Commentary on the CLASS Act: Health Care Reform's LTCi Program
Commentary on the CLASS Act
Health Care Reform's LTCi Program
The Health Care Reform bill creates a government-run long-term care insurance (LTCi) program ("the CLASS Act"), beginning in 2013.
CLASS will be administered through employers who choose to offer it. It is voluntary coverage, intended to be paid entirely by employees. To be eligible, people must be employed and at least 3 years from retirement. Analysts have assumed 2% to 6% enrollment in financial projections. To increase those low expected enrollment rates, employers who offer CLASS must automatically enroll employees who do not proactively opt-out.
Premiums (based on age at purchase) increase in accordance with the CPI each year. The price is limited to $5/month for people earning less than the poverty level. Other purchasers subsidize the $5/month premium. Benefits are paid when insureds are expected to need human help with at least two (or at least three, not yet determined) Activities of Daily Living (ADLs) for at least 90 days or need substantial supervision due to cognitive impairment. However, CLASS will be very different from private LTCi in that benefits will vary depending upon severity of need (the law requires from two to six categories).
Benefits must average at least $50/day (minimum, maximum and targeted average to be resolved) and can be used broadly, specifically encouraging payment of family caregivers. Benefits increase by the CPI each year and are paid as long as care continues to be necessary.
For employees who are not to enroll at work, alternate enrollment methods will be established.
In addition to the cash benefits, CLASS provides advocacy and counseling services which may or may not be identical to the care coordination services included with private LTCi policies.
Written by Claude Thau, April 4, 2010