The Bee and other media appear to be pandering to the sensational ("CalPERS accused of flimflam," State Worker, Feb. 28) when it comes to their coverage of premium increases in the CalPERS Long-Term Care Program. It is an unfortunate tactic on an issue so vitally important.
To clarify, the LTC program is a voluntary, self-funded, not-for-profit insurance program funded entirely by policyholder premiums and investment earnings. It is not structured as a pension program and it is not a pension benefit. It is an insurance program.
It is correct that the CalPERS Board of Administration approved an 85 percent premium increase effective in 2015, for early purchasers of specific plan designs. Our experience is similar to other LTC insurance providers.
What is missing in media coverage is that at the same time the board also approved new alternative benefit plans that give CalPERS LTC policyholders options for relief from the financial impact of the 2015 rate increase.
These new alternatives will allow policyholders to avoid further premium increases by converting to policies that will still provide adequate protection and possibly lower their premiums. Policyholders will receive complete descriptions of their options in the coming months.
We did not come to the pending premium increase lightly, nor did we take action without considering the impact on our policyholders. We consulted with member and policyholder constituent groups about the impacts of the increase on policyholders before taking final action. We made the very tough decision that rate increases were necessary only after thoughtful, deliberate analysis and only after we identified viable options to help policyholders avoid or mitigate the increases.
We are offering our affected policyholders variations of three, six and 10-year policy options. These alternatives will allow them to retain their current earned daily benefit amount, a very important feature because many of our policyholders have increased the value of their daily benefit amount over the years.
We feel these new benefit plan options for our policyholders are a reasonable and responsible change, especially for those with lifetime benefit policies. With the average length of stay in a care facility about 3 1/2 years, we think the 10-year conversion option will provide affordable and adequate coverage when our policyholders need it, as well as peace of mind.
We took great care to listen to the concerns of our policyholder constituent groups and weighed staff proposals for these options carefully before making our decision, and we are taking these actions to ensure the sustainability of the Long-Term Care Fund and the availability of benefits for our policyholders now and into the future.