CalPERS Issues Notices of Planned 85% Rate Hike for Long-Term Care Plans
CalPERS has begun sending notices to more than 110,000 beneficiaries with long-term care insurance about an 85% premium increase beginning in 2015, the Los Angeles Times reports (Terhune, Los Angeles Times, 2/21).
In October 2012, CalPERS' Board of Administration unanimously approved a plan to raise long-term care insurance premiums by 85% for hundreds of thousands of state workers and retirees.
CalPERS officials cited cost concerns when justifying the premium hike. They said the long-term care program has enough money for now but will face shortfalls in decades to come.
Unlike its pension benefits program, CalPERS' long-term care program is not funded by taxpayers, and the state pension fund must pay its own claims.
Details of Rate Hike
CalPERS' long-term care policyholders currently pay $1,400 to $2,400 annually in premiums. Under the new rate hike, enrollees could pay hundreds or thousands of dollars more per year, depending on their age and coverage type.
The rate increase affects about three-quarters of CalPERS' long-term care beneficiaries and would be phased in over two years.
However, policyholders have the option of facing a 79% rate hike if they agree to absorb the premium increase in one year (California Healthline, 10/18/12).
Responding to negative reactions from beneficiaries, Bill Madison -- a CalPERS spokesperson -- said, "We understand people's anger and frustration," adding, "It's not something the board wanted to do, but it's necessary so benefits are available to people when they need it."
CalPERS Seeks To BoostÂ Enrollment inÂ Long-Term Care Program
On Thursday, the CalPERS board approved plans to reopen enrollment for the long-term care program by the end of the year and expand eligibility.
The state pension fund closed enrollment for the program in 2009 (Los Angeles Times, 2/21).
CalPERS officials say that the premium increases and the creation of a new, cheaper long-term care policy are some of the factors driving them to consider reopening the program.
The state pension fundÂ seeks to include tougher underwriting standards in the program and to open it to adult children of CalPERS beneficiaries.The proposal requires lawmaker approval (California Healthline, 2/21). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.