Over 110,000 policyholders with CalPERS are receiving the news that there will be an 85% hike in the rate for their long term care. Although the rate hikes won’t be occurring until 2015 and are being said to be inevitably necessary in order to keep the $3.6 billion insurance fund intact, there are many who are upset about the rate hike and are questioning whether or not they will be able to afford it. The CalPERS program has been the target of many high claims, low investment returns, and horrible pricing – similar to what many plans sold by private insurers are also experiencing. Insurance regulators throughout the states have said that one of the reasons this is occurring is because insurers have underestimated the cost of care and the amount of customers who would still be using these policies. The plans are usually used to pay for home health care visits, residential care, and nursing home care, which is not covered by Medicare – but in turn, many insurers have not expected that the people who hold these policies would be living longer and would be requiring additional care to meet their needs.
CalPERS runs one of the second largest long term care plans within the nation. It has said that it would provide policy holders with a few different ways that they would be able to adjust their benefits in order to try to ‘avoid’ the increase of the premiums, though in some sense, the higher rates are almost inevitable. One suggestion is that customers will be able to drop the option of having benefits that will increase automatically with inflation; they can also say no to lifetime benefits in order to ensure that they have coverage for only a smaller period of time, which might be more affordable. The company has said that it would request for policyholders to be able to make a decision about these options and the changes by June 30th of this year. However, with over 148,000 policy holders – many of which are seniors – this may not be the most well-received option.
It has been said that some of the policy holders will be experiencing a 5 percent increase in their rate during this year alone. Most of them will experience the 85% increase during 2015, however. The increase is primarily set to affect those who invested into the company’s policy from the years 1995 to 2004 – policies which were all set to provide lifetime benefits. More recently, the CalPERS board of administration said that they approved plans to open enrollment again by the end of the year. This would allow them to offer new policies which may be more beneficial to those who are seeking coverage and do not want to deal with the high rates of their current policies within the program.