Federal Insider: Costs skyrocket for feds' long-term care insurance

Federal employees and retirees who participate in the Federal Long Term Care Insurance Program (FLTCIP) are in for some serious sticker shock.

They pay the full cost of that insurance, and on Nov. 1, it will jump by up to 126 percent. The average increase will be 83 percent or $111 per month.

That leaves retirees livid.

“I am stunned at the extent of the increase and angry that this type of financial pressure is being placed on federal employees and retirees,” said Richard G. Thissen, president of the National Active and Retired Federal Employees Association (NARFE). “This situation should not have occurred and signals the need for change in the structure of the FLTCIP to prevent federal employees and retirees from ever facing such huge, unexpected increases again.”

Office of Personnel Management (OPM) officials said they worked with the John Hancock Life and Health Insurance Co., which provides the product, “to address the financial impact of the increases on affected enrollees.”

The result of that effort is unsatisfactory for enrollees who will face less coverage at the same price or the same coverage at a higher price. All but 10,000 of the 274,000 will see an increase.

Information from Long Term Care Partners, which administers the program, blamed the “significantly higher premiums” on a recent analysis of the program that indicated current fees “would not be sufficient to meet the future, projected costs of the benefits.”

That means “the actuaries got it wrong, and long-term care costs are rising faster than expected,” Thissen said. “That may be the case, but enrollees should not bear the financial responsibility for the mistakes of insurance actuaries.”

A NARFE statement added that OPM’s oversight of the program “has proven insufficient in providing predictable costs for federal employees and retirees…The result is premium increases for enrollees, who have no legal protection from this or future increases.”

Walton Francis, a health economist and an expert on federal health insurance programs, said “this never should have happened. The LTC (long term care) estimates should have been actuarially sound and accurate, taking into account far more carefully both the possibility of low interest rates, the low rate of return on premiums invested in bonds, and of adverse selection by persons most likely to need LTC.”