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CalPERS' LTC Rates Spurt 33%

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The California Public Employees’ Retirement System is raising premiums for its self-insured group long term care insurance plan by an average of 33.6%.

The increase was needed to avoid a projected $68 million deficit for the program within 60 years, according to actuarial projections.

The CalPERS plan, begun in 1995, currently has 174,000 members, all state and local government employees. CalPERS officials did not estimate how many might drop out of the plan due to the rate increase, which covers policies issued in 2004 and earlier. Rates for policies issued in 2005 and afterward would be unchanged, according to a report to CalPERS’ Health Benefits Committtee by the agency’s Office of Health Plan Administration.

The increase follows recommendations to CalPERS from consulting actuaries Mercer Oliver Wyman, Milwaukee, and United Health Actuarial Services Inc., Carmel, Ind., which came to strikingly similar conclusions about the financial health of the state LTC insurance plan.

“This proposal aims to build program reserves without placing increased cost burden or disincentives for younger or newer policyholders,” says Richard Krolak, chief of health plan administration for CalPERS, in a report to members of the Health Benefits Committee.

Members unwilling to take on the increased premiums will be given the option of trading down to a less expensive policy, such as one with a lower daily benefit or to one offering a shorter benefit period, Krolak says.


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