CLASS Act Passes Senate: Natl. Long-term Care Insurance

The Senate passed the Community Living Assistance and Support Services (CLASS) Act on Friday, December 4th, making this act an approved portion of the healthcare reform bill.  The word on the street is the healthcare bill will pass, in some form, and this portion of the bill has now been approved.

What is it?

The CLASS Act allows Americans to contribute, through payroll deductions, to this long-term care insurance program.  After 5 years of paying into the program, benefits may be paid, if assistance is needed for a minimum of 2 Activities of Daily Living.

The purpose of the program is to provide an alternative to nursing home care for people with disabilities and seniors.  It will also allow family members to be able to continue to work and pay for a caregiver. 

Average policy premium?  About $50 per month.

Average amount of daily benefit?  About $75 per month.

How will the benefit be paid for? Through the insurance policy premiums - - this was fashioned to follow how private insurance is operated - which can be extremely profitable when managed well.  The government did have actuaries crunch the numbers for this insurance program (yep, there is a reason why Warren Buffett, one of the wealthiest guys in the U.S.A., likes to buy insurance companies - - many more people pay into premiums than collect on them and interest can be earned on the money in the meantime).  The premiums will be age-adjusted and contributions must be made for 5 years before someone can file a benefit claim.  And, the government can't "borrow" from this money to pay for other programs.

By delaying and preventing nursing home admissions, the CLASS Act will also decrease costs for Medicaid, which only provides for care in a nursing home. 

The risk?  It will be important for participation rates to be high.

Learn more about the CLASS Act and read the statement prepared for the Senate by Massachusett's Senator Kirk, who filled former Senator Edward Kennedy's seat - - Senator Kennedy had been a proponet of the CLASS Act as a way to allow seniors and the disabled to remain in their homes and afford at least part-time care.

 

 

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