Policyholders Say That CalPERS Misled Them on Long-Term Care Rates
Some CalPERS beneficiaries with long-term care insurance allege that the state pension fund misled them when they purchased the policies by saying premium rates would not increase, the Sacramento Bee's "The State Worker" reports (Ortiz, "The State Worker," Sacramento Bee, 2/28).
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.
Last week, CalPERS began sending notices to more than 110,000 beneficiaries with long-term care insurance aboutÂ the increase, scheduled toÂ begin in 2015 (California Healthline, 2/22).
Previous CalPERS Marketing in Question
Some policyholders are criticizing the plan to hike premiums, saying that CalPERS guaranteed that rates would not increase when it sold them the long-term care plans in the 1990s.
Most of the long-term care plans sold in the 1990s have an "automatic inflation-protection" feature that increases payout limits annually.
According to "The State Worker," a graph in a CalPERS sales brochure from 1998 shows inflation-protected coverage for a 45-year-old as a flat blue line that remains at $75 each month indefinitely. The brochure states, "With this option, your plan is designed to remain level and won't increase each year."
However, the brochure also states, "Your premiums can only be changed through action of the CalPERS Board."Ann Boynton -- deputy executive officer of the CalPERS Benefit Programs Policy and Planning unit -- said that the plans in question were sold before she joined the staff of the pension fund. She said, "I can't say what anyone was told or what they heard" ("The State Worker," Sacramento Bee, 2/28). 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.