May 4, 2009
The Office of Personnel Management on Monday announced a new seven-year contract for the Federal Long Term Care Insurance Program that could boost premiums for some enrollees by as much as 25 percent.
Agency officials said the contract with John Hancock Life and Health Insurance -- which has been a 50 percent insurer for the government's long-term care program since it was created in 2002 -- contains premium increases that follow industry trends.
Enrollees with inflation protection built into their policies could see rate increases between 5 percent and 25 percent. The amount of the increase will depend on the employee's age and length of time in the program, said OPM spokesman Ed Byrnes.
The premium rate hike will affect only those covered under the automatic compound inflation protection plan, in which enrollees pay higher premiums up front to avoid annual increases for inflation. Those with a future purchase option -- which, unlike the compound inflation protection plan, automatically updates premiums for inflation -- will not see an increase as a result of the new contract with John Hancock.
According to OPM, there hasn't been a premium hike in long-term care coverage since 2002, and there won't be another increase until 2016. The insurance program provides long-term medical care in nursing homes, hospice facilities and assisted living communities. The government currently has 224,000 enrollees in the plan.
The contract also includes increased home health care reimbursement rates, and higher daily benefit amounts and payment limits on informal care provided by family members. The plan also will have new benefit periods.
"We obviously do not like to see premium increases, but it is important that the element of choice is available to enrollees to determine what best fits their needs," said National Treasury Employees Union President Colleen Kelley. "We encourage our members, if they choose long-term health care coverage, to closely examine costs vs. benefits if they choose to enroll or are already enrolled."
Long Term Care Partners will remain the administrator of the program.
During a decision period before the new rates take effect, enrollees will be able to select different benefits packages. They will have a one-time opportunity to switch to the new plan without obtaining a review of their health status to determine eligibility for coverage. Enrollees also may change their benefit structure to keep premiums "substantially the same," according to OPM.
The program does not include a federal match for employee-paid premiums.
May 4, 2009