Blog readers will know of yours truly's skepticism about the value of long-term care policies. Basically, you are expecting some insurance entity, possibly years from now when you are not in condition to deal with bureaucracy, to act in good faith on your policy. That is an optimistic expectation. Of course, you could say the same about life insurance. However, life insurance is simple. You are either dead or you aren't. What you should get from long-term care depends on someone's decision about what you need. Those who bought from CalPERS (UC employees were eligible) undoubtedly thought that a state public agency would treat them right. It didn't happen that way.
Judge hands CalPERS 1st-round loss in long-term care lawsuit
5-29-2014
Jon Ortiz, State Worker blog of Sacramento Bee:
CalPERS can be sued for allegedly mishandling its privately-funded
long-term care insurance program, a Los Angeles court has tentatively
ruled, clearing the way for a trial. Judge Jane Johnson turned
aside CalPERS request to throw out the case, which contends that the
fund’s board members violated their personal duty to watch out for
members’ best interests. The fund also breeched policy contracts and
dealt unfairly with policyholders, according the the lawsuit.
The Los Angeles Superior Court complaint, if granted class-action status, would represent about 150,000 CalPERS members who
purchased long-term care insurance between 1995 and 2004 to cover
convalescent care, in-home living assistance and similar services.
Nearly all the policies guaranteed inflation-adjusted payments for the
life of the policyholders, many of whom believed their premiums would
never be increased.
CalPERS stopped selling the so-called “lifetime, inflation-protected” policies a decade ago. It incrementally raised premiums on existing policyholders because
the program was going broke. Officials have blamed under-performing
investments, underpriced policies and higher-than-expected payouts for
the trouble. Private-sector insurance carriers have had the same
experience long-term-care coverage. Many have exited the business.
Lawyers
got involved, however, when CalPERS announced it would hike premiums 85
percent for the most lucrative plans starting next year. Members who
had purchased policies and paid premiums for nearly a decade or more
were outraged. CalPERS asked the court to throw out the case for a variety of reasons, but Johnson ruled that none were valid. The tentative ruling isn’t yet final, however such decisions are rarely overturned...
Full story at http://m.sacbee.com/sacramento/db_294804/contentdetail.htm?contentguid=eb42YegP&full=true#display
Right now both CalPERS - and its customers for long-term care - are both big losers.
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