On March 10th, a superior court approved the proposed second-class action settlement which has now gone out to CalPERS policyholders to accept or reject by June 6th and with a final court approval hearing scheduled for July 26th.

The settlement amount has dropped to $800 million from $ 2.7 billion in the first proposed settlement.  This may be to bolster the finances of the CalPERS long-term care program in order to protect remaining policyholders.  However, this program has had a history of failure, and keeping a CalPERS policy may be problematic.

The CalPERS policy is a group long-term care insurance policy, and as such, is not subject to regulation by the California Department of Insurance and is financed solely by CalPERS.  Unfortunately, CalPERS investments have turned sour, and for that and other reasons, the program has been grossly underfunded.

The basic offer of the new settlement involves two choices: (1) refund of 80 % of premiums paid, and (2) keeping policies and getting $ 1,000 and a moratorium on rate increases through October, 2024.

Alternatively, policyholders can reject both choices by completely excluding themselves from the class action lawsuit and still maintain their policies.  There is also a process to object to the settlement.

If more than 1% of policyholders exclude themselves from the suit, then the settlement permits CalPERS to walk away from the deal.  CalPERS walked away from the first proposed settlement which failed to garner sufficient approval from policyholders.

With a settlement, as opposed to a trial, CalPERS representatives have not been compelled to speak publicly about what occurred and why.  As well, with this settlement, CalPERS denies all culpability and responsibility for causing harm or violating contracts.

Policyholders that accept either of the settlement offers will also give up all claims against CalPERS arising from or related to the 85% premium increase.  Whether such a release of claims would apply to CalPERS’ most recent 90% rate increase is unclear.

For those who decide to obtain the refund of 80% of premium paid, we may be able to provide another solution which would protect you against the costs of long-term care.  You could convert that cash refund into a plan which could take the cash you receive and multiply it several times to cover long-term care expenses in the future.  To do this, you would have to be less than 85 years old and in fairly reasonable health.  To find out whether you  would qualify, please either give us a call at 800 303-1527 or contact us at