SACRAMENTO, Calif. -- The California Public Employee Retirement System Pension and Health Benefits Committee unanimously voted Tuesday to increase premiums on policy holders for the financially troubled program.
About 112,000 state employees, or three quarters of long-term care policy holders, would be affected. The increase would be phased in over two years, beginning in 2015.
Policy holders would have the option of getting a 79-percent increase, if they agree to absorb the rate hike in one year, or an 85 percent premium increase over two years.
On average, a long-term care policy costs nearly $2,200 a year. A 79 percent rate hike would mean paying about 17 hundred dollars more a year, bringing in more than 39 hundred dollars.
The program, which pays for stays in assisted living or nursing homes, is suffering financially from lower-than-expected gains and higher-than-expected claims. CALPERS' long-term care program is self funded, unlike its pension plans, and doesn't get taxpayer support.
CALPERS officials say it's long-term care program faces significant shortfalls in years to come if rates don't increase now.
"We think this is a very good move for our policy holders and will allow them to have a viable choice as they look at the potential increases in front of them in 2015," said Ann Boynton, Deputy Executive Officer for CALPERS.
The CALPERS committee also voted to create a less comprehensive benefit package. Instead of lifetime benefits, the plan would cover 10 years. CALPERS officials said only one percent of policy holders would need more than 10 years worth of benefits.
A final decision will be made by the CALPERS full governing board Wednesday.
