On Tuesday, CalPERS' pension and health benefits committee unanimously voted to raise long-term care insurance premiums by 85% for about 112,000 state workers and retirees, or about three-quarters of its long-term care enrollees, the Sacramento Bee reports.
The full CalPERS board is meeting Wednesday to vote on whether to ratify the committee's rate hike decision (Kasler, Sacramento Bee, 10/17).
The 85% hike is higher than the 75% increase CalPERS officials considered earlier this month.
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 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, 10/12).
Details of the Hike
CalPERS' long-term care policyholders currently pay $1,400 to $2,400 annually in premiums. If the proposed rate hike is implemented, enrollees could pay hundreds or thousands of dollars more per year, depending on their age and coverage type.
The proposed 85% rate increase would take effect in 2015 and be phased in over two years. However, policyholders would have the option of facing a 79% rate hike if they agreed to absorb the premium increase in one year.
Policyholders Express Concern
Some long-term care policyholders have expressed concern that the rate hike would impose a significant burden.
Phil Sherwood -- executive director of California State Retirees -- said, "It represents a threat to the retirement security of many of the retirees" (Sacramento Bee, 10/17).