A key CalPERS committee Wednesday approved a plan to reopen its long-term care insurance to new policyholders, widen the eligibility pool and introduce a new, cheaper benefit program.
The CalPERS program has struggled for many years due to loose underwriting standards, a high number of claims and poor investment returns. Many private insurers fell victim to similar trends, but had a larger pool of policyholders to share the risk. CalPERS has struggled more acutely in part because because it restricted its policies to members. About 150,000 of them hold policies.
The fund stopped taking new long-term care insurance applicants in 2009 to stem losses that threatened the program's viability. But officials Wednesday said that premium increases, an expected migration to a new, cheaper policy and other factors are strong enough medicine for the ailing program that it can again take applications at the end of this year.
The strategy includes tougher underwriting standards and opening the program to adult children of CalPERS members, assuming that the Legislature changes state law to allow it. Applicants could enroll any time, not just during a specified time of the year.
"We will be getting healthy lives in these age groups as well as even perhaps younger lives if we open it up to adult children," CalPERS staff member Kathy Donneson told the fund's board Wednesday. "So we can grow the (risk) pool."