House Panel To Examine Federal Long-Term Care Premium Hikes

A House panel on Wednesday afternoon will hold a hearing to discuss the huge premium spike that hit participants in the Federal Long-Term Care Insurance Program on Nov. 1.

The House Oversight and Government Reform Subcommittee on Government Operations, chaired by Rep. Mark Meadows, R-N.C., will hear testimony from the Office of Personnel Management, John Hancock Insurance, and the National Active and Retired Federal Employees Association, on the new federal long-term care premium rates that took effect earlier this month. Average premium rates have increased 83 percent, or $111 more per month, for enrollees who opted not to change their coverage.

Federal employees and retirees with long-term care insurance had until Sept. 30 to view the new premium rates – announced in July – and make changes to their coverage before the increases kicked in on Nov. 1. (For those paying premiums from their retirement benefits, the first payment with the increase will be reflected in the Dec. 1 annuity payment.) The rate increase, which affects most enrollees, varies widely between nothing and 126 percent, depending on an enrollee’s option under the FLTCIP, according to OPM.

» Get the best federal news and ideas delivered right to your inbox. Sign up here.

More than 96 percent of FLTCIP enrollees who had responded as of Oct. 19 either accepted the increase, or reduced their current coverage, according to OPM. The agency also said at that time it had not seen a decline in the number of new applications since the start of the enrollee decision period.

Despite outrage from enrollees and their advocates, this is the first congressional hearing on 2016’s significant spike, even though OPM said as far back as April that premiums would rise sharply in the fall. House Oversight and Government Reform Chairman Rep. Jason Chaffetz, R-Utah; Meadows; and their Democratic counterparts Reps. Elijah Cummings of Maryland and Gerry Connolly of Virginia, sent a letter in August to FLTCIP contractor John Hancock requesting several documents and reports related to the program's contract and financial health.

OPM announced a new, seven-year contract in April that retained John Hancock, which last received the contract in 2009. (OPM has to issue a new long-term care contract every seven years.) The insurance company was the only one to place a bid for the contract, which remained open for one year. News of the 2016 premium spike added insult to injury: In 2009, FLTCIP enrollees saw their premiums jump by as much as 25 percent.

“John Hancock proposed higher premiums because recent analysis of the program, using updated assumptions based on identified trends and actual claims experience, indicated that the current FLTCIP premiums would not be sufficient to meet the future, projected costs of the benefits,” said a July 18 letter from John O’Brien, OPM’s senior adviser for health policy, to enrollees. O’Brien is scheduled to testify at Wednesday’s hearing.

NARFE, which also will testify at the hearing, has criticized the premium spike, and has been urging lawmakers for months to hold a hearing. “I am stunned at the extent of the increase and angry that this type of financial pressure is being placed on federal employees and retirees,” said NARFE National President Richard G. Thissen, in August. “This situation should not have occurred and signals the need for change in the structure of the FLTCIP to prevent federal employees and retirees from ever facing such huge, unexpected increases again.”

The organization is concerned about what the combination of the increase in FLTCIP premium rates, the small cost-of-living adjustment for retirees announced in October, and a rise in Medicare Part B premiums means for the federal employee and retiree community.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.