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Key developments in the world of federal employee benefits: health, pay, and much more.

Anger Mounts Over Long Term Care Premium Spike

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There’s growing concern on Capitol Hill surrounding the recently-announced premium hike for the 274,000 current and former employees who are covered by the Federal Long Term Care Insurance Program. Policy holders, on average, will soon see an 83 percent spike in their payments to maintain their current coverage levels. Some will see rate increases as high as 126 percent.

Key lawmakers on the House Oversight and Government Reform Committee are asking the company that provides coverage through the FLTCIP (there was only one bidder for the contract) to turn over documents and analysis related to the premium increase, as well as unredacted contracting documents the company has with the Office of Personnel Management, which negotiated the contract.  

In the Aug. 23 letter to Craig Bromley, president of John Hancock Financial Services, the lawmakers requested the documents by Sept. 2. The requesters are Reps. Jason Chaffetz, R-Utah; Elijah Cummings, D-Md.; Mark Meadows, R-N.C.; and Gerry Connolly, D-Va., the chairmen and ranking members of the full committee and its Government Operations panel, respectively.

Also yesterday, Sens. Ben Cardin and Barbara A. Mikulski, both Maryland Democrats, released a letter to Office of Personnel Management Acting Director Beth Cobert saying they were “flabbergasted” to learn of the premium increase. Their concerns mirrored those of Virginia lawmakers last month. Like their colleagues from across the Potomac, Cardin and Mikulski demanded OPM explain its contractual relationship with John Hancock:

“Federal annuitants and employees pay the full cost of the premiums.  Many of them are on fixed incomes or coming off a three-year pay freeze and substandard pay raises since then. They are being asked to pay an additional $111 per month, on average. This is unacceptable, and so are the alternatives: a reduction in coverage to keep premiums at their current level, taking a ‘contingent benefit upon lapse’ for those who are eligible, or dropping coverage altogether.

“How could professional actuaries, financial advisors, risk managers, and other experts be so wrong? We are left to wonder whether the issuer, which has no competition, has engaged in a sort of classic ‘bait-and switch’ by luring customers with what appears to be affordable coverage and then jacking up the premiums. In either instance, the Office of Personnel Management has failed to meet its oversight responsibility.

Cardin and Mikulski asked OPM to extend by 60 days the Sept. 30 deadline for policy holders to assess their options and asked OPM to explain “how and why this happened” as well as what steps the agency was taking to prevent future similar price hikes. The two also have requested that the Senate Homeland Security and Government Affairs Committee hold hearings on the rate increase next month.

In other benefits-related news this week, the National Treasury Employees Union is asking the Obama administration—which is raising the aggregate spending cap on agency performance awards for members of the Senior Executive Service and other senior-level career positions from 4.8 percent to 7.5 percent beginning Oct. 1—to unfreeze a similar restriction on bonuses for the rest of the federal workforce. As Kellie Lunney reported:

Right now, performance awards and individual contribution awards for non-senior-level employees are limited to no more than 1 percent of their aggregate salaries. That 1 percent cap, along with the current 4.8 percent cap on SES/SL/ST bonuses, has been in place since fiscal 2011.

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