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OPM approves new long-term care contract
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.
COMMENTS
- I now have the personalized options form and the daily benefit amount for my current 5% ACIO option (Option 1) is less than Option 2 with a 4% ACIO. It will take 12 years for the Option 1 daily benefit to catch up and 21 years to break even on the cumulative increased premium. But the info from the FLTCIP FAQ's makes any analysis shakey. It says pricing isn't based on the number or enrollees but elsewhere that persistency is a factor. Also, it says comparable commercial plans have increased. At enrollment, the word was that those plans low balled. I would like to see how our premiums were invested, if there was any AIG backing, and what the new investment assuptions are. James Clark Posted November 3, 2009 11:15 PM
- I'm having a hard time justifying any premium increase for the ACI option enrollees. Besides the fact that they promised not to do it, the ins. companies are committed to pay a specific benefit for a specific time with a known inflation factor.They knew exactly what their liabilities were going in. Not like regular health insurance. This is just OPM's incompetance in negotiating a new contract. The insurance companies want us to reimburse them for their bad investments. The need to suck it up just like we all have during these economic times. Write to your representatives!!!! Tom Evans Posted August 17, 2009 2:59 PM
- Well...I was planning on buying FLTCIP coverage. I actually started filling out the online application today. I am glad that I came across this article. I was going to opt for the ACI inflation protection, but what's the point? This from the OPM website definitions: Automatic Compound Inflation (ACI) An inflation protection feature that helps premiums remain constant while benefits increase by a fixed percentage each year. Under the FLTCIP, benefits increase automatically by 5% compounded annually with no corresponding increase in premium. Obviously, that is a lie. It specifically states that there is no corresponding increase in the premium...yet there will be an increase in the premium as of January 2010. The OPM is lying. This is FRAUD. George Husted Posted July 13, 2009 8:00 PM
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