A program to help the great majority of working Americans who have no long-term care insurance is an under-reported component of the new health care law.
Called the Community Living Assistance Services and Supports Act, or CLASS Act, the legislation translates into law a concept the late Senator Edward Kennedy and his staff had been working on since 2003. We are indebted to The New York Times for an authoritative explanation of the new program, based on The Times’ discussions with four experts on long-term care issues.
The CLASS Act is not the all-embracing long-term care social insurance program the nation needs. But it breaks significant new ground and provides a structure that can be expanded and strengthened in the years ahead.
Enrollment in the new program is expected to begin in 2013. Participation is voluntary and open to any working person who earns enough each year to pay Social Security taxes. Those who sign up must pay premiums for a vesting period of five years to qualify for benefits. The Congressional Budget Office (CBO) has estimated that the average monthly premium will be about $123 (less for younger enrollees, more for older ones).
CLASS is an “opt out” program. That means that if the employer participates, the worker is automatically enrolled unless the worker “opts out.” The enrolled worker becomes eligible for a daily benefit estimated at $75 if he or she needs help, either with two to three “activities of daily living,” or because of cognitive impairment. “Activities of daily living” include eating, bathing, dressing, using the toilet, continence care, and transferring from bed to chair or wheelchair.
Once a person qualifies, the daily benefit continues for as long as it is needed. This could mean many years of payments. About 40% of those currently receiving long-term care are young people who have had accidents or who have developed chronic illnesses.
The CLASS Act is not intended to pay the full cost of 24-hour care or a nursing home. But many persons with disabilities can stay out of nursing homes, or delay admission to one, with the act’s moderate levels of assistance supplementing family care.
Projections indicate that two-thirds of older Americans will sooner or later need long-term care. For all its limitations, the CLASS Act will give working people – those who have the foresight to enroll – an affordable way to avoid institutional care entirely, or at the very least, to ease its economic burden.
Back to Home
Subscribe to:
Post Comments (Atom)
The CLASS Act's $50 per day "average benefit" will only cover a small portion of the $75,000+ per year most Americans pay for in-home care. Most people who want to protect their savings will still need to purchase long-term care insurance.
ReplyDeleteOne of the biggest problems we face is that most Americans still think that Medicare or their medical insurance covers the cost of long term care.
The CLASS Act addresses this problem by making a very clear statement: You have to pay for your own long term care. You either have to pay for your own long term care by using your savings, the $50 per day CLASS Act benefit, long term care insurance, or a combination of these.
Most of the ten million Americans who own long term care insurance, own it because they've seen friends or family have to spend down their assets before qualifying for Medicaid. The CLASS Act will help alert the rest of the country to the fact that they need to financially plan for their future long term care needs.
There are 2 reasons the projected premiums for the CLASS Act are much higher than a comparable long term care insurance policy.
1) Anyone who is working (even just part-time) can enroll in the CLASS Act regardless of their health history. Enrollees with severe diabetes or crippling arthritis will pay the same amount for the CLASS Act benefit as those who are in perfect health.
2) Those who earn less than the federal poverty level will be automatically enrolled in the CLASS Act for only $5 per month (unless they opt-out). Their premiums are being subsidized by the rest of the enrollees.
Scott A. Olson
www.LTCInsuranceShopper.com
This comment has been removed by the author.
ReplyDeleteThank you for the update. There is not too much information on the CLASS Act out there, so I am trying to read everything I can so I can know how to advise my clients.
ReplyDeleteAlso, thank you for turning me to the New York Times article, I had not read it yet.
For those who have not read it, the link to the article is here:
http://newoldage.blogs.nytimes.com/2010/04/29/details-on-the-class-act/
--at least I am assuming this is the article being referenced!
-Joe DeGroff