How are Federal Long Term Care Insurance Program (FLTCIP) premiums established?
The goal in establishing the premium rates is to calculate rates that will be sufficient to pay claims plus expenses, now and over the future lifetime of enrollees. Calculating premiums requires using a series of assumptions that quantify the risk that certain things will happen in the FLTCIP over the course of time. The key risk assumptions relate to claims (how many people will qualify for benefits and begin submitting claims, when, and for how long?), investment results (how much money will be earned by investing the premiums?), lapse results (how many people will voluntarily drop their coverage over the course of time?), and mortality (how many people will die while enrolled?). These risks vary for enrollees depending on their ages when they enroll, and the risks change as people age while enrolled. Different plan designs require different risk assumptions as well (for example, there are different risk assumptions made for a 3 year benefit period and an unlimited benefit period). T
