CalPERS OKs Long-Term Care Rate Hike, Creation of Alternative Program
On Wednesday, CalPERS' Board of Administration unanimously approved a plan to raise long-term care insurance premiums by 85% for about 114,000 state workers and retirees, the Sacramento Business Journal reports (Robertson, Sacramento Business Journal, 10/18).
The vote followed testimony earlier this week from retirees who said the premium hike would cause them hardship (Vellinga, 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.
Details of the 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 85% rate increase will take effect in 2015 and 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.
The plan affects about three-quarters of CalPERS' long-term care beneficiaries (California Healthline, 10/17).
CalPERS Approves Less Comprehensive Plan
CalPERS also approved plans to create less comprehensive long-term care coverage that will be less costly for beneficiaries.
According to the Business Journal, it is unclear how many beneficiaries will choose to continue their current coverage or select the less comprehensive plan.
Beneficiaries who want to switch plans are required to do so by July 1, 2013.Bill Madison, a CalPERS spokesperson, said letters will be sent to beneficiaries in the spring that explain their options (Sacramento Business Journal, 10/17). 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.