OPM Needs Contingency Plan for Long-Term Care Insurance

The Office of Personnel Management (OPM) inspector general has recommended OPM devise a backup plan for the Federal Long Term Care Insurance Program (FLTCIP) after an audit of a bid process that produced only one application to administer the plan, reports Government Executive . In 2015, OPM opted to let its contract with John Hancock Life and Health Insurance expire after the company determined it needed to raise premiums to fully fund the FLTCIP. However, at the conclusion of the bid process, John Hancock was the sole bidder to administer the program, and it got a new seven-year contract. In August 2015, the insurer imposed premium hikes for new enrollees, which varied wildly depending on a participant's age and choice of plan. Premiums for existing participants rose by an average of 83 percent in November 2016, after John Hancock was granted a new contract. Although the inspector general found OPM followed all federal regulations during its year-long bidding process in the intervening years since FLTCIP was founded, the market for long-term care insurance has practically dissolved. "Considering the rapidly changing environment of the long-term care insurance industry, OPM should develop a contingency plan to prepare for future FLTCIP procurement challenges," the inspector general urges. "Although some changes may require regulatory or legislative actions, OPM should be proactive in planning for any changes that could arise in the future."