What Is the CLASS Act?
Nearly all Americans will be affected in some way with the enactment of the Patient Protection and Affordable Care Act, which President Obama signed into law in March 2010.
The health reform legislation creates CLASS, a national, voluntary insurance program to provide individuals with a cash benefit if they have a functional limitation, or disability. The intent of the CLASS Act – also known as the Community Living Assistance Services and Supports program – is to provide additional options for people who may need a way to help pay for long-term care services.
Although the details of the program, including regulations that will define exactly how CLASS will operate, have not been defined, the CLASS program is effective on January 1, 2011. The health reform law requires the federal government to release the details of how CLASS will work no later than October 1, 2012. If this deadline is met, you should be able to sign up for the program starting in early 2013.
Who Can Enroll In Class?
CLASS is a voluntary plan that mainly will be offered by your employer and paid for by employees. Similar to Social Security and Medicare payroll taxes, payment for CLASS will be withheld from your paycheck. The law will also allow people who are self-employed to participate in the program.
It is important to remember that enrolling in CLASS is voluntary and you do not have to participate or pay any premiums. Most likely, it will be offered to you during your company’s benefit period when you sign up for health insurance and other company-sponsored benefits. At that time you can “opt” out of CLASS coverage.
You can enroll in CLASS if you are “actively at work,” age 18 or older, and you are not living at the time in a nursing home or another long-term care facility. You cannot be excluded from enrolling in CLASS if you have any pre-existing conditions such as a physical disability or a chronic disease such as diabetes.
How Much Will CLASS Cost?
The monthly premium that the government will charge you to participate in CLASS has not been determined yet. Those amounts will probably not be announced until sometime in 2012.
One of the financial goals of the CLASS Act is to make sure that no taxpayer support is needed to pay for the program for at least 75 years. Therefore, the premiums paid by people who enroll in CLASS must be high enough to pay for all of the benefits required by people in the program who need long-term care services. Some insurance brokers have speculated that the monthly premium for an individual may range from $100 to $200 (or more) per month.
The federal government, through the U.S. Department of Health and Human Services will determine the premium amounts. Younger people – since they will be paying in for a longer period of time – will most likely pay less than older participants. If you are a full-time student or your income is below some percentage of the federal poverty level, you will pay a nominal premium, possibly starting at $5 per month.
What Benefits Will the CLASS Program Provide?
To be eligible for CLASS benefits, you first must pay premiums for five years after which you will be eligible to receive a cash benefit if:
- You have a functional impairment, or disability that is expected to last more than 90 days; and,
- you will need substantial assistance with two or three Activities of Daily Living because of the impairment; or,
- you have a significant cognitive impairment – such as Alzheimer’s disease or dementia following a stroke.
A Dr. Mike Long-Term Care Definition: Activities of Daily Living include eating, bathing, dressing, using the toilet, getting out of bed or a chair, and caring for incontinence.
Also, you must have been employed during three of those five years in which you were paying premiums.
Although the CLASS cash benefit is not designed to cover all of the costs related to your long-term care needs, it is intended to help you offset some of the expenses you may incur. You can use the cash benefit to help pay for health-related services that are not covered by either your health insurance or Medicare, such as a home health aide or adult day care.
The actual cash benefit you receive will be based on the severity of your impairment or disability, but will average no less than $50 per day and is expected to average about $75 per day, or more than $27,000 per year. The greater your need for help with activities of daily living, the higher your cash benefit.
There is no lifetime limit on the CLASS benefit – if you qualify you will receive a benefit, which will continue until you no longer have a qualifying level of disability.
Some Thoughts from Dr. Mike
Long-term care services are very expensive and it’s important to plan how you will pay for such services if you need them in the future. For example, in some states the yearly cost of a nursing home can be more than $100,000.
The older you get, the more private long-term insurance will cost you to purchase. And, many people think that Medicare will pay for most long-term care – it does not!
Although the CLASS program may help pay for some of your essential long-term needs, it is not meant to be a substitute or replacement for basic health insurance or for long-term care coverage that you get through private long-term care insurance or Medicaid.
CLASS may supplement your long-term coverage by providing a cash benefit to pay for non-medical expenses that may help you remain independent for a longer period of time.
You can read the actual CLASS Act at:
- Patient Protection and Affordable Care Act: Title XXXII - Community Living Assistance Services and Supports
