Premiums may increase due to enrollment and claims patterns. Image: Mike Flippo/Shutterstock.com
By: FEDweek StaffOPM has paved the way to suspend enrollments in the Federal Long-Term Care Insurance Program and to “reprice” — almost certainly meaning “raise” — premiums.
Under final rules published in the November 16 Federal Register, OPM could suspend both new enrollments and requests by current enrollees to increase coverage, after giving 30 days of notice of that intent. The suspension could last as long as 24 months, with OPM having discretion to continue it indefinitely in 24-month increments.
OPM said it would do so “for example, in order to allow for adjustment to underwriting processes or to reprice premium rates after a review of actuarial assumptions.” That would allow OPM and the carrier “to agree on underwriting changes or new premium rates that reasonably and equitably reflect the cost of the benefits provided as required by the FLTCIP statute.”
While the final rules do not announce that such a review lies just ahead, OPM said in issuing proposed rules in June that it “has determined that there is a strong likelihood” that premiums will need to be “revised” following a review of the program’s projected long-term income and outgo.
FLTCIP premiums are based on age when the person buys the coverage and on choices including the daily benefit amount, the maximum length of the benefit period and inflation protection. Premiums may increase due to enrollment and claims patterns, however.
OPM has cited that as justifying several increases over the last decade, in some cases affecting only future enrollees but in others also affecting current enrollees. As each successive seven-year contract has expired, certain benefit options also have been eliminated for new enrollees in the new contracts. The current contract expires in 2023.
The inspector general’s office at OPM recently reported that based on its own review of the program’s finances, enrollees “will likely see a large increase in premiums and/or decrease to benefits for the next contract period.” It cited lower long-term interest rates than previously assumed and “higher claims utilization due to longer life expectancies.”
The Federal Register notice also empowers OPM to end the policy of allowing newly hired employees and their spouses to apply within 60 days using only “abbreviated” underwriting—which asks fewer questions about the applicant’s health and ability to carry out daily activities than does “full” underwriting that applies at other times. OPM said that instead, it would announce “special application periods” in which abbreviated underwriting would apply.
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See also,
FEHB: Federal Benefits Fast Facts
FEHB Open Season Ahead – Time to Shop
Watch for ‘Significant’ FEHB Plan Changes, OPM Says
Enrollee Share of FEHB Premiums to Rise 8.7 Percent on Average for 2023
FERS Retirement Planning Bundle: 2022 FERS Guide & TSP Handbook
