1. People & Relationships

CLASS Act: Long Term Care Program Signed Into Law

By April 2, 2010

When President Obama signed the healthcare bill into law, it included a program that has received little publicity, but promises to be very important as aging boomers require long-term care and disability assistance.

The Community Living Assistance Services and Supports Act (known as the CLASS Act) mandates the creation of a national long-term care insurance program that will provide average benefits of no less than $50 per day to help people pay for non-medical expenses--like home care--that will help them maintain their independent living status.

Under the CLASS Act, this long-term care program will be paid for by workers through automatic payroll deductions, which will be deducted from paychecks. All workers will be automatically enrolled in the program unless they choose to opt out. The current plan is that workers need to participate in the program for a vesting period of five years before they can apply for benefits.

The original CLASS Act legislation was introduced by Senator Ted Kennedy (D-MA) and Congressman Frank Pallone (D-NJ) in March 2009, and was one of the last tasks Kennedy performed before leaving the Senate for health reasons.

The late Sen. Kennedy was a longtime proponent of a national healthcare system and improved benefits for Americans, and I'm sure he would be proud to see this legistation signed into law.

For an informative overview of the CLASS Act, including a discussion of whether the program would pay for itself and how long it could remain solvent, see National Public Radio's "Long-Term Care Program Debuts In New Health Law." 

Additional Resources:

April 7, 2010 at 5:15 pm
(1) Steffan says:

This is quite interesting and amounts to quite a bit of money! 50$ a day is enough for many to live off of, especially if they already own a home. I am curious as to how much exactly it takes off of the paycheck, but it seems quite interesting regardless.

April 29, 2010 at 1:32 pm
(2) Bernie Ockrim says:

The CLASS ACT will be so significant. Seniors now will be able to protect their health without depleting other assets. Especially those who prefer to age-in-place.

April 30, 2010 at 1:55 pm
(3) Craig says:

CLASS can be perceived as either the second coming – or a travesty – depending upon perspective. What is clear is that HHS has their work cut out for them. To negate adverse selection premiums need to be high. And this is certainly no panacea for comprehesive long-term care.

I hope people can get beyong the conceptual (of course it’s a good idea) and start to understand the details. Unfortuantely, there is no magic bullet for the care financing dilemna.

May 31, 2010 at 12:56 pm
(4) Scott says:

Bernie wrote: “The CLASS ACT will be so significant. Seniors now will be able to protect their health without depleting other assets. Especially those who prefer to age-in-place.”

Actually, Bernie, the CLASS Act will be no help to those who are already retired or who will retire by 2016. In order to be vested in the CLASS Act, one must pay premiums for 5 years and must be working at least 3 of those 5 years. Since enrollment in the CLASS Act will not begin until late 2012/early 2013, anyone retiring before 2016 will not be able to become vested in the CLASS Act unless they continue to work part-time after they retire.

June 30, 2010 at 12:26 pm
(5) gt says:

This is for LTC and the average cost right now is $72,000.00
They are not sure how much it will cost and how much it is going to pay out. I have seen that is will cost any where from $180 – $240 per month for this coverage. So, tell me how is someone making $50K per year going to aford this!

Right to recieve any benefits for LTC you must not be able to preform 2 out of the 5 daily living activities, which include, get out of bed, bathing, dressing, using the rest room, and eating with out assistance.

August 5, 2010 at 2:41 am
(6) Harold L. says:

Let’s see, people procrastinate when it comes to buying lTC insurance, waiting until they become uninsurable and it’s too late to buy, hence the CLASS Act. Cost of care averages around $200 per day today. So, in 5 years or after the vesting period it will be over $250 per day. So, exactly how will $50 per day help the average uninsured American?

September 1, 2010 at 9:51 am
(7) Marc says:

Looks like the last 3 posts had time to digest this CLASS Act and how this is essentially NO help.

November 10, 2010 at 2:04 pm
(8) Don says:

Look, 50 a day is not supposed to be for a skilled nursing facility(SNF) or the like. The average cost nationwide is currently 200+ per day IN A SKILLED NURSING FACILITY. So, when you look directly at home care, which is what this is targeted at, it is actually a big help since the average LTC situation is roughly 5 years in duration….2 of which services are provided in the home setting. It would actually help if people educated themselves on the particulars of home care versus skilled care before passing on misinformation.

Next, while I have not read the law in question, I would be surprised if it is only based on 5 activities of daily living since every single LTC policy I have ever sold is based on 6. Also, I fear you have misread or are just parroting a source who is wrong. You do not have to be unable to perform 2 of your 6 activities of daily living. My guess is, as this is how all LTC works, that you: Cannot perform 2 of your 6 ADL’s, Cannot perform 2 of your 6 ADL’s without assistance, or Cannot perform 2 of your 6 ADL’s without supervision. All three qualify for benefits the same in the private insurance market.

But my fear will be affordability of the plan. I believe Adverse Selection will be a huge problem. Even private insurance companies who offer LTC have been raising premium rates over tha past 5 years….and they discriminate against the unhealthy! The fact that this public program will be Guaranteed Issue…albeit with a vesting….makes it vulnerable to Adverse Selection. The only saving grace will be the shear number of the risk class.

Lastly, if you want to solve this problem, make 100% of all private LTC premiums a top line deduction off a person’s income. This will reduce the pressure on our states Medicaid programs and help save estates from being devastated by a long term illness that cannot be cared for in the home.

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