It May Be Time to Explore Short-Term Care Insurance

Short-Term Care insurance can be an alternative to Long-Term Care or it can augment it.


The Office of Personnel Management (OPM) has suspended new applications for coverage in the Federal Long Term Care Insurance Program (FLTCIP) to allow OPM and the FLTCIP administrator time to thoroughly assess the benefit offerings and establish sustainable premium rates that reasonably and equitably reflect the cost of the benefits provided. The suspension period began on December 19, 2022, and current plans are for the suspension to remain in effect for 24 months unless OPM decides to end or extend the suspension period.

Existing FLTCIP members and their eligible family members will remain covered under FLTCIP. OPM suggests that those federal workers interested in obtaining policies consider alternative care plans to the FLTCI during the suspension period.

Ralph R. Smith’s article FLTCIP Problem: OPM Suspending Long-Term Care Insurance Applications was published this November on the suspension and the article’s ensuing discussion thread attached to the article can provide you with a richer context for further information and opinions about the topic.

Another article you may want to consider reading is one written by Stephanie Wilson, FLTCIP and alternatives to it. This article written earlier this year explains several alternatives besides the FLTCIP for tackling the long-term care challenge. This author presents information about the flexibility offered through some private long-term care insurance policies and “hybrid” insurance plans which combine life insurance and long-term care in one policy.

In seeking alternatives to the FLTCIP, I would like to introduce you to another insurance product that has traditionally not been considered by most of us as an alternative to the FLTCIP. This would be short-term care insurance.

Short-Term vs. Long-Term Care Insurance

Short-term care insurance was not intended to serve as a replacement product for long-term insurance. Short-term care policies encompass a duration of time from a few months to just under a year of care in scope. 

A short-term care policy can be a stand-alone product or employed to provide coverage for a long-term care insurance policy’s elimination period. Under most long-term care policies including the FLTCIP, you have to pay out of pocket for the initial care services for a certain amount of time, such as 30, 60, 90 days, or more, before the long-term care insurer starts reimbursing you for any care. 

Benefits of Short-Term Care Insurance

A short-term care policy can relieve you from having to plan for liquid assets to pay for the elimination period. Could you write a check tomorrow for 90 days of care? Leslie Kasperowicz’s Is short-term coverage right for you? written in August of this year provides information on this type of insurance should you be unfamiliar with the concept.

David Rodeck’s Short-Term Insurance Plans’ Good, Bad, and Ugly at the Kiplinger website will add further value to your understanding of short-term care policies. From his article, you will get a nice balanced perspective on the pros and cons of short-term care and whom it may best serve.

You may benefit from exploring a short-term care policy. This is true if you already have long-term care because it allows you to use a monthly premium to pay for the elimination period. If you do not have any long-term care coverage, a short-term care policy can give you up to a year of protection. 

A short-term care product designed for one year gives care coverage for that entire year without the need for liquid assets because there is usually no elimination period in these policies. Some of you may even determine having one year of short-term care as an acceptable alternative strategy to the traditional long-care insurance model. 

The assumption justification for no care insurance is spending down all your assets possibly to the point of being a Medicaid candidate. The assumption justification for short-term care is you admit the possibility of care but are hoping that will not be the case for more than a year. The assumption justification for long-term care is you are going to need long-term care for an unknown period. 

Paying decades of long-term care premiums with the understanding of also needing liquid assets always at the ready for the elimination period is an expensive commitment.

Selecting a one-year short-term care policy saves money from significantly smaller care premiums. The need to have significant additional liquid assets ready to pay for care during an elimination period is not necessary. If you need care beyond one year, however, you now have to pay for care. That could be an interesting way to approach risk.

The risk is that outliving the one-year time of care coverage would mean one would be responsible for additional care costs. This strategy, however, would be appreciated by beneficiaries down the road if the short-term care coverage was sufficient if care was needed or if such care was never accessed. 

Short-term care coverage might be the nudge some of us need to address the risk possibility for care coverage. If you have no long-term care insurance, because you were somehow confident you may not need it and/or perceived the premiums were too high, then think about short-term coverage as a way to revisit the decision using the Goldilocks principle. It might be “just the right amount” of care coverage you never considered. 

About the Author

Francis Xavier (FX) Bergmeister, CLU®, ChFC®, CASL®, ChSNC® has been Certified Financial Planner® for 30 years. He is a graduate of the Wharton School and earned a Doctor of Arts from George Mason University. He provides retirement seminars thru Federal Career Experts.