Few claims are expected to be submitted during the early years of a long- term care insurance policy. Because the average age of enrollees in the individual market is  higher than the average age of enrollees in the federal program, the rate of  claim submissions is likely to peak earlier in the individual market, after 15  to 25 years. Federal Long Term Care Insurance Program

The federal government began offering group long-term care insurance  benefits in 2002 for federal employees, retirees, and certain other people. Federal Long Term Care Insurance Program Offered Benefits Comparable to Other Products, Usually at Lower Premiums

The federal program offered benefits that were similar to those of other  long-term care insurance products we reviewed and usually offered lower  premiums for comparable benefits in individual products. However, despite the  broader range of options available in the other products, most enrollees in  the federal program and in individual and group products chose similar  daily benefit amounts, elimination periods, and benefit periods. Overall, annual  premiums in the federal program averaged across three benefit plan  designs were lower for both single people and married couples who were  both the same age compared with similar individual products sold on  March 31, 2005. Federal Program Participation Was Comparable to Other Group Products, while Federal Enrollees Were Younger Than Enrollees in Individual Products and Older Than Enrollees in Group Products

The employee participation rate in the Federal Long Term Care Insurance  Program for active federal civilian employees was 5 percent, comparable  to the industry average in the group market, but overall enrollment was  lower than the expectations established by Partners. The  average age was 54 for enrollees in CalPERS. During its  first 3 years, the federal program paid 39 percent of what it initially  expected to pay for claims per enrollee; the number of claims paid per  enrollee also was lower than initial expectations. It is still too early to determine whether the early claims experience will  continue or whether adjustments to the expected claims experience or  premiums are indicated.
Why GAO Did This Study

The Long-Term Care Security Act required the federal government to offer long-term care insurance to its employees, their families, and others. The act also required GAO to conduct a study of the competitiveness of the Federal Long Term Care Insurance Program, which began in 2002, compared with individual and group products generally available in the private market. GAO compared the federal program's benefits, premiums, enrollment rates, and enrollee characteristics with other products over a 3-year period. GAO also compared the federal program's early claims experience with initial expectations.

What GAO Found

Program offered benefits similar to those of other long-term care insurance products GAO reviewed. Most enrollees in the federal program and in individual and group products chose similar benefit amounts, elimination or waiting periods, and benefit periods. The federal program usually offered lower premiums than individual products for comparable benefits. Overall, annual premiums for the federal program averaged across three benefit plan designs were 46 percent lower for single people and 19 percent lower for married couples who were both the same age in comparison with similar individual products sold on March 31, 2005. The participation rate in the Federal Long Term Care Insurance Program for active federal civilian employees--5 percent--was comparable to the industry average in the group market, although enrollment in the federal program was lower than initially expected. The average age of all enrollees in the federal program was younger than the average age of enrollees in individual products and older than the average age of enrollees in group products. The Federal Long Term Care Insurance Program paid 39 percent of what it initially projected to pay for claims per enrollee. The number of claims paid per enrollee was also lower than initial projections. While the early claims experience was below expectations, it is still too early to determine whether this trend will continue or whether adjustments to the projected claims experience or premiums are indicated, because most claims are not expected to be submitted for many years.