September 16, 2009

Last May, when the Office of Personnel Management (OPM) signed a second 7-year contract with John Hancock Life and Health Insurance Company to provide insurance for the Federal Long-Term Care Insurance Program's (FLTCIP), it also announced changes to the benefits and premiums.

Upsetting to thousands of federal employees enrolled in FLTCIP was a premium increase of up to 25 percent -- specifically for those enrollees with the "automatic compound inflation" option who were under age 70 when they purchased the coverage and who choose to keep the same coverage they have now under the new OPM contract with the carrier.  

Many federal employees in that group of FLTCIP enrollees, whose premiums will increase on or about January 1, 2010,  have said they either overlooked the terms of the policy regarding the potential premium increases, or felt they were mislead in the language of the policy. 

As a result, federal employees and Congress have put OPM under pressure, as reported in the Washington Post, "to make the terms of the program it oversees more transparent, told Del. Eleanor Holmes Norton (D-D.C.) in a letter that the agency is requiring the program's insurance company to 'mention the conditions under which premiums may increase in a more prominent manner.'"

In June, Sen. Herb Kohl (D-Wis.) co-authored legislation to regulate the long-term care insurance industry.  Specifically, the bill (S. 1177) would increase consumer protections through measures such as stabilizing premium rates; creating criteria for the development and enforcement of model marketing language, disclosures and definitions used to solicit long-term insurance policies; and the training and certification of agents. 

OPM anticipates the new benefit options will be available for new applicants approved for coverage sometime this fall. At that time, the current benefit plan will be discontinued for new applicants. According to OPM, current enrollees will also have the opportunity this fall to change to the new benefit options or make changes to their coverage.

Related Articles & Resources

·  Information on the Federal Long-Term Care Insurance Program (FLTCIP) from OPM ·  Why Planning for Long-Term Care Is Important ·  What is Long-Term Care Insurance? ·  What Does Long-Term Care Cost?