The lawmakers — Chairman Jason Chaffetz (R-Utah), top Democrat Elijah Cummings (D-Md.), Rep. Mark Meadows (R-N.C.) and Rep. Gerald Connolly (D-Va.) — have asked for the contract awarded to the company in April by the Office of Personnel Management. They also want contracts covering the previous eight years the company provided long-term care insurance for federal workers — and all documentation supporting John Hancock’s actuarial claims that it needed to hike rates to cover projected payouts for care.
The Aug. 23 letter to John Hancock Financial Services President Craig Bromley also asks for seven years of quarterly reports showing investment returns on the insurance program’s assets.
The premium increases, announced this month, are set to take effect Nov. 1 for policyholders to maintain their current levels of coverage. The new rates do not apply to those who have enrolled since Aug. 1, 2015, but they do apply to those who enrolled before that date.
Long-term care policies offer in-home, nursing home care and assisted-living benefits for retirees with certain physical or mental limitations.
Also yesterday, Maryland Democratic Sens. Ben Cardin and Barbara A. Mikulski wrote to Office of Personnel Management Acting Director Beth Cobert and declared themselves “flabbergasted” to learn of the rate hike.
Here’s an excerpt:
“…Many [current and retired federal workers] are on fixed incomes or coming off a three-year pay freeze and substandard pay raises since then. They are being asked to pay an additional $111 per month, on average. This is unacceptable, and so are the alternatives: a reduction in coverage to keep premiums at their current level, taking a ‘contingent benefit upon lapse’ for those who are eligible, or dropping coverage altogether.How could professional actuaries, financial advisors, risk managers, and other experts be so wrong? We are left to wonder whether the issuer, which has no competition, has engaged in a sort of classic ‘bait-and switch’ by luring customers with what appears to be affordable coverage and then jacking up the premiums. In either instance, the Office of Personnel Management (OPM) has failed to meet its oversight responsibility.”
Cardin and Mikulski asked the agency to extend by 60 days the Sept. 30 deadline for signing up for a plan.
Since the announcement, employees have been livid over what is apparently an unprecedented increase for a federal benefit.
The last premium increases in the program came in 2009.
Sam Schumach, an OPM spokesman, said Friday in an email that the agency and John Hancock “have recently conducted in-person briefings to congressional staff members on the Federal Long Term Care Insurance Program, processes, and options available to enrollees, including our work to mitigate the increased cost. OPM continues to work with members and their staff to provide them additional information as requested.”
Correction: An earlier version of this story incorrectly reported that the recent increases to long-term care insurance premiums do not apply to those who enrolled before Aug. 1, 2016. The new rates do not apply to those who have enrolled since Aug. 1, 2015 , but they do apply to those who enrolled before that date.