A new option now exists for those interested in purchasing long-term care insurance. Contained within the health reform package, the Community Living Assistance Services and Supports (CLASS) Act creates a voluntary national insurance program that will provide up to roughly $27,000 annually for disabled individuals who require nonmedical, or custodial, services.
“The demographics show that an increasing number of people are living longer with disabling conditions,” says Larry Minnix, president of the American Association of Homes & Services for the Aging (AAHSA). The Centers for Medicare and Medicaid estimates that 9 million Americans need long-term care services, a number that will increase 30 percent in just two years. And in roughly seven out of 10 cases, according to CMS, family and friends are the sole caregivers, which creates a costly and often strenuous situation.
The CLASS Act, which is scheduled to begin operating in a practical way in early 2011, covers the provision of care for activities of daily living such as getting dressed, bathing and using the bathroom. None such custodial services are covered by Medicare. Prior to the health reform passage, just two options existed for long-term care needs: private long-term care insurance and Medicaid.
While detractors of the CLASS Act question its payment model, in which individuals are vested after five years of paying premiums, and its long-term viability, proponents of the Act applaud its comprehensive expansion of long-term care access and point to reports from the Congressional Budget Office that project the Act to remain solvent for 75 years.
“[The CLASS Act] takes advantage of choice,” says Minnix. “It takes advantage of a large insurance pool. And it allows people to stay where they want to stay—at home.”
Below are the main attributes of the CLASS Act:
Accessible custodial care. The intent of the CLASS Act legislation is to provide an accessible insurance program for individuals who may potentially face disability. The insurance program provides custodial care to meet the needs of activities of daily living.
Structure of payment. Individuals who wish to participate will provide a monthly payment that initial studies suggest would fall within the range of $85-$100, according to the AAHSA. The payment structure will exist on an opt-out basis. Those who are in college or fall under the poverty level would be required to pay less—as low as $5 per month.
Qualifications. After five years of payments, individuals will be eligible to receive benefits. Individuals must have been working for at least three of those five years. In terms of collecting benefits, individuals must meet specific disability criteria based on physical or cognitive functioning.
Benefits. Depending on the established degree of disability, individuals will receive a cash sum averaging roughly $50 per day or more. The cash benefits are intended to help individuals retain independence and likewise reduce the burden of nonpay caregivers.