Angry members of Congress are urging the Office of Personnel Management to delay a major price hike in the long-term-care insurance program for federal employees and retirees.
Placing a good portion of the blame for the cost increase on the Office of Personnel Management (OPM), three Democratic lawmakers expressed their “outrage over the dramatic premium increases,” in a letter sent Friday to acting OPM director Beth Cobert. Reps. Chris Van Hollen (Md.), Gerald E. Connolly (Va.) and Don Beyer (Va.) signed the letter.
OPM was not swayed. The agency said it “shares the concerns expressed by the members of Congress and the Federal employees,” but they’ll get no more than that. OPM will not extend the Sept. 30 deadline for customers to make a decision about their long-term-care policies under the higher pricing.
But would a delay make a real difference?
“Postponing it will just delay the inevitable,” said Martha Sewell, 66, a former Architect of the Capitol employee from Falls Church. “Why were not small increases made in a more gradual manner?”
The lawmakers criticized the agency for approving the increase, which will take effect in November. The increases will average 83 percent, but could go as high as 126 percent. Federal long-term care premiums are not subsidized. Customers pay the full charge to John Hancock Life and Health Insurance, which provides the insurance.
The letter quoted promotional literature sent to them in 2002: “Your premiums can change only with OPM’s approval and only on a group, not an individual, basis.” That assertion makes the huge hike “particularly egregious,” the lawmakers wrote.
This leaves policyholders with few choices, none good. Among them: Maintain the current level of coverage at a much higher price, maintain the current premium for an inferior product, fashion a combination of those two or abandon the policy and lose the premiums already paid.
There also is the little-known paid-up option that would allow most customers to stop paying, while getting reduced benefits.
Complaining that “our constituents were blindsided,” the letter said the policyholders “are now faced with paying the increased premium or reducing or even dropping coverage that some have held since the program began more than a decade ago.”
OPM rejected the call for a delay, saying “any additional delay of the increase would result in enrollees ultimately paying a greater premium rate, since the increase would need to take into account and correct for any additional period of time with inadequate premiums.”
Samuel Schumach, OPM press secretary, explained: “The new pricing adjusts for changing trends in morbidity and mortality rates as well as expected return on investments and these increases are necessary to be sure that OPM is meeting its statutory requirement for FLTCIP (Federal Long Term Care Insurance Program) premiums to reasonably and equitably reflect the costs of the benefits provided.”
This provides little comfort to the participants, about 270,000 of them, and the representatives who feel their questions have not be adequately answered.
“Since this announcement was first made in July, we have not received acceptable answers for why changes in actuarial projections occurred so suddenly as to justify this dramatic premium hike, why the Office of Personnel Management (OPM) failed to provide advance notice of the impact of these projections to enrollees, and how OPM plans to improve oversight of the program to prevent sudden hikes in the future,” the lawmakers wrote.
While the lawmakers demanded an extension, the National Active and Retired Federal Employees Association (NARFE) has changed positions on that point. Saying “we feel an extension is no longer necessary,” NARFE did an about-face after getting additional information.
After the Sept. 30 deadline, enrollees will receive individualized packets with their new premiums and coverage, Jessica Klement, NARFE’s legislative director, explained. They will then have 30 days to change plans.
“With packets mailed starting in October, the 30-day time period will start after we know the FEHBP (Federal Employees Health Benefits Program) premium increase next year and the annual cost-of-living adjustment to Social Security benefits and federal annuities,” Klement said. “Given that by Oct. 18 federal employees and retirees will have all the health care information necessary to make informed decision regarding long term care, Medicare and FEHBP, we no longer feel an extension is necessary. However, we will not discourage OPM or Congress from granting an extension, as many enrollees have asked for one.”
NARFE remains upset with the price hike, as is Jerome Duncan of Annandale, who put in almost 34 years with the government before retiring.
“People need to be fired, from the very top on down through the first management levels,” he said. “I think that OPM did not do adequate research on the providers of LTC and they allowed them [Hancock] to get away with an outright theft.”
Anger like that could be vented at a congressional hearing that some members of Congress have suggested. None is currently scheduled, but word on Capitol Hill is a hearing might be called for November.
That, of course, would be too late to do anyone any good.