CalPERS Agrees to $740M Long-Term Care Insurance Rate Suit Settlement

What You Need to Know

Policyholders are suing over an 85% premium increase imposed in 2013.
The average age of the class members is now 76.
An earlier settlement proposal failed when too many policyholders opted out.

A state court judge in California has given preliminary approval to a $740 million settlement that could resolve nine years of litigation between the California Public Employees’ Retirement System and 80,000 CalPERS long-term care insurance benefits policyholders.

The policyholders have been suing CalPERS since 2013, after the state public employee pension agency increased LTCI premiums by 85%. The settlement amounts to about $9,250 in value per class member.

CalPERS managers said they did nothing wrong, but they have agreed to the settlement to end the court fight.

Judge William Highberger, a California Superior Court judge in Los Angeles, expressed support for the proposed settlement earlier this month. He scheduled a July 26 hearing on a final approval motion.

The History

To agents selling ordinary individual LTCI coverage, CalPERS once looked like a formidable foe.

In 2004, for example, it told state public employers that it could charge 20% less than comparable private LTCI plans. “Most of these savings result from the direct marketing and self-funded, not-for-profit aspects of the program,” CalPERS said.