Claiming hundreds of thousands of federal employees were “grossly misled” by two insurers and a government agency regarding freezes in premiums for long-term care insurance, a Virginia congressman wants a hearing on the matter to prevent future incidents.

Gerald E. Connolly

Rep. Gerald E. Connolly (D-Va.) recently wrote a letter to Rep. Stephen Lynch (D-Mass.), chairman of the House Oversight and Government Reform Federal Workforce Subcommittee, requesting the hearing to investigate ways to better protect federal employees.

Connolly said that seven years ago, a consortium of MetLife and John Hancock Life & Health marketed a pair of long-term care coverages to 225,000 employees participating in the government’s program. A “future purchase” option, where benefits and premiums increase every two years, was one choice, along with an “automatic compound inflation” (ACI) option, “where a higher premium is paid for a 5% compounded increase in benefits each year without increasing premiums,” according to his letter.

In May, Connolly said, the U.S. Office of Personnel Management (OPM) announced a new seven-year contract with John Hancock as the sole provider, but also announced that their actuarial assumptions of the program were “inaccurate,” resulting in premium increases of 5% to 25% for the 144,000 enrolled in the ACI option.

According to OPM, as many as 133,000 beneficiaries will face the highest rate increase, Connolly said.

“Both the OPM and the insurance companies now acknowledge that previous promotional materials misled federal employees to believe that enrolling in the ACI option would protect them from future premium increases,” Connolly wrote in his letter. “In fact, they suspected this might be the case as early as 2005, yet they did not adjust any of the promotional material provided to current or prospective enrollees.”

Connolly “strongly urges” Lynch’s subcommittee to investigate “what if any steps are being taken to better protect the interests of federal employees so that they cannot be so grossly misled, either by OPM or a private insurer, in the future.”

The congressman adds that the subcommittee may also want to consider future legislation to further protect federal employees.