October 2011 -- CRITICAL UPDATE: US Department of Health & Human Services
Secretary, Kathleen Sebelius, had to finally admit that implementing the CLASS
Act was a bridge too far.
Read all about it on her website
(http://www.hhs.gov/secretary/letter10142011.html)
THE BALANCE OF INFORMATION ON THE CLASS Act is, due to the above CRITICAL
UPDATE, somewhat now irrelevant and should only be read or considered on the
basis of historical reference.
----------------------------------
The Community Living Assistance Services and
Supports Act ("CLASS Act")
In March 2010, the Community Living Assistance Services and Supports (CLASS)
Act was passed as a provision in the new health care reform law (the Patient
Protection and Affordable Care Act). This new program allows for the creation of
a voluntary government plan that provides some long-term care coverage.
While the program is still under review and refinement by the Department of
Health and Human Services, and is not expected to be finalized until 2012,
publicity about the CLASS Act is beginning to pick up. At best the program will
not officially take effect until 1/1/2013 and may, in fact, be undone between
now and that time since most actuarial findings show that the resources to fund
and sustain such a program simply do not exist.
The CLASS Act will establish a national long-term care assistance program run
by the federal government that is intended to help people pay for the cost of
care when they become functionally disabled for 90 days or longer.
Employers do not have to offer this program to their employees and do not have
to pay any of the costs for employees if they do offer the program.
The CLASS Program Is Expected to Work as Follows:
• Active workers earning a minimum threshold of income, ages 18 and older, are
eligible to participate in the program regardless of health. Non-working
individuals are not eligible.
• If an employer decides to make this program available to their employees,
their workers will be automatically enrolled in the program through a payroll
deduction system. Their employees will be allowed to opt out if they do not want
to participate.
• Premiums will be established based on the age of the applicant. While premiums
have not yet been determined, it is expected that they may be as high as $240
per month*. Low income workers will pay nominal premiums, starting at $5 per
month, subject to an annual increase for inflation. Premiums are intended to
remain level, but the law permits premium increases if the program needs more
funding. The program will be funded by premiums and will not be supported by
taxes.
• Workers must pay premiums for at least five years before becoming eligible for
benefits. Alternate methods of payment will be established so that workers can
continue to pay premiums if they leave their employer. Those dropping their
enrollment and no longer paying premiums will not be eligible for benefits.
• Enrollments are expected to start in 2012 or 2013.
• A minimum benefit of $50 a day on average that can be used to pay for medical
and non-medical services. The daily benefit amount may be higher or lower,
depending on functional limitations.
• The benefit amount will be adjusted annually for inflation.
• The benefits would continue for as long as the impairment/need is present.
[*Richard S. Foster, Chief Actuary (January 8, 2010) Estimated Financial
Effects of the “Patient Protection and Affordable Care Act of 2009,” as Passed
by the Senate on December 24, 2009, p.14].
For questions about this and the more popular and practical Private Long Term
Care Insurance alternatives, please contact us today: 800.482.5347
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