The health reform law, as amended by the Health Care and Education Reconciliation Act of 2010, establishes a national, voluntary insurance program for purchasing community living services and supports known as the Community Living Assistance Services and Supports program (CLASS Act). The CLASS program is designed to expand options for people who become functionally disabled and require long-term services and supports. The CLASS program is effective on January 1, 2011. The HHS Secretary is expected to define the CLASS benefit by October 2012 with enrollment to begin subsequently. This issue brief describes the major components of the CLASS program including eligibility, benefits, financing, and interaction with Medicaid.
Key elements of the CLASS program:
- WHO CAN ENROLL IN CLASS? Working adults will be able to make voluntary premium contributions either through payroll deductions through their employer or directly.
- WHO IS ELIGIBLE FOR BENEFITS? Adults with multiple functional limitations, or cognitive impairments, will be eligible for benefits if they have paid monthly premiums for at least five years and have been employed during three of those five years.
- WHAT ARE THE BENEFITS? Adults who meet eligibility criteria will receive a cash benefit that can be used to purchase non-medical services and supports necessary to maintain community residence; payments for institutional care are permitted. The amount of the cash benefit is based on the degree of impairment or disability, averaging no less than $50 per day.
- HOW IS THE PROGRAM FINANCED? CLASS is financed by voluntary premium contributions paid by working adults, either through payroll deductions or direct contributions.
- HOW DOES CLASS INTERACT WITH MEDICAID? CLASS will generally be the primary payer for individuals who are also eligible for Medicaid.
The CLASS program gives working adults the opportunity to plan for future long-term care needs by providing a basic cash benefit to those who meet work requirements and have either functional or equivalent cognitive limitations. CLASS may be especially helpful for individuals who are unable to afford traditional long-term care insurance. But that doesn't mean insurance agents should just dismiss it. Lcients need to know how limited the CLASS program benefits are and that LTCI offers a much more comprehensive approach and has numerous coverage options.
While the CLASS benefit is not designed to cover the entire costs associated with long-term care needs, it is structured to help offset the costs incurred by millions of adults with chronic and disabling conditions. CLASS has the potential to reduce reliance on Medicaid and provide relief for family caregivers. However, the payout of CLASS benefits will not take effect until 2017, another significant feature agents need to point out to clients with more urgent LTCI needs.
CLASS and LTCI
- Consumers can choose to direct their own services. CLASS is about giving people more control over their own lives.
- There will be no medical underwriting. CLASS should be open to all American workers who meet the requirements, regardless of their health history.
- Unlike LTCI products the CLASS program offers the unique paring with employers to disseminate outreach information and enroll their employees. The Department of Health and Human Services are also looking at ways to fully implement the alternative enrollment system the statute envisions. CLASS contains neither an employer nor an individual mandate, yet HHS is determined to engage with employers to make enrolling in CLASS as easy as possible.
- The CLASS program was designed to protect today’s workers against future needs. That is why it included a requirement that people earn a certain but yet to be determined amount of money in order to participate. But if that standard is set too low, the program may have too many enrollees who will quickly make claims on program benefits, thereby threatening CLASS’s financial viability. That is not the intent of this program, so HHS will look closely to make sure we have picked the right earnings requirement Closing loopholes that could allow people to skip premium payments and then re-enroll in the program without paying any penalty. All participants should pay their fair share.
HHS will also explore options for indexing premiums for inflation so they would rise along with benefits. The approach to indexing would be completely transparent so that participants could plan ahead. CLASS will attempt to provide tailored benefits to meet individual needs and preferences. CLASS will avoid a “one-size-fits-all” approach to not only serve people better, it will also be attractive to larger numbers of people.
In summary, the CLASS program offers a unique alternative for individuals to consider as the plan for retirement and long-term care services coverage. CLASS is not a comprehensive answer for the provision of long-term care; but it should be considered as part of the solution so understanding its role, potential benefits, and impact on long-term care insurance are essential.
