Health Reform's Long-Term Care Option

jkom51June 12, 2010

I'm posting this here because this option, when finally set up, applies only to workers, not retirees. Most people don't seem to know much about this, and this article gives the basic pros and cons of the new LTC option vs the average private LTC policy:

Health Reform's Long-Term Care Option

June 11, 2010 SmartMoney: Elder Care by Lisa Scherzer

(excerpted) "Tucked into the health reform legislation that passed in March is a national voluntary insurance program for purchasing long-term-care services.

Called the Community Living Assistance Services and Supports program, or CLASS, the programÂs benefits will be financed by voluntary contributions paid by working adults (age 18 or older) through payroll deductions.

The program could go to supplement the private long-term-care insurance that consumers purchase to cover the costs of long-term-care services, most of which are not covered by traditional health insurance or Medicare. LTC insurance policies pay for several types of care, including nursing home care, assisted living care, and home health care services.

"The idea behind it is: How can we keep people at home for as long as possible, and reduce the number of people going into an institutional setting?" says Janet Forlini, policy director for long-term services and supports at the National Council on Aging.

Over 10 million Americans need long-term care services and supports to help them with daily activities  a number thatÂs expected to grow with an aging population, according to Kaiser Family Foundation, a health policy nonprofit.

Given the new program, how should workers plan for their long-term care? One thing they shouldnÂt do is rely solely on CLASS and assume it will take care of all their needs."

Here is a link that might be useful: SmartMoney article: LTC option under reform bill

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Sorry - a little more info to be added:
(IÂm a believer itÂs best to get a private policy before one turns 50 [most carriers will not write an LTC policy on anyone younger than 45] as the premiums start to rise substantially after that age. As the first article states, the premiums for the CLASS program are not much cheaper than a Preferred risk would pay for a much better private LTC policy if purchased at age 50 or younger. Our own policies (purchased thru DH's employer 10 yrs ago) are miles better than the CLASS program offers, but if we tried to obtain these same policies now, weÂd either get turned down or have to pay three or four times more than what we currently pay.)

Further info:

Article: With Health Reform, Long-Term-Care Option Becomes Law
CLASS Act enacted with health care reform
3/24/2010 By Stephen Miller

Under the CLASS Act program, all premium costs can be charged to employees.

Employers who chose to participate in the CLASS program wil be required to permit employees to make contributions by means of a payroll deduction, once the CLASS Independence Benefit Plan is designated by U. S. Department of Health and Human Services (HHS), which is to be no later than Oct. 1, 2012.

Employers either would create automatic enrollment procedures that allow workers to opt out, or allow workers to choose to enroll and pay premiums. Participants must pay monthly premiums for at least five years before they could receive benefits. Seniors (over age 65 years old) who have paid premiums for at least 20 years and are not actively employed are exempt from paying any premium increase.

Premium payments will be placed in a "Life Independence Account" on behalf of each eligible beneficiary and managed by the U.S. Department of Health and Human Services as a new insurance program.

As the CLASS program is developed, participating employers will need to coordinate with their payroll services providers to facilitate these deductions and contributions.

The Congressional Budget Office estimates that the monthly insurance premium will average about $123 in 2011. Premiums vary with age and will not increase once employees signed up, but they would increase for those signing up later.

After five years of paying into the program, enrollees who continue to pay monthly premiums would become eligible for assistance if they experience limitations in two or more so-called activities of daily living, including eating, bathing, dressing and taking medications. This assistance would take the form of a modest daily cash benefit, estimated at $50 per day for impaired enrollees living in the community, for services such as respite care, home care aides and accessible transportation, and up to $75 a day for enrollees who become institutionalized. These amounts would increase with inflation.

Here is a link that might be useful: Earlier info on CLASS program

    Bookmark   June 12, 2010 at 12:25PM
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beachlily z9a

At the age of 53 and already in disability retirement, I was denied the ability to purchase a LTC policy (offered by a company representing the Federal govt.) because of arthritis and carpel in both wrists. The representative said I was denied because it sounded like I would need it! My husband has had multiple types of cancer so he can't buy it either. We are both retired Civil Service employees. We have always believed that we should take care of ourselves, and the government agrees! Fortunately we can afford it.

    Bookmark   July 2, 2010 at 9:22PM
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Insurance companies are like banks. They prefer to do business with you when you don't really need them. That's why financial planning should take into account your family health history and how much risk you are willing to take on future scenarios.

Despite what people would like, the world runs on profit and loss. If you are a bad risk, there are fewer people willing to do business with you.

That's why the best advice we were ever given was to buy LTC insurance early (in our late 40's) rather than waiting for the traditional "get it when you're 60" theory. Less than 5 yrs after purchase, my DH had a haemorrhagic stroke. That made him virtually uninsurable by ANY standards.

Even if we never use the policy, it's worth it for the peace of mind and planning purposes. I don't have any fears of running out of money should he become disabled or die - and vice versa, since I have my own LTC policy. Because we bought it a decade ago, the premium increases have been manageable (we budgeted for increases in all living costs over the years) and benefits are much better than the government program.

But for those who are working but can't qualify or afford private insurance, the federal LTC option has some advantages that are worth considering. Everyone's financial situation and health morbidity is different.

    Bookmark   July 3, 2010 at 3:42PM
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