Congressional Hearing on Long-Term Care Premium Spike Likely After November Election

A congressional hearing is tentatively scheduled for after the presidential election on the huge premium spike hitting federal employees and retirees with federal long-term care insurance coverage on Nov. 1.

A House Democratic aide said Republican leaders on the Oversight and Government Reform Committee indicated they would have a hearing on the issue in November or December during the lame-duck session. Government Operations Subcommittee Chairman Mark Meadows, R-N.C., is expected to hold the hearing, though his office did not immediately respond on Tuesday to an inquiry about it. Oversight and Government Reform Committee Chairman Jason Chaffetz, R-Utah, also did not respond to questions related to an investigation of the new Federal Long-Term Care Insurance Program premium rates, which on average will increase 83 percent, or $111 more per month, for many enrollees who opt not to change their coverage.

Federal employees and retirees with long-term care insurance have until Sept. 30 to view the new premium rates – announced in July – and make changes to their coverage before the increases kick in on Nov. 1. (For those paying premiums from their retirement benefits, the first payment with the increase will be reflected in the Dec. 1 annuity payment.) The rate increase, which will affect most enrollees, will vary widely between nothing and 126 percent, depending on an enrollee’s option under the FLTCIP, according to the Office of Personnel Management. Prospective enrollees can use the FLTCIP premium calculator to view current rates for new participants.

Despite outrage from enrollees and their advocates, lawmakers haven’t yet held any public hearings on 2016’s significant spike, even though OPM said as far back as April that premiums would rise sharply in the fall. Chaffetz, Meadows, and their Democratic counterparts Elijah Cummings of Maryland and Gerry Connolly of Virginia, sent a letter in August to FLTCIP contractor John Hancock requesting several documents and reports related to the program contract and the financial health of the FLTCIP. The committee is reviewing the information, which the contractor is still submitting, according to the Democratic staffer.

Asked whether lawmakers might introduce legislation in the near future on the issue, the aide said they were “reviewing the Hancock documents to determine whether the premium increases are justified, after which we will be in a better position to evaluate options.” Long Term Care Partners, which administers the FLTCIP, "is fully cooperating with Congress" regarding the FLTCIP, said a John Hancock spokesperson. The group said it did not know if there will be a congressional hearing or not.

OPM announced a new, seven-year contract in April that retained John Hancock, which last received the contract in 2009. (OPM has to issue a new contract every seven years for the Federal Long-Term Care Insurance Program.) The insurance company was the only one to place a bid for the contract, which remained open for one year. News of the 2016 premium spike added insult to injury: In 2009, FLTCIP enrollees saw their premiums jump by as much as 25 percent.

“John Hancock proposed higher premiums because recent analysis of the program, using updated assumptions based on identified trends and actual claims experience, indicated that the current FLTCIP premiums would not be sufficient to meet the future, projected costs of the benefits,” said a July 18 letter from John O’Brien, OPM’s director of health care and insurance, to enrollees.

“At least one of the options will allow the enrollee to reduce coverage in order to maintain the current premium at or below the current level,” the letter continued. “In general, enrollees will be able to choose: a premium-neutral option to fully offset the premium increase; a partial increase, accepting roughly half the premium increase along with moderate coverage reductions; or the full premium increase to retain the current benefits and inflation protection.”

Federal employee and retiree advocates have asked OPM to extend the Sept. 30 deadline to give FLTCIP enrollees more time to make a decision. “To date there have been no hearings at all on this issue and it appears that the earliest a hearing may occur won’t be until after the November elections,” said a Sept. 19 letter to Chaffetz and Cummings from Gregory Junemann, president of the International Federation of Professional and Technical Engineers.

IFPTE also asked the lawmakers to introduce a bill “to require OPM to negotiate a deal with the insurance provider that would allow federal employees to get at least some of the premium money back if they choose to exit the program.”

The National Active and Retired Federal Employees Association also has criticized the premium spike, and called for congressional hearings on it, nearly two months ago. “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 NARFE National President Richard G. Thissen in August. “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.”

Maryland Democratic Sens. Ben Cardin and Barbara Mikulski in late August asked OPM to extend by 60 days the Sept. 30 deadline for policy holders to assess their options and asked the agency to explain “how and why this happened” as well as what steps the agency was taking to prevent future similar price hikes. The two also requested that the Senate Homeland Security and Governmental Affairs Committee hold hearings on the rate increase in September. It was similar to a letter Connolly and Rep. Don Beyer, D-Va., sent OPM acting Director Beth Cobert in July.

Drew Pusateri, communications director for the Democrats on the Senate's Special Committee on Aging, said his office continues to discuss and gather additional information on the premium increase. 

OPM did not respond to questions from Government Executive about extending the Sept. 30 deadline for enrollees to choose long-term care insurance coverage. The majority and minority sides of the Senate Homeland Security and Governmental Affairs Committee also did not respond to questions about upcoming hearings.

For those having trouble making the decision on FLTCI coverage, Retirement Planning columnist Tammy Flanagan tackled the topic in August. Click here to read her column.

Of the approximately 274,000 current FLTCIP enrollees, about 10,000 will not be affected by the new premium increase. That group includes those who applied for coverage on or after new application rates went up on Aug. 1, 2015; enrollees who purchased FLTCI at age 80 or older; current enrollees in the FLTCIP’s alternative insurance program; and enrollees currently eligible for benefits or awaiting a decision on a pending claim.