Introduction To Long Term Care CLASS Act

The Community Assistance Services and Support Act (CLASS Act) is the first health care program signed by Barack Obama that establishes the government-run long term care insurance program. This program is voluntary and consumer financed insurance plan that provides assistance for people to pursue independent living either at home or in a nursing home. 

Over the years, there have been programs aimed at reducing Medicaid budget on long term care. The CLASS Act is another effort to abate the burden on Medicaid for shouldering more than 40 percent of the overall care for seniors and people with disabilities. Medicaid currently allocates one-third of its entire budget, or more than $100 billion, solely on long term care.

CLASS is the recent effort of the government to persuade more Americans to pay their own long term care rather than expect help from Medicaid from time to time. The Deficit Reduction Act was the pioneer and known program that pushes the expansion of long term care insurance by providing tax incentives and state partnership programs. 

Moreover, CLASS fills the gap of what the previous programs failed to meet. It allows American adults to obtain coverage with limited benefits regardless of health compared to traditional LTC insurance that qualifies people with good health or without pre-existing condition. 

When Does It Start?

The Long Term Care Class Act effective date is January 1, 2011, but will be open to the public in 2012 or 2013. President Obama signed this into a law that will be passed to the Department of Health and Human Services to work on the terms of the program or make some necessary modifications. 

How Does CLASS Act Work?

The budget for CLASS will be coming from the premiums paid by voluntary participants and not on taxpayers. The government has the right to increase the premiums in the future if the initial efforts fail, and will not pay the entire long term care expenses of the voluntary participants in the future. The Act has still no exact definitions on the benefit amounts, premium costs, and requirements for receiving benefits because the Secretary of the Health and Human Services will decide on certain provisions.

CLASS vs. Private LTCi

Policyholders with existing private long term care insurance are advised to retain their policies because CLASS provides limited benefits compared to private LTC. Also, according to AAHSA website, the cash benefit will only be $50 a day. When the participant achieves the level of disability and starts receiving cash benefits, the benefits will continue until the person no longer qualify for the level of disability.

Pros of CLASS

•Makes it possible for everyone to qualify for coverage regardless of the current health condition

•Affordable premiums that start in $5 a month for students under 22 and people below poverty line

•The premiums ensures fair competitive rates with private insurance companies

Cons of CLASS

•Participant has to wait for five years to receive the benefits

•Have to be working adult for more than 5 years before retirement

•Participant has to wait for 2 years before the benefits are determined

Who Should Consider CLASS

•People rejected by private insurance companies

•Low-income, people below poverty line