Federal employees who enrolled in the Federal Employees Health Benefits Plan (FEHB) were led to believe they would be protected from future premium increases if they enrolled in the automatic compound inflation (ACI) option, but now they are facing increases of 5 to 25 percent because OPM said inaccurate actuarial assumptions were made.  Congressman Gerry Connolly wants to know why.

Congressman Connolly wrote a letter to House Oversight and Government Reform Federal Workforce Subcommittee Chairman Stephen Lynch requesting that the subcommittee hold a hearing to investigate ways to better protect the interests of federal employees who have been misled, either by OPM or by the John Hancock Insurance Co., about the premiums for their Federal Long Term Care Insurance.  Connolly is a member of the subcommittee.

Connolly said that more than 144,000 federal employees enrolled in the ACI option could face premium increases of 5 to 25 percent because of the inaccurate actuarial assumptions and he wants to find out what happened and make sure it doesn’t happen again.

Connolly said on November 13 that the long-term care program has received another black eye.  It was reported that the insurance company that runs the plan for federal employees and retirees sent out erroneous letters on the plan's premiums and benefits to tens of thousands of participants.

Here is the story from Government Executive (and there are links below to Connolly's letter calling for hearings and a recent interview on Federal News Radio:

Insurer sends wrong benefit information to long-term care enrollees

By Alyssa Rosenberg 
November 13, 2009
 
A long-term care insurance provider sent letters with incorrect information about benefits and premiums to tens of thousands of federal enrollees.

"Getting accurate, easy to understand information to our enrollees in a timely manner is my top priority," Office of Personnel Management Director John Berry said in a statement. "All companies participating in this program must take steps to ensure that similar errors are avoided in the future."

Long-Term Care Partners, a John Hancock subsidiary, sent the letters, beginning Oct. 26, to 71,600 employees who had purchased an insurance package that allowed them to pay higher premiums upfront to avoid future increases driven by inflation. OPM signed a new contract with John Hancock in May that included premium hikes ranging from 5 percent to 25 percent for those employees. The agency and the company said the hikes were not due to inflation, but to problems with the program's initial financial assumptions. So OPM extended the enrollment period for those employees to Feb. 15, 2010, to give them a chance to switch programs -- a decision complicated by the erroneous letters.

Long-Term Care Partners notified OPM of the erroneous premium information included in the letters, and is sending new letters to those enrollees informing of them of the mistake. Those notification letters are being mailed today and on Monday. In December, those participants will receive corrected, personalized letters that will include the appropriate premium information in the "Benefit Amount" section. In addition, OPM will extend the enrollment window to Mar. 15, 2010, for those federal workers who received incorrect letters.
Colleen Kelley, president of the National Treasury Employees Union, said the problem with the letters, on the heels of premium hikes, demonstrated the need for more vigorous oversight of the Long-Term Care Insurance Program, including more congressional hearings.

"It is extremely disappointing that the administrator of the government's long-term care insurance program has sent letters to tens of thousands of enrollees in that program containing mistakes in the calculation of their potential premiums," she said. "This kind of carelessness is unacceptable, particularly in the face of looming premium increases for many of them. I am very concerned about yet another problem with this troubled program." 

Rep. Gerry Connolly, D-Va., said he already has asked the House Oversight and Government Reform Government Management Subcommittee to hold hearings on the matter. 

"This recent announcement from OPM is another black eye for the long-term care insurance program that had already been battered by poor performance and communication with our federal workforce," Connolly said. "How are the 145,000 employees affected by the changes in this program supposed to have any faith in the system when it cannot even accurately provide premium and benefit information to them?"
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(C) 2009 BY NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED.

http://www.govexec.com/dailyfed/1109/111309ar1.htm

To read a full copy of Connolly’s letter requesting the hearing, click here.

To listen to Connolly’s interview on Federal News Radio, click here.