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Insurance and Uninsured

Friday, October 12, 2012

CalPERS Considers 85% Rate Hike for Most Long-Term Care Policies

CalPERS has proposed an 85% premium increase for 115,000 of its 150,000 long-term care beneficiaries, the Sacramento Business Journal reports (Robertson, Sacramento Business Journal, 10/12).

The proposed hike is higher than the 75% increase CalPERS officials were considering earlier this month.

Bill Madison, CalPERS spokesperson, said the previously proposed 75% rate hike "was a work in progress" (Kasler, Sacramento Bee, 10/11).

Background

Unlike its pension benefits program, CalPERS' long-term care program is not funded by taxpayers, and the pension fund must pay its own claims. According to CalPERS officials, the long-term care program has enough money for now but will face budget shortfalls in decades to come.

Ann Boynton, CalPERS' deputy executive officer, recently said, "At current course and speed, we would not have enough money ... to pay anticipated claims" in the long-term care program (California Healthline, 10/4).

Details of Proposed Premium Increase

The proposed 85% increase would take effect in 2015 and would be phased in over two years (Sacramento Business Journal, 10/12).

CalPERS officials said that as an alternative to the 85% hike over two years, the fund could increase rates by 79% in one year.

Regardless of which rate increase is implemented, the pension fund hopes that the hike would "stabilize" the long-term care insurance program.

Next Steps

CalPERS' pension and health benefits committee will review and vote on the rate hike proposal on Tuesday. CalPERS' full governing board will consider the proposal on Wednesday (Sacramento Bee, 10/11).

Reader Comments:
  • 5
  • 10/21/2012
  • Colleen Fitzmaurice

I am in agreement with the above comments. I was also told that the costs would not increase much. There is no way I can continue paying for this. I want all my money back. We need a class action lawsuit.

  • 4
  • 10/16/2012
  • Linda Torn

I agree this program has turned into a scam. When I signed on in the 90s we were told that the costs would remain basically the same with slight and reasonable escalations. This has turned out to be false. The current proposed 85% increase is especially hard to swallow based on State employees' pay cuts and increased retirement benefit contribution. Apparent false advertising got us to sign up. If this premium increase is accepted (and it appears it will be), our choices are lousy - either stop paying and lose the money we've put in or continue paying and accepting increasingly higher rates.

  • 3
  • 10/12/2012
  • DENNIS RUSSELL

It would appear that Calpers LTC enrollees should request and require from the LTC board alternatives other than another round of premium increases. If Calpers LTC continues on this path of dramatic rate increases without offering alternatives, possibly the enrollees should consider a class action suit or other legal action against Calpers LTC. Simply put, it is not right nor ethical that good faith enrollees lose all of their past premium payments as well as being forced to compete in today's LTC insurance market. Calpers LTC must accept some level of responsibility and provide suitable, supportive alternatives to their enrollees.

  • 2
  • 10/12/2012
  • Barbara Hanson

CalPERS self-funded LTC “insurance” first came out in the mid 90's below market price and insured employees already diagnosed w/ MS and other serious medical issues. Earlier hikes were 17%, 23% and 47%. CalPERS, because it is NOT an official insurance company, is not subject to CA government (DOI) regulation. Private insurers must conform to DOI regulations, turn a profit and not rely on bail-outs when things go badly. CalPERS is effectively out of the LTC business, so cannot rely on new business contributing to their bottom line. Official insurers have to have mandated reserves, and they also participate in the state guaranty association which provides a safety net for state policyholders, ensuring they continue to receive coverage even if their insurer is declared insolvent.

  • 1
  • 10/12/2012
  • Bill Hall

CalPERS originally offered long term health care suggesting at their presentations that the cost would remain the same as the entry cost. That hoax has long been dismissed. Now they are suggesting an 85% increase that they "Hope" will stabilize the program. I think they need to get out of the long term health care business, give back to participants all the money they have put into the system, plus the average return on investments, and fire everyone associated with the program! This program is a scam!



Readers are invited to send feedback to: chl@chcf.org