Following last week's disclosure that rates for the Federal Long Term Care Insurance Program were rising an average of 83 percent this year, Virginia congressmen Gerry Connolly and Don Beyer have some questions for the Office of Personnel Management.
The two Democrats sent a letter to Acting OPM Director Beth Cobert on July 25, insisting that the agency provides more information about the stark jump in premiums.
OPM announced the new rates last week after they had previously secured a new contract with insurance provider John Hancock.
The company has managed the FLTCIP since its inception in 2002, but the last two seven-year contracts signed to manage the insurance programs have seen rate increases.
"For those on a fixed or limited income, such an increase is simply unaffordable," the Connolly-Beyer letter said. "By comparison, the last time OPM awarded the seven-year contract to John Hancock Life and Health Insurance Company, premiums rose on average 17 percent, with some as high as 25 percent. It merits a reconsideration of how we structure FLTCIP so that price spikes at this extreme can be avoided."
Part of the reason for the premium hikes, OPM said, was that beneficiaries of long-term insurance programs were living longer, necessitating more use of insurance benefits.
But the program is also managed by an actuary, which uses investment strategies to help offset risk and future premium costs. Those investments, it appears, haven't performed as expected.
Connolly and Beyer asked OPM to explain the following:
- how the rates are calculated
- what outreach OPM has performed to notify beneficiaries of the changes
- how OPM and John Hancock are working with beneficiaries to help mitigate the cost of the premium spikes
- What benchmarks are incorporated to ensure projected values made by the actuary match actual value of the investments
FLTCIP beneficiaries have until Sept. 30 to decide whether they want to pay the higher premiums or reduce their coverage.