CLASS Act, Voluntary Long-Term Care Insurance Program of Affordable Care Act, is Called-Off

On October 14, 2011, the Obama Administration announced that the voluntary long-term care insurance program of the Affordable Care Act, the “CLASS Act,” is not viable for implementation. The announcement came from Kathleen Sebelius, Secretary of the United States Department of Health and Human Services, in the form of a letter to the Speaker of the House of Representatives. In this letter, Ms. Sebelius describes the thorough research done on the financial and structural solvency of the CLASS Act if implemented. The bottom line: the CLASS voluntary long-term care insurance program will not work because the cost will be too high for individuals who need care.

What is Long-Term Care?

Let’s take a look at what long-term care is before getting into why we need long-term care insurance. Long-term care (LTC) covers a broad range of services and supports for individuals requiring medical and/or social care over an extended period of time. 

• This includes activities of daily living (ADLs) like feeding and bathing; and instrumental activities of daily living (IADLs) like grocery shopping and doing laundry. 
• Long-term supports and services (LTSS) can be delivered in two main areas: institutions (like nursing facilities) or the home and community based setting (Assisted Living, Supportive Living, private apartment or home).

To learn more about how Illinois LTC measures compared to other states, read my blog post about a recently published study on LTC across the country.

What does this announcement mean to people with long-term care needs?

The CLASS Act offered a way for the United States to start addressing the long-term care needs of millions of Americans.  Persons with disabilities and older persons are the largest populations with LTC needs.  For more information on what the CLASS proposed to do, read Illinois’ Health Matters Blog Post by Lisa Ekman on the CLASS Act.

According to the National Clearinghouse for Long-Term Care Information, over 20 million people had LTC needs in 2008, with more than half of these people being over age 65. According to Politico Pro, only 7 million of these individuals have the private insurance to cover their LTC needs.

With the advance of medical technology and the aging of our population, people are living longer and with chronic conditions that require LTC. Here are some statistics:

• The number of adults 65 years and older will more than double from 40 million today to over 85 million by 2050. See Census Bureau data here and here.   
• An estimated 130 million Americans live with at least one chronic disease, and at least 65 million older adults experience multiple chronic conditions[1]. 
• 25% of older adult Medicare beneficiaries have more than four chronic conditions and are responsible for at least 80% of Medicare spending[1].

Now that the CLASS Act has been called off, the American public should be asking: “What is our country going to do for people who need long-term care?” Right now, we simply do not have a LTC system that can handle the number of people who need LTC. Medicare only pays a small portion of long-term services and supports; Medicaid requires people to spend down their savings in order to access LTC. And both Medicare and Medicaid are constantly under attack at a federal level for budget cuts. Meanwhile, the millions who require LTC will continue to have LTC needs, many of which will go unmet.

What Can You Do?

If:

• You are a person with a disability or an older adult who requires long-term care, OR 
• You know someone who requires LTC, OR  
• You support the program for those who have LTC needs

Then:

Share your story, and call your Senators and other elected officials! Simply call their offices and tell them that you support, and would like the Senator to also support, Medicare and Medicaid because these programs help you address America’s (perhaps your) LTC needs. More specifically, you can tell them that you do not want any cuts to benefits or changes to eligibility for these programs.

For your reference:

• Senator Dick Durbin’s Illinois office phone number is: (217) 492-5089 
• Senator Mark Kirk’s Illinois’ office phone number is: (217) 492-4062

Your voice and your stories are important and are a way to tell our elected Congressmen WHY we need LTC programs, and WHY we need to protect Medicare and Medicaid.  
 
Questions? Comments? Please let me know, I look forward to hearing from you and continuing the conversation.

For additional resources on how the Affordable Care Act addressing LTC, please download the Health Care Reform Impact in Illinois, Long-Term Care Reform Provisions Brief.

Kristen Pavle
Associate Director
Center for Long-Term Care Reform
Health & Medicine Policy Research Group
312.372.4292 x 27

[1] Boult, C., Karm, L., & Groves, C. (2008) Improving chronic care: The “Guided Care” model. The Permanente Journal. 12 (1), 50-54.

The CLASS Act: A New Option for Paying for Long-Term Services and Supports

Have you ever thought about how you would pay for services or supports to allow you to live independently if you acquired a disability or if a health condition you already have became worse and you needed assistance to complete basic tasks?

If you are like most people, you probably haven’t.

Most people don’t even want to think about the possibility that an illness, accident, or chronic health condition will happen to them, let alone plan for the possibility. Until now, the options have been limited even for those who have considered the possibility. Private long-term care insurance was the only option and for many the expense made it unaffordable. For others, a pre-existing illness or chronic health condition meant that long-term care insurance was not a viable option. Fortunately, there is a new program called the Community Living Assistance Services and Support Act, or CLASS Act, that will provide long-term services and supports to people who participate in the program.

The CLASS program is a voluntary, federally administered, consumer-financed long term care insurance plan. President Obama signed it into law as part of the Patient Protection and Affordable Care Act (ACA) on March 23, 2010. The CLASS plan provides those who participate through their employer with cash to help pay for needed assistance, if they become functionally limited, in a place they call home — from independent living in the community to a nursing facility, if they choose.

The CLASS Act is designed as an employer option to provide a long term care benefit for their current employees.  Employers that choose to participate in the program will deduct CLASS premiums from the earnings of employees, who can also decide whether to participate. There is no employer contribution required. There will also be a way for people whose employers don’t participate and for the self-employed to pay premiums and participate in the program.

The basic design of the program is simple: people over 18 who are actively at work (which will be defined in regulation by the U.S. Department of Health and Human Service (HHS)) must pay into the program for at least 5 years to be eligible to receive a benefit. A person who needs assistance with activities of daily living and has paid premiums for 5 years can apply for and receive a cash benefit to pay for the services required to maintain independence in the setting of their choice.

Although the basic outline of the CLASS program was established in the ACA, it does require HHS to fill in many of the details -- such as the amount of premiums people will pay -- through regulation. There may be some changes to the program as implementation moves forward to 2013. We anticipate that HHS will make the following changes in order to provide a benefit that employers opt to offer and that is sustainable without tax dollars, as is required by the CLASS Act.

1) The premium will be adjusted so as to account for inflation.

2) The program will continue to be guaranteed issue available to people with underlying health conditions. However, the minimum earnings level will probably be raised in order to ensure that the program has beneficiaries who are consistently active workers.

3) The program will also close loopholes to guard against beneficiaries who intermittently pay into the program over the course of their working life.

4) The CLASS benefit design should be completed in 2012, with premium collection either beginning later next year or in early 2013.

5) The Secretary of HHS is evaluating ways to make the CLASS program sufficiently flexible to ensure that the diverse long-term services and supports needs of Americans are met.

Here are two helpful links you can use to follow the development of the CLASS Act benefit: LeadingAge and AdvanceClass. Also, here is HHS's FAQ on CLASS.

Lisa Ekman, JD, MSW

Senior Policy Advisor 

Health & Disability Advocates