Tommey Teague

Advocate Photo By LIZ CONDO – Tommy Teague, Chief Executive Officer of the state's Office of Group Benefits, in 2006.

Liz Condo

State officials were closeted behind closed doors Monday trying to find a way to keep monthly life insurance rates from dramatically rising for state government retirees next year.

“The rates went up 5, 6, 10 times, depending on your age,” Frank L. Jobert Jr., with Retired State Employees Association of Louisiana, told The Advocate Monday.

It’s not uncommon for an 80-year-old state government retiree’s monthly life insurance bill to go from $19 a month to $109, he said. Just how high depends on the insured’s age and the extent of coverage in their policy.

The monthly premiums for health care coverage are not increasing for 2018 – just life insurance.

Jobert said the life insurance provider, Prudential, has lost $4 million a year for the past four years and wanted to start linking rates to the ages of the policy holders, rather than the flat monthly fees charged over the years. That’s mostly because younger employees didn’t sign up, leaving the elderly as the prime holders of the policies.

The 24,000 employees still on the job and holding life insurance policies should see lower monthly prices starting Jan. 1, 2018.

But the proposed increases for the 44,000 retirees were so great and the outcry so loud that Gov. John Bel Edwards’ administration started looking for ways to make the increases a little less drastic.

Tommy Teague, chief executive officer at the Office of Group Benefits, which handles insurance for state government employees and retirees, did not return calls Monday.

Jacques Berry, spokesman for the state Division of Administration, said Teague was locked behind closed doors all day Monday with other state officials putting pencil to paper to weigh the impact of “emergency bids” from insurance companies that were received Monday.

“As drastic as those (proposed) quotes were, we’re optimistic that this is going to lead to a more favorable result,” Berry said. He couldn’t quantify what “more favorable” specifically means.

“Some of the proposed increases were horrific,” said Kenneth Krefft, who sits on the Group Benefits Policy & Planning Board. “I suspect these won’t be as horrific but the premiums for life are still going up.”

For state government retirees, life insurance is only available if they signed up during their working years. The basic policy is for $5,000 but an employee can buy supplemental insurance at a higher price that will pay up to $50,000 at death. When an employee hits 65 years of age, the value of the policy drops by 25 percent. At 70, the value drops another 25 percent.

Prudential’s contract to provide life insurance for state employees and retirees ends on Dec. 31. At first the Office of Group Benefits attempted to keep a flat rate but no insurer bid, Krefft said.

So, the state allowed bids that were based on the age of the insured.

The board was shocked at how high the rates jumped, Krefft said. “Then the phones started ringing.”

“I’ve spoken twice with the governor, a few times with the commissioner of administration. And legislators are getting calls,” said Jobert, who also is a member of the board. “I had about 50 calls from members and I walked them through what was going on.”

Krefft said the board two weeks ago voted 8-0 to reject Prudential’s bid, which had the high rates. Last week, on Nov. 8, the Division of Administration asked for offers from six companies.

The bids are being graded and will go Wednesday before the Group Benefits Estimating Conference, a six-member panel dominated by the governor’s appointees. The conference then must make a recommendation to the 11-member Group Benefits Policy & Planning Board, which convenes on Thursday.

Should the board approve the increased rates, the proposal will go Friday before the House Appropriations and Senate Finance committees, which will give a final okay or send the Office of Group Benefits back to the drawing board.

One wrinkle, however, is that the deadline for signing up for health and life insurance is Wednesday. The plan is to extend the deadline for life insurance applications – though not healthcare policies – until Nov. 30. And policyholders who previously rejected continuing their life insurance policies will have the opportunity to reapply.

And time is running out, said state Sen. Dan “Blade” Morrish, who also sits on the board.

In slightly more than a month, the state will have to offer life insurance policies to its employees and retirees, as it is required to do by law, regardless of the monthly costs. That means a lot of retirees may not be able to afford the premium increases and have to drop the life insurance they had carried for years. Administrators and lawmakers are scurrying to find a solution, the Jennings Republican said.

“People who know about this are kind of pulling their hair out trying to figure out what to do,” Morrish said. “It’s a real dilemma. As you know, the state is broke.”

Follow Mark Ballard on Twitter, @MarkBallardCnb.