Federal Long Term Care Insurance (FLTCIP) premiums are about to go through the roof! According to the OPM, John Hancock Financial Services (the carrier of this insurance coverage) proposed a premium rate increase of an average of 83% and as high as 126% for the new year. This new rate would mean that enrollees would have to pay an extra $111 per month to maintain their current coverage and will affect more than 274,000 beneficiaries!
Lawmakers and Senators alike are calling for hearings to find out why there is such a massive increase in premiums. Many congressmen and women have sent letters to the OPM to request these hearings. This increase comes after a new seven-year contract was awarded to John Hancock Financial Services (who previously held the contract). John Hancock says that the main reasons for the spike in premiums is that beneficiaries are living longer and the current premiums would not be sufficient to cover the future projected costs of benefits.
Richard Thissen, National President of the National Active and Retired Federal Employee Association (NARFE), wrote,
“I am stunned at the extent of the increase and angry that this type of financial pressure is being placed on federal employees and retirees. This situation shouldn’t have occurred and signals the need for change in the structure of the FLTCIP to prevent federal employees and retirees from ever facing such huge, unexpected increases again. This isn’t what NARFE envisioned for the program 16 years ago when the Long-Term Care Security Act was signed into law by president Bill Clinton. This massive 83% increase will come as a shock to more than 274,000 federal employees and annuitants and their spouses enrolled in the Federal Long Term Care Insurance Program (FLTCIP). They are now faced with difficult choices—pay substantially higher premiums; reduce coverage substantially; or, in the worst-case scenario, drop the coverage some have paid into for more than 14 years.”
This extreme rise in rates is causing enrollees to make the tough decision of paying more, reducing coverage to keep their premiums the same, or drop coverage altogether. Participants must make this choice by September 30, 2016. The new coverage will go into effect November 1, 2016, and those higher premiums will start costing you at that time. If you are paying from annuities, the first increased payment will be December 1, 2016.
