Public Pension Fund Offers LTC Plan Model
The following is an excerpt from an article which appeared in the April, 1998 edition of Employee Benefit News:
Public Pension Fund Offers LTC Plan Model
By Stephenie Overman
Colorado's Public Employees' Retirement Association (PERA) provides a model of how long-term care (LTC) coverage can be tailored to meet the needs of group members, retirees and dependents, plan designers assert.
PERA offers its new LTC benefit to its 200,000 members, retirees and family members. The benefit is available to members' and retirees' spouses, parents, parents-in-law, grandparents and grandparents-in-law.
The association decided to offer LTC coverage "because people had been asking for it for a long time. The PERA board realized how quickly even a good pension can be depleted and see this as a complement to the pension plan," notes Renae L. McKenny, director of insurance programs. PERA is the 24th largest public pension fund in the country, with more than $23 billion in assets.
The program was rolled out Jan. 1, and according to McKenny, "we're just getting into the heat of it. We're just now gaining the momentum, but I think it's being received very well." The enrollment period ends April 30.
Range of choices
McKenny's department began looking into LTC coverage about eight years ago, "but at that time long-term care plans were just getting off the ground, and then we were busy with a new health care program. About a year ago we made another presentation to the board and it just seemed to click."
The board of trustees chose U.S. Care Inc. to serve as program manager. MedAmerica Insurance Company, which is dedicated exclusively to long-term care, is underwriting the program.
PERA's program features three plan choices, with a range of benefits that includes home health care, community-based care and nursing home care. All options include a pool-of-dollars benefit by which participants can allocate funds to cover care in appropriate settings of their choice.
Additional features of the plan include assistance from personal "care advisors" to help families identify and obtain long-term services; a 60-day waiting period per lifetime before benefits begin, compared to 90 days accumulated in a 12-month period for most long-term care plans; and a rider option under which the member or retiree pays premiums for only the first 10 years, after which benefits continue with no further premium payments. The mid- and high-level choices include respite care.
"Like heath care, nothing is going to please everyone, but we tried to put in choices. It has a lot of good features," McKenny says.
Samuel X. Kaplan, the founder and chairman of U.S. Care, says the PERA plan serves as a model for others because it's designed based on what people want and what is affordable.
"The usual approach is to take something off the shelf, something you think they want. That's why the response is so bad. You have to put your arms around people and lay out the options, but it has to be their choice."
What people generally want is to protect their assets and spouse, to remain independent in their own home, and to avoid being a burden, Kaplan notes "People want the broadest benefits all in one package. They want a lot of flexibility so they can make decisions."
Kaplan notes that many people are unprepared to meet the financial demands of long-term care because they mistakenly believe that health plans, including Medicare, provide long-term care coverage, when in fact, they provide only limited coverage for skilled nursing and home care coverage.
U.S. Care is not an insurance company, Kaplan stresses. "We're the program manager. Our responsibility is to affect the greatest benefits for the employees based on the programs that have been designed and accepted. Employees need somebody to look out for their interest. We control the underwriting aspects of the group, we make sure people are functionally underwritten, not medically underwritten."
U.S. Care introduced customized LTC services in the early 1980s. Kaplan was instrumental in the design and introduction of a long-term care program by CalPERS, the nation's largest pension fund.
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