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Articles | Lawmakers, NARFE Question Long Term Care Insurance Rate Hike in Senate Hearing
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Lawmakers, NARFE Question Long Term Care Insurance Rate Hike in Senate Hearing
October 15, 2009
A 25 percent premium increase in the Federal Long Term Care Insurance Program
(FLTCIP) could have been mitigated had earlier warning signs been heeded, said
National Active and Retired Federal Employees Association (NARFE) President
Margaret L. Baptiste yesterday to the Senate Aging Committee and the Senate
Subcommittee on the Federal Workforce.
"Lower-than-expected lapsed rates, which increase the number of individuals
likely to submit claims, and low interest rates, which reduce the expected
return on investments, were already an industry problem in 2003, according to
the nonpartisan Government Accountability Office," Baptiste said. "We have
to ask: 'when did these shortfalls become apparent in the FLTCIP' and 'when did
Long Term Care Partners [the program's third party administrator] and the Office
of Personnel Management (OPM) consider whether rates should be adjusted in
response?'"
NARFE's president described the outrage and anger she has heard from FLTCIP
enrollees since the rate hike was announced.
"Many of them have invested tens of thousands of dollars in their policies
and are confronted with choices that go from bad to worse," Baptiste
testified. She said that so-called "landing spots" developed
by OPM and Long Term Care Partners to help enrollees avoid paying the premium
increase should allow the insured to trade the automatic compound inflation
(ACI) option for an increased benefit amount. "Indeed, when coverage
was first offered, some financial planners suggested to certain clients that
they buy a benefit amount in excess of current costs as an alternative to the
compound inflation protection's hedge against inflation. In fact, those
who took this advice are not facing a rate hike," she said.
Baptiste testified that Congress must take steps to restore confidence in the
program. "It is our understanding that fewer insurance carriers competed
for the FLTCIP contract this year. Many of us are concerned that the
downturn in the industry and further consolidation could make matters worse in
2016 when the contract is re-bid. Consolidation means there is less
competitive pressure on carriers to offer the best possible product. For
that reason, now may be the time for Congress to consider whether the FLTCIP
should self-insure," she remarked.
Today, GovExec.com reports Senators blasted the long-term care insurance
premium hikes in yesterday's hearing, and that lawmakers said the promotional
materials for the FLTICP were misleading. (Click
here to read the full column)
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