As many of you may be aware, the implementation of the Community Living Assistance Services and Supports Program (CLASS) has been suspended, but not the law itself, due to a lack of sustainability This is the controversial Long Term Care Insurance Program created by the Affordable Care Act (ACA), which was intended to provide financing alternatives for long-term services and supports for community living.
Working adults were to have been automatically enrolled, unless electing to opt-out, with premiums being placed in a “Life Independence Account” and managed by the Department of Health and Human Services (HHS) as a new insurance program. To qualify, individuals must be 18 years old and have contributed monthly premiums to the Program for at least 5 years with a benefit eligibility after proof of 90 days of continuous functional limitation (therefore, no benefits for the first 5 years + 90 days!).
The Cash Benefit is assigned by the Secretary (HHS) based upon the degree of disability or impairment averaging no less than $50 per day. CLASS benefits could be used to offset the costs to Medicaid when eligible for both programs. Unused amounts may roll month to month, but NOT year to year and once benefits cease due to improved circumstances or death, any balances remaining will not be payable.
The majority of individuals with long term care needs (over 85%) live in a community environment. The typical company or individual health insurance program will not cover these costs and the only government plan that will provide benefits (some) is Medicare, however, only those who are designated as poor, or become poor, qualify. Additionally, Medicare is very limited in providing long-term services, covering only short-term skilled nursing and home health care.
As the average life expectancy continues to expand, the annual costs of Long Term Care Programs can be expected to inflate as well. It is for this very reason that several of the larger carriers have either recently decided to leave the market, while continuing to maintain their current book of business, while others have requested and received decidedly large premium increases, in excess of 20%, that have been passed along to the dismay and even horror of their policyholders. Many of whom are on fixed incomes.
One of the only preventive ways to be assured of the prospective affordability of future premiums is to consider a limited pay period, such as a plan with premiums that are only paid to Age 65 or perhaps 10 Years. While the premiums may increase during this period, you are assured that you will no longer have any premiums upon the completion of the chosen time agreement.
With over 10 million Americans in need of long-term services and the average nursing home costs nationally exceeding $70,000 per year, for those who are concerned, I would strongly advocate that you consider looking into a Long Term Care Program, sooner rather than latter, if for no reason other than pricing. Such a plan would go along way to removing the Indignities of both the suspended CLASS Program, as well as the realities of the circumstances.
Finally, for those who are owners or employees of a “C Corporation”, your premiums can be 100% tax deductible, making the limited payment arrangement even more attractive. While those participants of Health Savings Accounts (HSA) would be eligible to utilize any of their accumulated HSA Account resources to pay for their Long Term Care premiums.
As you go to print on November 14th, the Supreme Court of the United States has agreed to rule on the Health Care Law, which is expected to be next June.