Happy (?) Ending for CalPERS Long-Term Care Train Wreck

Back in 2019 (and at other times), we took note on this blog of the problems surrounding the offering of long-term care insurance by CalPERS. UC is not part of CalPERS but UC employees - because they were employed by a state entity - were allowed to purchase such insurance back in the day when it started to offer the plan. 

After enrollment, however, participants were subject to very high premium increases, leading some to drop the plan and others to take cut-rate policies to reduce the cost. It was never clear of CalPERS had lowballed the initial premium to attract business or whether it simply had made a mistake about the actuarial costs of the plan.

In any event, a class-action lawsuit developed. Apparently, some settlement has been reached in that litigation. From the Sacramento Bee:

CalPERS has agreed to pay up to $2.7 billion to settle a lawsuit over big price hikes the retirement system imposed on long-term care policyholders eight years ago, according to a Tuesday announcement. The proposed agreement, which requires a judge’s approval, would settle a class-action lawsuit policyholders filed in 2013. Several policyholders filed the lawsuit after receiving notices that their premiums would rise 85% in two increases in 2015 and 2016.

The settlement agreement presents affected policyholders - those who paid extra for an “inflation protection” benefit - with a choice. To receive a full refund of their premiums, they must give up their long-term care insurance plans. The policies, which CalPERS started selling in 1995, cover costs for nursing homes and in-home care. Most policyholders who accept the settlement money would receive between about $35,000 and $50,000, with a minimum payment of $10,000...

Full story at https://www.sacbee.com/article252753473.html.

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*http://uclafacultyassociation.blogspot.com/2019/07/long-term-care-calpers-train-wreck.html.