I often get asked questions about nursing homes and Long-Term Care (LTC). CalPERS also has its own optional LTC program. I signed up for this program in the early 90s when it was first offered. There were a few different plan options. CalPERS reps said the Cadilac Plan had inflation protection built in, and the rates would not increase. CalPERS later said this was not a true statement, but many I have spoken with remember this statement from presentations CalPERS made around the state.
Due to higher inflation, lower investment returns, and heavier plan use than anticipated, plan rates have gone up. A long-lasting lawsuit resulting from these promises was recently settled in Sept 2023, and those in the plan were offered the option of dropping coverage and having a percentage of their premiums paid returned with various settlement amounts offered to each member. Those that kept their coverage were offered $1000, and a waiver of premium increases until Sept. 2024.
At the June 2024 CalPERS Board meeting, the LTC fund was 90 % funded as result of the payouts and premium waivers. This may necessitate two additional rate increases of approximately 10% in 2025 and 2026 to bring the fund back to a 100% funded status. The fund is closed to new members. I noticed in an attachment that actuaries included a chart indicating projected cash flows and fund balance over the next 60 years. In 2083, there will only be 14-20 LTC members still living.
Here are two comprehensive articles to reference:
When California's Medi-Cal Will Pay for a Nursing Home, Assisted Living, or Home Care
How to Pay for a Nursing Home with No Money
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