GAO: Federal long-term care insurance program had unexpected premium hikes

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Although 66% of enrollees in the Federal Long-Term Care Insurance program saw an increase in premiums in 2009, almost half opted for the increase rather than taking a reduction in benefits or a lapse in coverage, according to a Government Accountability Office report.

These beneficiaries saw a 25% increase in premiums, which the GAO report found was due to higher-than-expected enrollee coverage retention, longer life expectancies and additional claim submissions. While the FLTCI program is only available to government employees, some experts believe the participants' behavior sheds light on whether people drop coverage when rates increase.

“Over the last decade, many carriers —including the largest in the market — have raised premiums to compensate for how the assumptions they used in setting premiums for this insurance product differed from their experience,” the report noted. It also said beneficiaries were surprised at the sudden jump in premium costs, as they had been led to believe their costs would remain stable.

The report comes as Democrats weigh how much to fight for the Community Living Assistance Services and Supports Act, or CLASS Act, a voluntary long-term care insurance program.