Benefits and Limitations of the Federal Health Insurance CLASS Act

Starting in 2011, your employer may be offering a new type of federal health care plan for you. Termed the CLASS (Community Living Assistance Services and Supports) Act, this health insurance plan will cover the costs of your long term care should you become too disabled to perform basic tasks such as eating, bathing, and dressing. The CLASS Act will be an optional health plan, not a "tax" as some critics are claiming. Also, the premiums for this health care plan will need to be paid for a minimum of five years before any benefits can be claimed.

Back in December of 2009, Congress passed the CLASS Act bill as part of the new health care law. After it was approved by the House of Representatives in 2010, Obama signed it into law. This law specifically states that the CLASS Act is "a national voluntary insurance program," and that employers are to enroll workers automatically, but that workers can choose to waive this insurance coverage "at any time." The Congressional Budget Office (CBO) estimates that premiums may be as low as $5 per month for poverty level participants and students, but may be as high as $180 per month for other workers. The CBO expects that most workers will end up paying premiums of about $123 per month.

The CLASS Act is not expected to replace long term care insurance, which is a partnership between state and federal medical coverage programs and private insurers. Long term care insurance is intended to protect a participant's assets from being completely "spent down" before that participant qualifies for long term care coverage from Medicaid. The CLASS Act is also not expected to replace Medicaid, the federal medical assistance program which covers long term care for low income individuals. However, the CLASS Act is certainly expected to help slow the drain on Medicaid, which will increase as baby-boomers age and require long term care.

How much coverage can be expected from enrolling in voluntary long term care insurance from the CLASS Act? Currently, daily long term or nursing home care is expected to be at least $50 per day (or $18,250 per year), but it may be as much as $75 per day (or $27,375 per year). However, keep in mind that daily nursing home care can be as much as $200 per day. Because the costs of nursing home care are so high, this insurance program would help cover such items as wheelchair ramps and home health care aides, thus enabling program enrollees to remain in their homes for as long as possible. The CLASS Act would also not discriminate between enrollees who became injured or otherwise incapacitated after age 65 and those who required assistance before that age.

Two things to keep in mind are the following: many individuals who carry Medicare coverage assume that Medicare automatically covers long term care or nursing home care. It does not. While Medicare may cover the cost of a nursing home for a given period of time following a hospitalization, it does not cover long term care indefinitely. Another thing to keep in mind is that, even if one enrolls in the CLASS Act program next year, benefits will not be paid out until at least the year 2016. This limitation means that workers who are currently 62 years of age or older may not have enough employment time left for sufficient plan enrollment.

Reference: Should Long-Term-Care Insurance Be Part of Health Reform?

http://www.time.com/time/politics/article/0,8599,1946431,00.html#ixzz168eGS6IP