IG: OPM needs contingency plan for FLTCIP

After steep increases to Federal Long Term Care Insurance Program premiums that alarmed federal lawmakers several years ago, the Office of Personnel Management still does not have a plan in place to make sure such increases don't happen again.

In 2015, John Hancock Life and Health Insurance Co., the current administrator of FLTCIP, significantly increased its premiums for nearly all of the 274,000 enrollees in the program. As a result, some beneficiaries experienced an average 83 percent increase.

Because of the rate hike, OPM decided not to extend the current contract and reopened its bidding process in order to attract more competitive rates, but John Hancock was the sole bidder and was awarded a new seven-year contract with the new rates.

“This is likely because the ‘true group’ plan (like FLTCIP) is almost non-existent in today’s marketplace,” an IG report states. It notes that in 2000, there were 125 insurers in the long-term care insurance marketplace, but by 2014, there were only 12 insurers that were issuing at least 2,500 individual policies and only five insurers sold group policies, and today there is only one insurance company that offers a group plan similar to that of FLTCIP.

It suggests that, although OPM followed all regulations during the contract process, it should consider the rapidly changing environment of the long-term care insurance industry and “develop a formal contingency plan to prepare for future FLTCIP procurement challenges. “

Read the full report here.

 

 

 

 

Reader comments

Wed, Apr 18, 2018

If Hancock goes out of business are all funds/ premiums I’ve paid in loss?

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