CalPERS is preparing to impose a rate hike of up to 85 percent on most of its long-term care insurance policyholders.
The rate hike would begin in 2015 and would be phased in over two years. It would affect three-fourths of the 150,000 CalPERS members who've bought long-term care policies, which pay for stays in nursing homes, convalescent homes and so on.
The proposed increase is somewhat higher than the 75 percent rate hike contemplated by CalPERS officials the past several weeks. The earlier estimate "was a work in progress," CalPERS spokesman Bill Madison said Wednesday.
As an alternative, CalPERS staff said the pension fund could raise rates 79 percent but do it in one year instead of two.
Either way, CalPERS hopes the rate hike will "stabilize" the long-term care insurance program, which has been hit with higher-than-expected claims and lower-than- expected investment returns. The program, unlike CalPERS' pensions, gets no taxpayer funding.
The hike should be enough so "we don't have to come back years from now" with another increase, Madison said.
The staff proposals will go to CalPERS' pension and health benefits committee for a vote Tuesday. The full governing board of the California Public Employees' Retirement System will take up the issue a day later.
Similar problems have plagued long-term care programs in the private sector. Several big private insurers have dropped out of the market.
CalPERS hasn't sold any new policies since 2008 and won't resume selling until the program is on more solid financial ground.
As part of its efforts to prop up the program, CalPERS also will offer a less expensive policy that provides 10 years of benefits. Currently, most of the members have lifetime coverage.