FOR IMMEDIATE RELEASE March 18, 1999

CONTACT: Ivonne Cuñarro (202) 606-1479 edbyrnes@opm.gov

OPM Director Lachance Speaks to Congress In Support of Long-Term Care Proposal

WASHINGTON, D.C. U.S. Office of Personnel Management (OPM) Director Janice R. Lachance today testified in support of proposed legislation that would make long-term care insurance available for federal employees, retirees, and their families. In addressing members of the House Civil Service Subcommittee during a hearing on long-term care proposals on Capitol Hill, Lachance said that the employer-sponsored model described in the Clinton/Gore proposal offers the best vehicle for delivering a quality product.

The Administrations proposal, introduced by Representative Elijah Cummings (D-MD), would authorize OPM to contract for long-term care insurance on behalf of the federal government. The proposal (H.R. 110) would allow OPM to negotiate with insurance carriers to obtain an attractive benefit package at rates lower than those offered in the individual market.

We estimate that by negotiating group rates we can provide an attractive long-term care product at a cost 15 to 20 percent lower than a comparable policy purchased in the individual market, Director Lachance said. We expect that initially about 300,000 eligible participants will enroll in such a program.

Long-term care insurance provides coverage for nursing home care, personal care, and other similar care for individuals who need assistance with activities of daily living.

H.R. 110 would allow OPM to offer a benefits package that reflects the requirements of the Health Insurance Portability and Accountability Act and the standards outlined by the National Association of Insurance Commissioners in its long-term care model. The coverage would provide for a variety of services and offer flexible options to participants. It is estimated that the cost of annual premiums would range from $200 to $3,000 depending on the age of the insured individual. In contrast, the long-term care proposal H.R. 602 would prevent OPM from negotiating with insurance carriers to ensure a quality benefit package at a low or competitive group rate.

Under H.R. 602, the Civil Service Long-Term Care Insurance Benefit Act, OPM would be required to accept virtually any long-term care insurance product that meets basic requirements, Lachance added. This approach is decidedly contrary to existing employer practices. We would not be able to take advantage of economies of scale and pass the savings on to federal employees, retirees and their family members, she said.

OPMs cost for administering long-term care coverage for federal employees and retirees is estimated at $15 million over five years. The funding would be used to educate the federal community about long-term care options and to offer them a quality package at rates which are below individual policies.

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