Are you one of the 117,000 potentially affected by the CalPERS Long Term Care Settlement? (a)

Policyholders, former policyholders, and heirs/estates of previous policyholders all have choices to make in the potential settlement of a class action lawsuit brought against CalPERS. In July of 2021 CalPERS reached a preliminary settlement agreement in the class action lawsuit brought against them after the 2013 (enacted in 2015 & 2016) premium increases. Affected policyholders may be required to decide if they want to be included in the settlement and at the same time decide on accepting another premium increase of 52% in 2021 and further compounded 25% increase in 2022 or reduce their benefits.

Even if ultimately selecting the refund option under the settlement, a failure to continue paying premiums until the preliminary settlement is certified by the court will result in a forfeiture of one’s policy and no refund. It is imperative for all potential class members to make an informed choice and notify CalPERS of their selection by the deadline.

With multiple decisions and 9 different categories of participants this may be complex to navigate. The best course of action, as always, is to look at each option available to you in the context of your overall financial plan. This will provide objective information to make the decision that will serve you best.

The most common class member is likely Category A: a current policy holder who is not on claim on the Final Settlement Date. If you are in Category A, you must respond, or they will assume you wish to surrender your policy. The first deadline for Category A class members is September 22, 2021.

Options for Category A individuals include either a full refund of all premium payments and forfeiture of any future benefits, full refund of all premium payments that is then used to purchase replacement coverage which will likely provide lower benefits than your current policy but will not have future premiums, or keep your current policy by excluding oneself from the settlement.

As noted earlier current policyholders must continue to make premium payments until the settlement agreement is approved by the Court even if selecting a full refund. That means that current policy holders must also determine if they want to accept the 2021 price increase and maintain current benefits or maintain their premium for reduced benefits.

According to the U.S. Department of Health and Human Services (b), almost 70% of Americans turning 65 today will need some type of long-term care service and support in their remaining years. While the average length of need is 3 years with women have a longer (3.7 years) average than men (2.2), 20% or 1 in 5 will need care for longer than 5 years.

The lawyers for the Class are hosting webinars to provide additional information for members and their families. You can register for one of the webinars here: https://calpersltcclassaction.brand.live/c/a-class-action-settlement-qa.

To better understand how your selection may impact your overall financial plan please reach out to any of us here at Lake Tahoe Wealth Management.

(a) https://www.calpersltcclassaction.com/

(b) https://acl.gov/ltc/basic-needs/how-much-care-will-you-need