California State University Emeritus & Retired Faculty & Staff Association


Details of Proposed CalPERS LTC Program Settlement Emerge

More details of the proposed settlement of the CalPERS Long-Term Care Program class action suit have emerged.

Class members - those policyholders who chose the "inflation protection" prior to the rate increases imposed in 2015 and 2016 and who haven't started to receive program benefits will have the option of (1) receiving a full refund of their premiums and leaving the program, or (2) remaining in the program. The class includes policyholders who may have dropped "inflation protection" in response to the 2015 or 2016 rate increases, as well as those policyholders who chose "inflation protection" and decided to drop out of the program in response to the 2015 and 2016 rate increases.

Policyholders with policies that did not include the "inflation protection" option are not included in the class.

Policyholders who chose the "inflation protection" option and have started receiving long-term care benefits are not eligible for the full refund of their original premiums. But they will receive a refund of any premiums they paid beyond their original premiums as a result of the 2015 and 2016 increases. They also will receive an extra year of benefits if they chose to limit their benefit period in response to the 2015 and 2016 increases.

It is estimated that there are about 80,000 policyholders in the affected class, and it is expected that almost all of these policyholders will choose to receive a full refund of all their premium payments and will exit the program. About 50,000 policyholders who never opted for "inflation protection" will remain in the program.

If 10% or more of the affected class opt out and choose to remain in the program, CalPERS will have the option of terminating the settlement agreement, though this is considered an unlikely eventuality given the 90% increases in premiums they face over the next two years.

The attorneys representing the class action plaintiffs will receive about 9% of the settlement (about $225 million). If the entire amount of the settlement is paid out, about $2.7 billion will remain in the long-term care fund along with additional revenue generated by the upcoming premium increases.

The class action attorneys are attempting to find a commercial insurer to provide long-term care coverage for those who accept the refund of premiums and leave the program.

Class members who also are members of CSU-ERFSA may be able to obtain long-term care coverage through our benefits partner AMBIA. Similar options may be available to class members who belong to other retiree groups.

Those of you who are affected by this issue are encouraged to track the latest news at:

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