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CalPERS pension committee approves intent to award long‑term care TPA contract to Illumifin, cites $16.8M projected savings
Summary
The Pension & Health Benefits Committee voted unanimously to issue an intent to award a five‑year contract for the CalPERS long‑term care third‑party administrator to Illumifin, with a proposed effective date of July 1, 2026 and projected program savings of about $16.8 million over the contract term.
The California Public Employees’ Retirement System Pension & Health Benefits Committee on June 17 approved an intent to award a five‑year contract to Illumifin to serve as third‑party administrator (TPA) for CalPERS’ long‑term care insurance program, subject to final negotiations and satisfaction of requirements.
Staff presented results of an August 2024 request for proposals that produced three finalists: Illumifin (the incumbent), Well Cove (also listed as CHCS in the process) and Davies Life & Health. Jared Chinnberry, CalPERS staff, said the selection combined technical scoring, interview performance and fee proposals. Illumifin scored highest on total points and proposed the lowest overall administrative fees over the five‑year period; staff reported projected net program savings of $16.8 million (a 25% reduction compared with the current contract) after negotiating a July 1, 2026 start date (earlier than the originally planned January 2027) and fee reductions.
Chinnberry summarized the evaluation: Illumifin’s national scale (more than 1.9 million long‑term care policies, according to staff), in‑house software for electronic visit verification and fraud detection, and proposed data platform enhancements gave it an edge. Staff said Illumifin’s proposal would lower administrative service fees, including per‑member‑per‑month (PMPM) charges and claimed a 23% fee reduction from the initial Illumifin bid; the negotiated start date added roughly $2 million in additional savings compared with a January 2027 start.
Trustees discussed the evaluation and congratulated staff on the negotiation results. President Theresa Taylor said it was “a really good win” for the long‑term care program and thanked staff for their work. Trustee David Miller seconded a motion approving the intent to award; the committee then conducted a roll call vote. Votes recorded in the transcript were all “aye”: Kevin Pauke; Malia Cohen; David Miller; Nicole Griffith (for Reyna Ortega); Jose Luis Pacheco; Theresa Taylor; Yvonne Walker; Melissa Willette. The motion carried and staff announced the award to the incumbent Illumifin, with an effective contract period of 07/01/2026–06/30/2031, pending final negotiations and contract execution.
Why this matters: The long‑term care program covers roughly 77,000 policyholders; administrative fees are an ongoing cost that directly affect program sustainability and premium pressures. Staff said the recommended contract reduces administrative fees materially and is intended to improve data and fraud‑detection capabilities while ensuring continuity of service.
What’s next: Staff will finalize contract negotiations and proceed with implementation after board approval; the contract’s earlier start date requires vendor readiness for transition activities to begin well before January 2027.
