Premiums Rising for Federal Long-Term Care Insurance
Premiums are set to rise for most federal employees who participate in the Federal Long-Term Care Insurance Program (FLTCIP). The rising premiums leave participants with the choice of paying more or lowering their coverage.
The program, which is overseen by the Office of Personnel Management (OPM), covers expenses for nursing homes, assisted living, hospice, and other services. About 260,000 federal civilian employees, service members, and their families take part in the program.
The premium hikes come as OPM renewed the contract with John Hancock Life & Health Insurance for another seven years back in May. In previous renewal periods in 2009 and 2016, premiums went up 83 percent on average and as high as 126 percent after the 2016 renewal. This year, OPM has not given an exact figure on average premium increases.
“I’m expecting another huge premium increase, which is going to be very difficult for people to accept,” John Hatton, policy vice president at the National Active and Retired Federal Employees Association (NARFE), told Federal News Network. “I generally think that they’re not releasing the numbers that’s a bad sign for how high it will be.”
“The scenario resembles a classic bait-and-switch scheme, as FLTCIP enrollees took the bait when they purchased insurance at lower-quoted price, and now are forced to switch to a higher cost product or lose their investment,” NARFE National President William Shackelford said in a statement.
Enrollees were notified of the rate hikes this month and have 60 days to accept higher premiums or reduce their coverage.
Transparency Questioned
OPM reviews any premium increase, which is needed when there is a projected imbalance between the program’s income and outflow, due to market conditions and changing mortality rates.
Still, the increase has attracted the attention of Congress for more than a decade as lawmakers have called for more transparency from OPM.
“To be aware of this possibility [of rate hikes], plan participants would have had to search the fine print in their policy documents,” testified Senator Susan Collins (R-ME) in 2009.
Lawmakers also questioned why premiums do not stay stable over the life of an enrollee.
“More than half of enrollees chose the compound inflation option ... [where] participants paid more initially but they were told that their benefits would automatically increase by 5% every year, with no increase in their premiums,” said former Senator Daniel Akaka (D-HI) during a hearing in 2016.
The premium hikes also come after an OPM Inspector General report warned that the FLTCIP fund will be depleted by 2048, unless there is a premium increase or benefit decrease.