The Community Living Assistance Services and Supports (CLASS) provisions for long-term care passed as part of the Act will be developed by the Department of Health and Human Services over the next few years.
CLASS provisions create a voluntary government program under which participants will pay (not the taxpayers) a monthly premium, on a guaranteed-issue basis, and will be eligible for modest benefits for their long-term care needs after five years of paying premiums.
What are the details of the coverage that would be provided?
• pay a monthly premium, through payroll deduction. Estimates indicate that the average premium will be $180-$240/month; that premium could be increased yearly to ensure that the CLASS fund is actuarially sound,
• be covered on a guaranteed-issue basis,
• be eligible for benefits for their long-term care needs after paying premiums for the first 60 months of coverage (i.e., a 5-year waiting period) and have worked at least three of those five years,
• receive a lifetime cash benefit after meeting benefit eligibility criteria, based on the degree of impairment, which is expected to average about $75/day or more than $27,000 per year and is payable as long as the claimant remains disabled. Enrollees will be offered coverage through their employers and will be automatically covered unless they opt out. They can opt back in later. Self-employed people or those whose employers do not offer the benefit will also be able to join the CLASS program through a government payment mechanism.
What if a client is considering the government plan now rather than LTC insurance?
It will be at least two years before the CLASS Act is operational and another five years from that time before any benefits can be paid. Since the government plan is highly limited, delaying the purchase of an LTC insurance policy can have an effect on the cost of your policy and possibly your insurability. Some advantages of a obtaining a private LTC insurance policy today are:
• no employment requirement
• a broad range of benefits better suited to address the high cost of care.
• no minimum number of years you must pay premiums before benefits are payable; the coverage will begin paying benefits once the benefits trigger and waiting periods have been met.
• Any unused LTC insurance benefits are carried over from year to year.
• The policy provides access to care coordination services, quality providers, and provider discounts.
Do you still need his/her LTC insurance policy?
Yes, it is recommended that all private LTCI policyholders retain their private LTC insurance policies due to the highly limited nature of the long-term care benefits that will be offered under CLASS, and potentially very high premiums for CLASS due to adverse selection.
CLASS provisions do not negate the need for private LTC insurance coverage. In addition, the program should play a significant role in raising consumer awareness about the many issues surrounding long-term care and the need to be prepared for a long-term care event.