- When can I enroll in this program and who is eligible?
- Should I buy long-term care insurance or just wait for CLASS to begin?
- How much will CLASS benefits pay if I need long-term care?
- How much premium can I expect to pay if I enroll in the program?
- How will premiums be collected?
- Do I have to pay into this program? What if I don't want to?
- I already have a long-term care insurance policy. Should I enroll in CLASS or is my insurance enough?
- How will I know when I can enroll in CLASS and find out what it will cost and what the benefits will be?
The CLASS Act is part of the health care reform bill, The Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, March 23, 2010). It establishes a national voluntary long-term care cash benefit insurance program paid for through voluntary payroll deductions.
While the federal legislation established the framework for the program, the Secretary of Health and Human Services (HHS) will be responsible for developing the program details, including deciding which federal government agency will administer the program, how and when enrollment will begin, the amount of premium people will pay, and the type and amount of benefit a person can claim when they meet the eligibility standards that will be established. Only people actively working who receive wages, or who are self employed and have earned income, will be able to enroll in the program when it begins. The program must be financially sustainable over at least 75 years and must be completely funded by the premiums enrollees pay; no taxpayer funds can be used. Premiums paid in must cover the entire cost of benefits paid out. For more detailed information about this program, please see our paper, “The Community Living Assistance Services and Supports (CLASS Act).”
1. When can I enroll in this program and who is eligible?
Enrollment has not yet begun. Most experts predict that enrollment won’t begin before 2013, after the Secretary (HHS) has issued regulations that spell out the details of the program, its operation, benefits, and premiums, and provide for a comment period.
In general, any actively working adult age 18 or older will be eligible to enroll once the program begins, regardless of any health conditions they may have had or currently have.
In general, any actively working adult age 18 or older will be eligible to enroll once the program begins, regardless of any health conditions they may have had or currently have. Premiums will only vary by age, with younger people paying less and older people paying more. Those with wages or earned income less than the federal poverty limit, and full time students under age 22 who are working will pay nominal premiums, initially about $5 monthly adjusted annually for inflation by the Consumer Price Index (CPI). Individuals must have wages or earned income during a year equal to the amount needed to qualify for one quarter of Social Security credit ($1,120 in 2010) for a minimum of 3 years of the first 60 months (5 years) they are enrolled in the program.
Individuals who work for an employer who participates in the program will have premiums automatically deducted from their wages. People who are self employed, work for more than one employer, or whose employer doesn’t participate in the program, will be able to pay premiums through an alternate system set up by the Secretary. Military personnel on active duty will be able to participate through the military system.
2. Should I buy long-term care insurance or just wait for CLASS to begin?
Do not base any decisions you need to make today on CLASS. This program is still under construction and will not be available for several years. In addition, while CLASS benefits are intended to provide a cash benefit on a daily basis to support a person’s independence in the community, it is not intended to provide a complete set of long-term care benefits, or to pay for all the long-term needs a person might have. In the meantime, insurance companies may develop insurance products that will coordinate or wrap around CLASS benefits. In the future, someone who has a commercial long-term care insurance policy and is also eligible for CLASS benefits might be able to delay the use of their insurance benefits by using their CLASS benefits first.
3. How much will CLASS benefits pay if I need long-term care?
The Secretary of HHS will determine the amount of daily benefits and publish it in regulation no later than October 1, 2012. Individuals enrolled in the program must have been actively working or had earned income for at least 3 years during the first 60 months (5 years) of enrollment before benefits will be available.
The legislation requires a scaled benefit based on the degree of impairment and an average minimum daily benefit of $50. However, the new government website for health care reform describes this as a minimum daily benefit amount. See New Community Living Assistance Services and Supports (CLASS) Program at healthcare.gov.
The legislation describes several levels of benefits. The particular level of benefits a person receives is likely to depend on the nature of their impairment, how serious their impairment is, and what kind of care is needed. One measure to be used in determining a person’s daily benefit amount is a person’s ability to perform normal activities of daily living (ADLs), like bathing and dressing, or the need for supervision and assistance when a person is cognitively impaired. People who are seriously impaired are more likely to receive a higher daily amount than people who are less seriously impaired. For instance, an individual requiring extensive care and support services every day at home is likely to have a larger benefit than someone receiving some assistance at home a few times a week.
4. How much premium can I expect to pay if I enroll in the program?
Premium amounts have not been established yet. This is part of the Secretary of Health and Human Services’ duties and will be published in regulations no later than October 1, 2012. Once established, premiums can only vary based on age, not on the health status of the applicant. However, since premiums will be based on age, people who enroll in the first years of the program may pay lower monthly premiums than if they were to enroll later. This is because a person who enrolls later will be older than they were when the program first began and because premiums can increase for new enrollees. Premium increases will only be allowed if needed to ensure the solvency of the program.
Both the Congressional Budget Office (CBO) and the American Academy of Actuaries (AAA) have published estimates of the premiums that they believe would be required to fund the benefits specified in the legislation. Those amounts are based on estimates of: how many people might enroll in the program; the ratio of healthy people to people who might need care; the number of people likely to claim benefits in each year once benefits begin; the amount of daily and lifetime benefits that are likely to be paid for each person claiming benefits; and the amount of inflation added to benefits each year.
The CBO estimated that the average monthly premium needed to fund an average daily benefit of $75 would be $123. If premiums are low, few workers will opt out of the program; if premiums are high, few workers will stay in the program, unless they think they are likely to need the benefits of the program within a few years.
5. How will premiums be collected?
Employers participating in the program will withhold monthly premiums from their employees’ salaries. People whose employers choose not to participate in the program, who are self-employed, or who work for more than one employer will have an alternate system for paying their monthly premiums individually.
6. Do I have to pay into this program? What if I don't want to?
No, you don’t have to. The program is voluntary. You have the right to opt out and no premiums will be withheld from your paycheck. If you choose not to enroll when first eligible, you will have another opportunity to do so every 2 years at the premium based on your current age.
If you enroll in the program and later decide to opt out, you can opt back in during the next 5 years and retain credit for the number of months you already paid towards the 60-month vesting period. Your new premium, however, will be based on your current age. To be eligible for benefits however, you would also have to meet or have met the requirements for a total of 3 years of paid wages or earned income during the first 5 years you were enrolled in the program.
If, after enrolling, you opt out and stay out of the program for more than 5 years, you will lose credit for any prior months of premium payment that you had made. If you re-enroll after 5 years, your new premium will be based on your current age, and a premium penalty will apply. The Secretary of HHS will specify this amount in the regulations to be published in 2012. You will also have to meet the requirement for a total of 3 years of paid wages or earned income during the first 60 months you were enrolled in the program before you will be eligible for benefits.
7. I already have a long-term care insurance policy. Should I enroll in CLASS or is my insurance enough?
There is not a simple answer to that question. It depends in part on your own financial situation: how much coverage you need; how much you can afford to pay for that coverage; and how you feel about the assets you would otherwise spend to pay for some or all of your care. Assuming, on the one hand, that the CLASS premiums were low enough for you to enroll, having benefits from both might let you conserve your insurance benefits if you only need a small amount of paid care when your are first eligible for benefits. On the other hand, if the premium you pay now for your insurance benefits is very high, adding an additional expense would not make sense. Nor would it make sense to give up your LTC insurance and all the premiums you’ve already paid to enroll in CLASS.
8. How will I know when I can enroll in CLASS and find out what it will cost and what the benefits will be?
Check our website. We will have more information available as details emerge. Other advocacy groups and foundations will also be following the progress of the program as it develops.
Also, remember that you can get free, individualized assistance from your local Health Insurance Counseling & Advocacy Program (HICAP) by calling 800-434-0222, or finding the contact info for your local HICAP office online. This state sponsored program can help you with decisions you need to make about long-term care insurance now, and later with questions about CLASS.
Some things to remember: The CLASS Act will NOT solve the nation’s long-term care problems, and it will NOT provide benefits for all your long-term care costs. It will, however, be the beginning of a national focus on helping people remain in their homes and communities with a modest amount of benefits so they can be as independent as possible for as long as possible. And that is quite a lot.
For more information, see our:
- Detailed CLASS Act summary
- Long-term care section