OPM Suspends Applications for Federal Long-Term Care Insurance Program
Those considering joining the Federal Long-Term Care Insurance Program (FLTCIP) may have to wait several years before applying.
The Office of Human Resources said it will suspend all new applications to the program starting Dec. 19. The suspension will last for the next two years, but those who applied before the start date may still get their applications through, while his current FLTCIP registrant is…
Those considering joining the Federal Long-Term Care Insurance Program (FLTCIP) may have to wait several years before applying.
The Office of Human Resources said it will suspend all new applications to the program starting Dec. 19. The suspension will last for the next two years, but those who applied before the start date may still have their applications passed.In the meantime, his current FLTCIP subscribers will not be able to apply for increased coverage. you can’t. Otherwise, the suspension will not affect current subscriber coverage.
OPM said the suspension could give agents time to mitigate the rising costs of FLTCIP premiums, which have risen at a high rate over the years.
Most recently, in 2016, premium rates Average increase of 83%, up to 126% for some subscribers. The average monthly increase was $111. This increase allowed more than 96,000 of his FLTCIP participants to keep their premiums the same by reducing their benefits. OPM said in a 2016 testimonyIn 2009, FLTCIP subscribers saw premium rates 17% increase on averagein some cases as high as 25%.
Individual FLTCIP premiums are based on age at time of application.However, the premium rate at the time of application is not guaranteed Subject to change in the future.
Contracts for insurance programs with John Hancock Life and Health Insurance Company generally run for seven years before being renewed. The program generally increases premiums each time the policy changes. During the open period for new contract proposals earlier this year, only current underwriter John Hancock submitted a bid. His current FLTCIP contract expires on his April 30, 2023.
The moratorium on future applications will allow the OPM to “evaluate the benefits provided and establish sustainable premium rates that reasonably and fairly reflect the cost of the benefits provided,” it said. the agency said. November 18 noticeOPM added that it only suspends applications when it is in the program’s best interests.
Many people are eligible to apply for FLTCIP coverage, including federal employees, U.S. Postal Service employees, pensioners, uniformed service active and retirees, and eligible federal relatives. John Hancock has historically sponsored the program and it is managed by Long Term Care Partners, LLC.
FLTCIP currently serves approximately 267,000 registrants, and the program has approximately 6,000 new registrants each year. That’s less than 0.1% of her 11 million people covered by the program (excluding spouses and other eligible relatives).
Due to the low rate of new applications, the OPM said FLTCIP is unlikely to see increased demand for registrations during its two-year suspension. Eligible individuals may also consider other options during the suspension. , or purchase short-term care insurance.
“OPM states that if the FLTCIP is suspended for a period of time, currently eligible and newly eligible individuals will not be able to apply for insurance during the suspension and individuals will either wait to apply after the suspension period or seek alternative insurance. We acknowledge that we may need to look for,” the agency said.
The announcement comes just days after OPM said it was suspending acceptance of new FLTCIP applications. Separate notice on November 16reviewed the requirements and privileges for suspending programs.
Some objected to OPM’s decision to suspend FLTCIP. Several comments from the public argued that OPM should continue to offer eligible individuals the opportunity to enroll in the program. However, OPM disagreed with this contention, noting the need to review the basic program processes and premium rates that affect subscribers.
Other groups, such as the National Association of Active and Retired Federal Employees (NARFE), did not necessarily disagree with OPM’s decision.
“If you can’t give a reasonable estimate of the cost of something, don’t sell it,” John Hatton, NARFE’s vice president of policy and programs, said in an interview. “Until they can find and insure people’s prices, which means they can plan and consider alternatives to it, they should probably suspend coverage. We’ll have to see what happens in , how bad it is, and what options people have.”
In another attempt to stabilize premium growth, the OPM New plans and pricing For the 2019 program called FLTCIP 3.0. The new version of the program included a “Premium Stabilization Feature” (PSF) intended to limit future premium increases for FLTCIP.
Despite these efforts, September 12 audit report The Office of the Inspector General of OPM said FLTCIP is currently not being provided funding to process expected future claims at current premium rates. The report adds that FLTCIP members are likely to see significant premium increases next year to offset the deficit.
“If the program continues without premium increases or benefit reductions, the fund is projected to be depleted by 2048, at which point contractors will have to pay future benefits under fully insured contracts. ,” the report said. “Our concern is that contractors are likely to seek even more significant premium increases to eliminate risk in paying future benefits, thereby giving program participants another unexpected Difficulties arise.”
OPM has taken several steps to address the report’s concerns, including instructing John Hancock to stop aggressively marketing to prospective applicants, and will continue to reduce premium increases and benefits in the near future. Informed policyholders of potential reductions. However, it also recommended that agents and contractors improve communication with policyholders and develop corrective action plans to mitigate significant premium increases. increase.
During an audit of the program, OPM’s OIG discovered that John Hancock was adjusting rates for commercial customers every three years instead of every seven years. According to the report, the contractor should use similarly short contract terms for his OPM’s programs or adjust rates more frequently to reduce large increases in premiums and cuts in benefits.
“We are open to other ideas on how best to stop these behaviors from recurring with each new seven-year contract term,” the report said. and contractors are strongly encouraged to investigate this issue and come up with a better solution that will help mitigate the risk of significant rate increases every seven years.”
https://federalnewsnetwork.com/pay-benefits/2022/11/opm-to-suspend-applications-for-federal-long-term-care-insurance-program/ OPM Suspends Applications for Federal Long-Term Care Insurance Program