If you are like most people, you probably haven’t.
Most people don’t even want to think about the possibility that an illness, accident, or chronic health condition will happen to them, let alone plan for the possibility. Until now, the options have been limited even for those who have considered the possibility. Private long-term care insurance was the only option and for many the expense made it unaffordable. For others, a pre-existing illness or chronic health condition meant that long-term care insurance was not a viable option. Fortunately, there is a new program called the Community Living Assistance Services and Support Act, or CLASS Act, that will provide long-term services and supports to people who participate in the program.
The CLASS program is a voluntary, federally administered, consumer-financed long term care insurance plan. President Obama signed it into law as part of the Patient Protection and Affordable Care Act (ACA) on March 23, 2010. The CLASS plan provides those who participate through their employer with cash to help pay for needed assistance, if they become functionally limited, in a place they call home — from independent living in the community to a nursing facility, if they choose.
The CLASS Act is designed as an employer option to provide a long term care benefit for their current employees. Employers that choose to participate in the program will deduct CLASS premiums from the earnings of employees, who can also decide whether to participate. There is no employer contribution required. There will also be a way for people whose employers don’t participate and for the self-employed to pay premiums and participate in the program.
The basic design of the program is simple: people over 18 who are actively at work (which will be defined in regulation by the U.S. Department of Health and Human Service (HHS)) must pay into the program for at least 5 years to be eligible to receive a benefit. A person who needs assistance with activities of daily living and has paid premiums for 5 years can apply for and receive a cash benefit to pay for the services required to maintain independence in the setting of their choice.
Although the basic outline of the CLASS program was established in the ACA, it does require HHS to fill in many of the details -- such as the amount of premiums people will pay -- through regulation. There may be some changes to the program as implementation moves forward to 2013. We anticipate that HHS will make the following changes in order to provide a benefit that employers opt to offer and that is sustainable without tax dollars, as is required by the CLASS Act.
1) The premium will be adjusted so as to account for inflation.
2) The program will continue to be guaranteed issue available to people with underlying health conditions. However, the minimum earnings level will probably be raised in order to ensure that the program has beneficiaries who are consistently active workers.
3) The program will also close loopholes to guard against beneficiaries who intermittently pay into the program over the course of their working life.
4) The CLASS benefit design should be completed in 2012, with premium collection either beginning later next year or in early 2013.
5) The Secretary of HHS is evaluating ways to make the CLASS program sufficiently flexible to ensure that the diverse long-term services and supports needs of Americans are met.
Here are two helpful links you can use to follow the development of the CLASS Act benefit: LeadingAge and AdvanceClass. Also, here is HHS's FAQ on CLASS.
Lisa Ekman, JD, MSW
Senior Policy Advisor