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[Lawrence A. Friedman, CELA] Articles

The CLASS Act Stays in the Picture

Last Updated: 11/9/2009 12:18:03 PM

The Community Living Assistance Services and Supports (CLASS) Act, which would establish a new national long-term care insurance program, continues to survive the long legislative march towards health reform. The measure is part of the 1,990-page House health care reform bill, H.R. 3962, that passed the House. And, given the CLASS Act's short-term contribution to revenue, the betting on Capitol Hill is that the Act will be in any health reform bill that makes it to President Obama's desk. However, some details of the Act as outlined in the House bill have changed from what its original sponsor, the late Sen. Edward M. Kennedy, originally envisioned.

Under the voluntary program, Americans would pay a premium, originally estimated at $65 per month. After they had contributed for at least five years, participants who needed long-term care would be eligible for a modest benefit to pay for a range of services that would help them stay in their homes. In the House bill, that benefit would depend on the degree of incapacity, but would average $50 a day.

Although versions of the CLASS Act are in the House bill and in the Senate Health, Education, Labor and Pensions (HELP) committee's health care reform bill, it is unclear whether the Act will be part of the final Senate bill, which will be a melding of the HELP and Finance committees' health reform measures. But the CLASS Act has one huge advantage that could ensure its survival: it helps the bottom line of any final legislation by being a revenue generator for about two decades. In its preliminary analysis of the House bill, the Congressional Budget Office projected that because the CLASS Act would pay out far less in benefits than it would receive in premiums over the 10-year budget window, it would reduce deficits by about $72 billion, and by a smaller amount in the following decade. After 2029, however, the program would start contributing to the federal deficit, but by a small amount compared to other provisions of the bill.

House Version Changes Details

As currently structured in the House bill, the program would offer between two and six different benefit levels, depending on level of disability. Rather than benefits of either $50 or $100 per day, as called for in earlier versions of the bill, the House version states that the benefit amount will be an average of $50 per day. There could be a sliding scale of benefits, ranging from, say, $30 a day for inability to perform two activities of daily living (ADLs) to $70 a day for five or six ADLs. Also under the House version, beneficiaries could drop out of the program only during a circumscribed "disenrollment period."

In addition, a work requirement has been removed from the House version, which should result in more older Americans signing up. Although enrollees still have to be working when they first enroll, Sen. Kennedy's version required that they had to work three of the first five years that they paid premiums. Under the House version, workers can quit a job after they sign up and still be in the program. Finally, the House version would take effect in late 2012 or early 2013.

Insurance Industry Opposition and Support

As ElderLawAnswers previously reported, the insurance industry is fighting to remove the CLASS Act from health reform legislation, arguing that its modest benefit will not adequately protect Americans who need nursing home care or 24-hour home health care services. A survey by the American Council of Life Insurers, which is spearheading the opposition to the Act, found that public support for the CLASS Act drops when respondents learn about its potential cost. The survey found that only 3 percent of respondents would participate in the program if premiums reached $160 monthly, which is the level the American Academy of Actuaries-Society of Actuaries claims is required for the program to remain solvent.

But a former opponent of the CLASS Act, Scott A. Olson, CLTC, a long-term care insurance agent based in Redlands, California, says he has since been persuaded that the Act will be a net boon to his industry.

"Everyone who will sign up for the CLASS Act is essentially saying 'Yes' to long term care insurance (albeit, government-run long term care insurance)," said Olson in an e-mail message. "But, just as tens of millions of Americans buy Medsupps, so, too, will millions buy 'Class Act' supps!" Olson also contends that the CLASS Act will send a strong message to the older population that "Healthcare reform does NOT include free long-term care."

To read the details of the CLASS Act in H.R. 3962, click here, download the PDF version, and scroll to page 1,562.