CalPERS Proposes 85 Percent Rate Increase for Long-Term Care
Officials with CalPERS, California's Public Employees’ Retirement System, are getting ready to impose an 85 percent insurance premium increase. The rate hike would affect long-term care insurance holders.
Long-term care insurance covers things like nursing home stays and assisted living facilities. And according to Ann Boynton, CalPERS deputy executive officer, the program is running out of money.
"The initial rates our policyholders were paying were not adequate over the long run," Boynton says. "We've had higher than expected claims and of course, we suffered greatly when the stock market tumbled in 2008."
The 85 percent hike would take effect in 2015 and raise annual premiums by hundreds, or in some cases, thousands of dollars. Boynton says to help ease the pain, the agency plans to phase in the increase over two years, and offer a less comprehensive policy option.
Harvey Robinson is president of the Retired Public Employees Association of California and says the increase is unfortunate.
"We have members who are in their 70s, 80s and they're living on a fixed income," Robinson says. "For those who might feel forced to terminate because of this rate increase, it's probable they would not be insurable by another company."
A CalPERS committee is expected to vote on the rate hike Tuesday.