CalPERS LTC Policy Class Action

Plaintiffs alleged CalPERS breached the insurance contract between the plaintiffs and others who purchased long-term care policies (LTC1 or LTC2) who had automatic inflation protection benefits by raising premiums 85 percent for these Class Members, an increase CalPERS announced in 2013 and implemented in 2015 and 2016.

The Class is made up of citizens living in California in 2013 who purchased an LTC policy from CalPERS between 1995 and 2004 that included automatic inflation protection benefits, and who were subjected to the 85 percent increase in premiums announced by CalPERS in 2013.

The Court preliminarily approved this settlement July 23, 2021.

If no one requests to be excluded from the Class, CalPERS will pay $2.4 billion into a qualified settlement fund.

In addition, CalPERS will pay $282.5 million into a “CAF Fund.” This CAF Fund will cover contingency costs,  administration expenses, attorneys’ fees, and other costs.

One of the contingency costs the CAF Fund can be used to cover is if a greater-than-expected number of Class Members opt out of the settlement. If that happens, CalPERS may recover up to $150 million from the CAF Fund to cover any potential actuarial costs.

If money remains in the CAF Fund after the administration process is complete, it will be returned to Class Members proportionately, based on their settlement award.

Along with their notice, Class Members may have received a form identifying their Initial Settlement Category and the amount they are entitled to as long as their Initial Settlement Category doesn’t change before the final settlement date.

• Category A: Class Members in Category A will see an amount that reflects all premiums paid for their CalPERS LTC policy through Dec. 31, 2020. Those who remain in Category A as of the final settlement date also will receive all additional premiums paid after Dec. 31, 2020. Each Category A Class Member will receive a minimum payment of $10,000 and shall surrender their LTC policy upon payment. Alternatively, Category A Class Members are entitled to apply their premium return to any available replacement LTC policy. Category A Class Members must continue to make their premium payments to CalPERS until the settlement goes into effect in order to obtain a full return of all premiums paid or to obtain the new LTC policy, including either paying the upcoming premium increase CalPERS recently announced or reducing their benefits following the process CalPERS described in its premium increase notice.
• Category B: Class Members who paid any part of the challenged increase and are on claim both on the notice date and final settlement date shall receive a refund equivalent to all additional premiums paid before they went on claim, and will not be required to surrender their policy.
• Category C: Class Members who, on both the notice date and final settlement date, are on claim but reduced their benefits as a result of the challenged increase before going on claim, shall receive one additional year of benefits based on their Schedule of Benefits as of the final settlement date, and will not be required to surrender their policy.
• Category D: Class Members who let their CalPERS LTC policy lapse between Feb. 1, 2013, and Dec. 31, 2014, and submit a form stating, under penalty of perjury, that they allowed the policy lapse as a result of the challenged increase are eligible for a refund equivalent to one-half of the premiums they paid from the inception of their LTC policy through the date the policy lapsed, less any amounts paid in benefits under the policy.
• Category E: Those who let their LTC policy lapse between Jan. 1, 2015, and the final settlement date and submit a form stating, under penalty of perjury, that they allowed the policy lapse as a result of the challenged increase shall receive the greater of all additional premiums paid or $2,500.
• Category F: The estates of Class Members who died after Feb. 1, 2013, and before the final settlement date, were current policyholders or were on claim when they died, and who reduced their benefits as a result of the challenged increase will receive the greater of all additional premiums paid or $2,500.
• Category G: The estates of Class Members who died after Feb. 1, 2013, and before the final settlement date, were current policyholders or were on claim when they died, paid the challenged increase, and never reduced their benefits in response to that increase will be eligible to receive all additional premiums paid.
• Category H: Those who paid the challenged increase, who went on claim at any point before the final settlement date, and who exhausted their benefits before the final settlement date will receive all additional premiums paid.
• Category I: Class Members who are current policyholders and were not on claim as of the notice date but are on claim as of the final settlement date must submit an election choosing to either surrender their CalPERS LTC policy or keep their policy in place. If the Class Member elects to keep their policy in place or makes no election, they shall receive no relief under the terms of the settlement. They shall maintain their contractual rights and benefits under the policy, except the claims released under the settlement. If they elect to surrender their policy, the defendant shall pay into the settlement fund, and the Class Member shall receive, at least an amount equal to a refund of all premiums paid (minus any benefits received), with a $10,000 mandatory minimum.

More information on the requirements for each category can be found on the settlement notice.

Anyone who did not receive a notice but believes they should be part of the Class should contact the CalPERS class action lawsuit settlement administrator at 1-866-217-8056.

The attorneys in this case are planning to hold webinars for Class Members who have questions. These will be held Aug. 20 and 25, and Sept. 3 and 10, 2021. To attend, register here.

A final hearing in the CalPERS long-term care policy settlement will take place June 8, 2022.

The deadline to object to or opt out of the CalPERS class action lawsuit settlement is Dec. 13, 2021.

The deadline to complete an Award Acknowledgement and Election Form for a Potential Replacement LTC Policy (Category A) has passed.

The deadline to complete a Lapse Claim Form (categories D and E) is Dec. 13, 2021.

The deadline to complete a Lapse Claim Form was Dec. 13, 2021.