Buyers of Long-Term Care Insurance Riled by Premium Increase

It's enough to take the "J" out of joy.

That leaves oy, as in "oy vey," which expresses the exasperation and dismay retired and active federal employees, including Donna and Chester Joy, felt when they learned their long-term care premiums are increasing significantly.

Like many others, when the Joys signed up for the Federal Long Term Care Insurance Program in 2003, they had the clear impression their premiums would not rise. But recently, the Office of Personnel Management announced fees for about 150,000 members of the plan will jump between 5 and 25 percent.

The Joys, who are being hit with the full bump, are livid.

"That just wasn't the deal we signed," Chester said by phone as they drove across Tampa Bay to visit Donna's parents. "I think we're being grossly cheated."

Both 62 years old, they balance their anger with facts and figures. In a series of letters to Del. Eleanor Holmes Norton (D-D.C.), the Southwest D.C. residents detail why they feel like marks in a scam. They said they've paid many thousands into the program over 6 1/2 years and now face a steep increase in monthly premiums.

Page 21 of their benefits booklet, issued by the John Hancock and MetLife insurance companies, says: "We may only increase your premium if you are among a group of enrollees whose premium is determined to be inadequate. While the Group Policy is in effect, OPM must approve the change."

Donna told Norton "there needs to be disclosure of this 'inadequate' calculation. Otherwise, how can current and potential policy holders have any hope of understanding the range of future premium payments that they are committing themselves to paying during retirement when they are living on a fixed income?"

Norton said she asked the House subcommittee on the federal workforce, Postal Service, and the District of Columbia to look into the issue.

Laura J. Lawrence, chief of the OPM group that deals with long-term care insurance, said when the premiums were set "there were certain assumptions used," such as the return on the program's investment and the number of enrollees who remain insured, "and those assumptions are no longer sufficient."

More than an assumption, the Joys felt they had a promise that under the automatic compound inflation option they selected, premiums would not increase. The OPM says it is explaining options, including maintaining the current premium but with decreased benefits, in letters to customers.

A May 1 news release from the OPM buries the lead by putting information about the increase halfway into the document. Two paragraphs later, the release makes it sound as if policyholders should be happy they didn't get pumped for more money earlier: "This increase will be the first since the Program began seven years ago and is consistent with increases in other public sector long term care insurance programs since 2002."