Hancock Customer Service Center at 1-800-711-2899 or visit the web at http://penn.jhancock.com (username: penn; password: mybenefit).
This document, which was written by the Division of Human Resources of the University of Pennsylvania, is based on questions asked at the November 8, 2005 Long-Term Care (LTC) information sessions. More details about plan provisions and exclusions can be found in your John Hancock LTC policy. If there are any inconsistencies between this document and the policy, the terms of the policy will govern. Please note that the plan provisions may be changed or deleted in order to satisfy state or legal requirements and the University reserves the right to terminate or amend the plan at any time and for any reason.
Almanac, Vol. 52, No. 13, November 22, 2005