CalPERS troubled long-term care insurance program has reopened to new applicants, ending a five-year hiatus marked by heavy financial losses and the announcement of a significant rate increase.
The pension fund said Thursday its taking applications for a series of new insurance plans designed to be affordable. Long-term care pays for such things as stays in nursing and convalescent homes.
Following years of hefty losses, the California Public Employees Retirement System closed the program to new applicants in 2008. In 2012, the fund imposed an 85 percent rate increase for most of its existing policyholders, taking effect in 2015.
The rate hike affects older plans, which carry unlimited lifetime benefits and protection against inflation.
The newly designed plans now on sale offer more limited benefits. Applicants can select programs that cap benefits at three, six or 10 years, said CalPERS spokeswoman Jeanie Esajian.
None of the older plans that were offered in the past are available anymore, Esajian said.
When it announced the big rate increase in 2012, CalPERS suggested that existing policyholders could switch to the newer, more affordable plans, and spare themselves the big rate increase. Esajian said CalPERS is also working on revisions to the existing policies so customers can change the parameters of their plan to avoid the rate increase. Those changes havent yet been finalized.
In any event, Esajian said policyholders thinking of switching altogether to the newer policies should wait until theyve completed the underwriting process and been approved for a new plan before they drop their old policy.
Dont cancel the one you have until youve been accepted into the other one, she said.
CalPERS actually reopened enrollment in a soft opening, without publicity, in late December. Some 127 applications have been submitted since then.
The pending 85 percent rate increase sparked a class-action lawsuit last August against CalPERS on behalf of the 125,000 policyholders affected by the rate hike. They said the increases, which could mean hundreds of extra dollars a year in premiums for some customers, violate promises CalPERS made years ago to hold rates steady. The case is pending in Los Angeles Superior Court.
CalPERS long-term care insurance is available to all current and retired California public employees, spouses, parents, parents-in-law, adult children and adult siblings between the ages of 18 and 79. Employees dont need to be a member of CalPERS.
Information is available at https://www.calperslongtermcare.com/.
Call The Bees Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.