Health Care Happenings

Earlier this week, I attended a joint hearing of the Special Committee on Aging by the Subcommittee on Oversight of Governmental Management, The Federal Workforce, and the District of Columbia, Committee on Homeland Security and Government Affairs. This was chaired by Senator Akaka of Hawaii. The purpose of the hearing was to hear witnesses testify on the rescent decision by the federal government’s Office of Personnel Management’s (OPM) to raise one of their long-term care insurance product’s premiums by as much as 25%. This unexpected rise in premiums affects approximately 144,000 individuals holding a policy with this particurlar option. The option is the Automatic Compound Inflation Option, or ACI.
Over seven years ago, OPM provided an insurance product for long-term insurance through a contract with John Hancock and Metropolitan Life as the insurance underwriters. This product was designed to help protect enrollees against the high costs of long term healthcare. Most Federal and Postal Service employees and retirees, active and retired members of the uniformed services and qualified relatives are eligible to apply for the insurance coverage. The program offered flexible benefit options to meet the diverse needs of the Federal family. The covered benefits included at-home formal and informal caregiver services, adult day care, assisted living facility care, hospice care etc.
Many individuals selected the aforementioned ACI option. This option stated in the published literatureby OPM at the time, that “Your premium will not change because you get older or your health changes or for any other reason related solely to you”. Which clearly implied to the enrollees that their premium’s would remain static and their benefits the same over the course of time if they paid their scheduled premiums on time. However, this year that proved not to be the case. OPM, due to some faulty assumptions and calculations on inflation, discovered that without an adjustment, the long term program would face a projected shortfall in funding for enrollees with the ACI option. Hence, their decision to raise the premiums. Their “original estimates appear inadequate”.
I can tell you that the Senate Sub-Committee was incensed with OPM that this could have occured and placed so many well intended federal retirees at risk! A representative from John Hancock Insurance Company also testified with proposed amends for these individuals, but these were met with a tepid response by the Committee members.
This brings us to some rescent proposed legislation by Senator Kohl D-WI. “the Confidence in Long Term Care Insurance Act of 2009″. This bill is designed to strengthen the consumer protections afforded to purchasers of long term care insurance, specifically by implementing protections, regulations, data collection, providing criteria for the creation of a “model” disclosure form which will provide consumers with consistent information regarding the insurance product which will be in an easily understandable format, as well as other protections for consumers.
In summary, I put this out to our members for their awareness, and suggest that we all become as educated as we can in the planning of our future long term needs.