Long-term care insurance hikes worry Californians

If you’re living in California, the news that CalPERS may be increasing their rates for long-term care insurance may not be good news. A March 11 news report shows how the insurance company, which is better known as the California Public Employee’s Retirement System, is starting to raise its prices, putting nearly 41,000 people to determine if they want to continue their coverage. According to the news, this increase will be a 5 percent increase in 2014 and another 85 percent hike over two years: 2015 and 2016.

The only way those receiving this kind of long-term insurance can prevent the hike in their payments is to accept less coverage, and that’s a problem for many people who hope this insurance will cover them in the future. A decision has to be made by May 9, and that means these people will need to determine if they will take a 5 percent premium increase or not; they have the option to defer making the decision on the 85 percent hike until next year.

It’s been said that the major increases happened because of fund investment losses in 2008 and because of higher-than-expected claims. Those claims, which are expected to be covered, allegedly wrecked the program. This rate increase is a serious shock to around 144,000 consumers who got this long-term insurance simply to protect their savings from being spent on nursing care and other support.

Right now, the way the program works is that each participant can claim long-term care benefits, but only up to a maximum daily benefit amount. They are unable to claim more, even when it’s needed. If they spend less money, it may last longer. But now, it’s unclear just exactly what will happen, and the major increase may turn some people away from the system altogether.

Source: 
Sacramento Business Journal, “CalPERS plans big rate increase for long-term care insurance” Kathy Robertson, Mar. 11, 2014