Will Congress rescind LTC premium hike?

When they say "it" could have been worse, odds are "it's" pretty bad, which is how Senior Correspondent Mike Causey explains the big jump in long-term care prem...

Is Congress going to step in and block, or modify, the increase in federal long-term care insurance premiums that are going up an “average” of 83 percent in November?

Short answer: Probably not.

How come? After all, some members of Congress — and their staffs — are enrolled in the federal LTC program too.

Short answer: Time, and the numbers, are not on your side.

First time: Congress is away until Sept. 6. There is talk of a four-week session. But insiders say it is more likely Congress will only be in town for two-to-three weeks at the most. Whether those are regular weeks, like you and I have, or the TWT (Tuesday, Wednesday, Thursday) weeks Congress often takes, remains to be seen. Either way there is a good chance that unfinished work on appropriations bills will be handled by passage of a continuing resolution. Many Democrats would like it to run through December or January, at the latest. Lobbyists say they are hearing that Republicans favor a CR — allowing agencies to continue spending at current fiscal year levels — until March 2017.

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Whatever happens, reelection-minded members of the House and Senate have little time and lots of reasons to spend it on getting reelected. Or working to ensure that they keep control of the House and Senate, if Republicans, or a possible Democratic takeover of the Senate if former Secretary of State Hillary Clinton wins the election.

Numbers: So many feds are angry over the new LTC premiums they figure it must be a mistake. Or a con. Something other than a reflection of reality. Many retirees, in particular, say that several years of low or no COLAs (cost-of-living adjustments) must reflect that inflation is all but dead. They believe either they are being ripped off by the LTC program’s lone carrier (and only bidder on the new seven-year contract), or have been let down by the Office of Personnel Management, which has the final say on premiums.

But the numbers tell a different story. The story is that 14 years ago, at the peak of the LTC insurance business, 102 companies offered LTC coverage. Today, 2016, only 12 to 14 companies are still in the business. Nobody anticipated how costly LTC has become. Or that more people are using it, and for a longer period of time than the actuaries figured.

Nobody anticipated the recession that brought interest rates down to the level that insurance companies can’t, or say they can’t, make enough money investing premiums into safe havens, like Treasury securities, to cover skyrocketing patient costs. LTC Partners, which manages the federal program for John Hancock, says current federal LTC policyholders are getting $13 million per month in benefits and that the carrier has paid about $700 million since it began.

About that average 83 percent increase: While that is the average premium hike for the LTC program, averages can be deceptive. Reader John King Tarpinian said, “My LTC insurance with the high option of a 5 percent increase, purchased at age 48, is going from $132.15 a month to $295.66 per month, which is a 124 percent increase!”

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