Most enrollees will see their rates spike unless they make changes to their coverage by Sept. 30.
Some federal employees and retirees with long-term care insurance could see a triple-digit increase in their new premium rates, which take effect on Nov. 1.
The rate increase, which will affect most enrollees, will vary widely between 0 percent and 126 percent, depending on an enrollee’s option under the Federal Long-Term Care Insurance Program, according to the Office of Personnel Management. The average rate increase will be 83 percent, or $111 more per month, OPM said, for enrollees who opt not to change their coverage.
From Monday through Sept. 30, federal employees and retirees with long-term care insurance will be able to view the new premium rates for the program and make changes to their coverage.
“To help ease the burden of the rate increase, all affected enrollees will receive a 2016 Enrollee Decision Period offer package with personalized options to reduce the impact of their rate increase, or eliminate it all together, by reducing their plan coverage,” said an OPM statement.
The National Active and Retired Federal Employees Association criticized the premium spike.
“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 a statement. “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.”
Thissen said the change would force FLTCIP enrollees to make difficult choices: either pay significantly more for coverage, reduce their coverage, or drop it altogether.
The new, seven-year contract – announced in April -- retained John Hancock, which last received the contract in 2009. The insurance company was the only one to place a bid for the contract, which remained open for one year. OPM has to issue a new contract every seven years for the Federal Long-Term Care Insurance Program. 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 director of health care and insurance, to enrollees.
“At least one of the options will allow the enrollee to reduce coverage in order to maintain the current premium at or below the current level,” the letter continued. “In general, enrollees will be able to choose: a premium-neutral option to fully offset the premium increase; a partial increase, accepting roughly half the premium increase along with moderate coverage reductions; or the full premium increase to retain the current benefits and inflation protection.”
Click here for a fact sheet on the 2016 open season and some frequently asked questions.
Current FLTCIP enrollees will have until Sept. 30 to make any changes to their existing coverage. Prospective enrollees can use the FLTCIP premium calculator to view current rates for new participants.
Of the approximately 274,000 current FLTCIP enrollees, about 10,000 will not be affected by the new premium increase. That group includes those who applied for coverage on or after new application rates went up on Aug. 1, 2015; enrollees who purchased FLTCI at age 80 or older; current enrollees in the FLTCIP’s alternative insurance program; and enrollees currently eligible for benefits or awaiting a decision on a pending claim.
Human resources specialists can register for a July 21 webinar for training on the 2016 open season for FLTCIP enrollees.
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