OPM suspends claims for federal long-term care insurance program | Federal News Network

Those looking to enroll in the Federal Long-Term Care Insurance Program (FLTCIP) will soon have to wait a few years before applying.

The Office of Personnel Management said it would suspend all new applications to the program from December 19. The suspension will last for the next two years, but those who apply before the start date may still have their applications accepted. During this period, current FLTCIP enrollees cannot apply to increase their coverage. The suspension will not otherwise affect the coverage of current enrollees.

The OPM said the suspension will give the agency time to try to mitigate rising FLTCIP premium costs, which have risen at high rates for many years.

More recently, in 2016, premium rates increased by an average of 83%, and up to 126% for some enrollees. The average monthly amount of the increase was $111. The increase caused more than 96,000 FLTCIP enrollees to keep their premiums the same by reducing their insurance benefits, OPM said in 2016 testimony. In 2009, FLTCIP enrollees saw their premium rates increase by an average of 17%, and up to 25% in some cases.

Individual premiums for FLTCIP are based on their age at the time of application. But premium rates at the time of application are not guaranteed for enrollees and are subject to change in the future.

The contract for the insurance program, with John Hancock Life and Health Insurance Company, typically lasts seven years before being renewed. The program normally gets a premium increase each time the contract is renewed. During the open period for new contract proposals earlier this year, only current underwriter John Hancock submitted a bid. The current FLTCIP contract will expire on April 30, 2023.

The upcoming suspension of claims will allow the OPM “to evaluate benefit offerings and establish sustainable premium rates that reasonably and fairly reflect the cost of the benefits provided,” the agency said in a notice dated 18 november. OPM added that it would only suspend applications when it was in the best interest of the program.

Many are eligible to apply for FLTCIP coverage, including federal employees, U.S. Postal Service employees and annuitants, as well as serving and retired uniformed service members and federally qualified relatives. John Hancock has always sponsored the program and Long Term Care Partners, LLC has administered it.

Currently, FLTCIP covers approximately 267,000 enrollees and the program receives approximately 6,000 new enrollees each year. That’s less than 0.1% of the 11 million people eligible for the program, excluding spouses and other qualified relatives.

Due to the low percentage of new applications, the OPM said it was unlikely that the FLTCIP would have a strong demand for registrations during the two-year suspension period. And eligible people can also consider other options while on suspension. These alternatives include investing in a long-term care annuity, purchasing a different product that combines a life insurance policy with long-term care insurance, or purchasing an insurance policy. short-term care insurance.

“OPM recognizes that if FLTCIP is suspended for a period, it would prevent currently eligible and newly eligible individuals from applying for coverage during the suspension, and individuals may have to wait to apply after the suspension period or seek alternate coverage,” said said the agency. .

The announcement also came just days after the OPM referenced the pause in accepting new FLTCIP applications in a separate notice on November 16, which reviewed the requirements and authorities for the suspension. from the program.

Some disagreed with OPM’s decision to suspend FLTCIP. A few comments from the public argued that the OPM must continually provide eligible individuals with the opportunity to enroll in the program. But the OPM disagreed with that assertion, pointing to the need to review the underlying program processes and premium rates that impact enrollees.

Others, like the National Association of Active and Retired Federal Employees (NARFE), did not necessarily disagree with the OPM’s decision.

“If they can’t provide a reasonable quote on how much something will cost, then they shouldn’t be selling it,” John Hatton, NARFE’s staff vice president for policy and programs, said in an interview. “Until they can find and secure a price for people – so they can plan and consider this against the alternatives – they should probably suspend coverage. We’ll have to see what happens with premium increases next year, how bad they are and what options people have.

In another attempt to stabilize premium increases, OPM launched a new plan and pricing structure for the program in 2019, called FLTCIP 3.0. The new version of the program included a “premium stabilization feature” (PSF), intended to help reduce future premium increases in FLTCIP.

Despite these efforts, a Sept. 12 audit report from the OPM’s Office of Inspector General said the FLTCIP is currently not funded to handle expected future claims at current premium rates. The report adds that FLTCIP enrollees will likely see a big premium hike next year to make up for the shortfall.

“If the program continues with no increase in premiums or decrease in benefits, it is expected that the fund will be depleted by 2048, at which time the contractor would be obligated to pay future benefits under the fully insured arrangement. “, says the report. “Our concern is that the contractor will likely request another significant premium increase to help eliminate its risk of paying future benefits, creating another unexpected hardship for program participants.”

The OPM has taken some steps to try to address the report’s concerns, such as asking John Hancock to stop actively marketing potential applicants and informing enrollees of any possible premium increases and benefit cuts in the near future, the report says. But he also recommended that the agency and contractor improve communications with enrollees and develop a corrective action plan to mitigate the high premium increases.

During the program audit, OPM’s OPM found that John Hancock adjusts rates for its business customers every three years, instead of every seven years. The report says the contractor should use such short contract periods for the OPM program, or adjust rates more frequently, to reduce steep premium increases and benefit reductions.

“We are open to other ideas on how best to prevent these actions from happening again with each new seven-year contract period,” the report said. “OPM and the contractor are strongly encouraged to research this issue and come up with a better solution that helps mitigate the risk of significant rate increases every seven years.”