Long-term care planning information and long term care insurance information

CLASS Act Information
What Is The CLASS Long-Term Care Insurance Program?
How Does It Impact You (If You Have LTC Insurance ... If You Don't

UPDATED: January 3, 2013. Congress has formally repealed the federal long term care insurance program, the CLASS Act, as part of the American Taxpayer Relief Act of 2012 signed into law yesterday by President Obama. Click here now to read the news report.

UPDATED: October 10, 2011. The Department of Health and Human Services has disbanded the staff working on the CLASS Act program, including the program's Chief Actuary. That said, they have NOT completely terminated the program and are planning to issue a report that may contain recommendations for next steps.

It is the opinion of the American Association for Long-Term Care Insurance that nothing more will be done until after the 2012 Presidential election. If President Obama is re-elected, then HHS will decide whether to revisit CLASS or use it as a bargaining chip going forward. If the Republicans win the White House and more of Congress, then CLASS will be ended along with Health Care Reform.

In the meantime, if you can health qualify for long-term care insurance, waiting only risks you becoming medically uninsurable.

Media should contact Jesse Slome at the American Association for Long-Term Care Insurance for the latest updates and opinions.
Call (818) 597-3227


President Obama has signed into law comprehensive healthcare reform legislation that contains a program known as the Community Living Assistance Services and Supports Act (CLASS Act).

The American Association for Long-Term Care Insurance does not lobby legislative bodies. We are not paid by insurance companies. Our financial support primarily comes from insurance and financial professionals who are members. The mission of AALTCI is to inform and advocate for sound long-term care planning for all Americans and support our membership.

The passage of CLASS does not negate the need for private long-term care coverage in any way. While we have concerns about the long-term fiscal soundness of the CLASS plan, we are optimistic that the program will play a significant role in raising consumer awareness about the many issues surrounding long-term health care and the need to plan for the risk of needing this type of costly care.

Many of the details regarding the CLASS program are not yet defined and will be developed through Government regulation. The information below is designed to address what is known currently and to answer the most common questions being asked. We will make changes as new information becomes available.

Reporters: Please feel free to contact the Association for interviews regarding the CLASS Act provisions. Call (818) 597-3227.

Frequently Asked Questions About CLASS Plan Provisions

What are the general provisions of the CLASS Act?

Most of the important details for the CLASS program have not (yet) been defined. They will be developed by the U.S. Department of Health and Human Services (HSS) over the next few years.

But, simply stated, CLASS creates a new voluntary government program under which individuals will pay a monthly premium and will be eligible for modest benefits for their long-term care needs after five years of paying premiums.

While CLASS is often characterized as a long-term care program, it is primarily designed as a program to provide future assistance to the working disabled. Traditional long-term care insurance requires that applicants meet certain good-health requirements. CLASS will not have such health qualification requirements. The plan will be available on a guaranteed-issue basis.

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When will the CLASS Act begin?

While provisions of the CLASS Act become effective in 2011, there are so many details to be worked out that most experts don't expect the plan will actually become available until 2013. (The law says details are not due until the final months of 2012.

Costs have to be determined. Employers must be given sufficient time to educate employees and prepare to start withholding premiums from employee paychecks. Systems have to be in place to accept and keep track of monies withheld from participants.

Following implementation and withholding of the first payments from employees' paychecks, there is a five-year waiting period during which premiums must be paid before the participant becomes eligible to receive benefits. As a result, the earliest anyone could be receiving CLASS benefits may be as late as 2018.

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Who will pay - will it cost me money?

CLASS is intended to be a voluntary plan primarily offered by employers and paid for by employees. Or simply stated, money will be withheld from individual paychecks -- similar to the way Social Security (FICA) tax payments are withheld from paychecks.

There are provisions to make the CLASS offering available to others who may be self-employed or who may not have access to the plan through an employer. These also will have to be defined and systems established.

Congress made CLASS an "opt out" plan. This is an important point that people need to be aware of. Unlike Social Security or Medicare that are mandatory, CLASS is a "voluntary, opt-out" plan. If that sounds confusing, it is. Read the question below regarding "opt out".

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What will the CLASS insurance cost?

The monthly premium that will be charged by the government and deducted from paychecks has yet to be determined. There have been a wide range of estimates - and we will not speculate on the final cost.

Congress required that the CLASS plan should be fiscally sound for a 75-year period. The goal was to have the amounts paid by participants ultimately be sufficient to pay future benefits without the need for taxpayer support.

Because of the "guaranteed (health) issue" nature of the CLASS plan, many experts explain that those most likely to apply for CLASS policies will be individuals who are in poorer health. If this occurs (as anticipated) it will result in more people requiring benefits in future years. A fiscally sound plan will mean initial premiums could be high (as much as $1,500 to $2,500 a year per-person; twice that for a participating couple). Some say the costs could be higher. But we'll have to wait for the Department of Health and Human Services (HHS) to set the rates people will pay.

Premiums can be increased yearly to ensure that the CLASS fund is actuarially sound.

Remember that CLASS is not a contractual obligation. Future provisions (from costs to benefit eligibility) can be changed. And, of course, while the intent of the law is to avoid requiring taxpayer funds, CLASS could inevitably find itself underfunded the way Social Security and Medicare currently find themselves.

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What if I'm currently age 55 or older?

If you are 55 in 2010, you'll be 58 when CLASS finally starts enrolling participants. You'll have to be employed for at least three years (to age 61) and then pay until you are at least 63. Remember that the plan calls for payments for five years in order to ultimately be eligible to receive benefits (after meeting the qualifications).

If you are 55 and in good health, you should at least look into long-term care insurance. Here's a very important reason.

Insurers offer Good Health discounts and every few years the Association does a survey. In 2009, 46% of applicants between the ages of 50 and 59 qualified for the discount that is locked in so that even when your health changes, it is not lost. Only 38 percent of those between 60 and 69 qualified and 24 percent of those between 70 and 79. Waiting never pays.

So, do yourself a favor. Speak to a long-term care insurance professional. Get a quote for even some modest coverage.

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What does "Opt Out" mean - and why is this very important?

This is important information. Once details regarding CLASS are defined, your employer will provide information. Remember that CLASS will likely not become available until 2013. Information will likely be included as part of the company's annual employee benefits enrollment period. Your employer will give you the option to enroll (yes) or to decline participation (no).

Congress stipulated that employees must decline participation or "opt out". If you don't specifically say no, or "opt out" it will be considered that you have said "yes" and premium amounts will automatically be withdrawn and you will be paying into the plan.

Certainly much more information will be forthcoming because the last thing employers want is confused or angered employees. But, it is your responsibility to watch for and read information.

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Explain the five-year waiting period before benefits begin.

Once enrolled, participants must pay premiums for five years, after which they will be eligible to receive certain benefits for their long-term support and service needs. They must also have worked for at least three of those five years.

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What coverage or benefits will be provided?

While the exact benefits to be provided under the CLASS program are yet to be determined, here is some general information.

Remember that to be eligible for benefits, you must pay premiums for five years to be eligible to receive certain benefits for long-term support and service needs. The participant must have a functional impairment expected to last more than 90 days and which requires substantial assistance with two or three Activities of Daily Living, or has substantial cognitive impairment.

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What if I already have long-term care insurance?

First, it really is impossible for us to fairly evaluate the CLASS plan because currently there is no set price and no established benefit eligibility criteria. Chances are you'll be receiving information from your long-term care insurance provider or certainly can revisit the Association's website for information.

It's recommended you do not drop your coverage or make any changes.

Generally the highly limited nature of the long-term care benefits offered under CLASS, as well as what could be the rather high premiums for CLASS, will not be attractive to those who have already health qualified for individual or employer-sponsored long-term care insurance protection.

If you drop your coverage and decide to re-apply after final costs and provisions of CLASS are established, you may find yourself unable to health qualify. You'll certainly pay higher premiums becauses costs for long-term care insurance increase based on your age.

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What if I do NOT have long-term care insurance currently?

Here are some things to keep in mind.

It will be at least two years before CLASS is operational (2013) and another five years from that time benefore any benefits can be paid (2018).

CLASS is not a contractual obligation (the way private long-term care insurance is). The provisions of the plan can be changed at any point by Congress.

IMPORTANT IF YOU ARE HEALTHYCLASS will likely offer lower premiums to low-income individuals, and many in poor health will take advantage with the anticipation of benefits. As a result, those in good health (or with good incomes) will be subsidizing others. Private insurance is not based on income -- this type of 'subsidization' does not exist.

The government plan is very limited in what it will eventually pay ($50 or $75 per day is way below the cost for quality comprehensive care at home and certainly far less than the cost for care in an assisted living community or skilled nursing home setting).

PLUS, there are several advantages of private long-term care insurance offered on an individual basis or available through your employer.

Unlike CLASS you are not required to be employed or earn any specific level of wages to purchase protection and maintain coverage.

Unlike the CLASS program's 5-year waiting period, there are no minimum number of years an individual must pay premiums before benefits are payable.

Most private long-term care insurance policies provide a broad range of benefits not available with CLASS.

And, if CLASS is priced to be financially sound, it's very likely someone eligible for discounts available from private insurers to those in good health, will be able to purchase more coverage for fewer dollars.

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How Will the CLASS Plan impact long-term care insurance sales?

The following are the opinions of Jesse Slome, executive director of the American Association for Long-Term Care Insurance ... and frankly no one has a crystal ball about these things.

In the short term there will be a whole lot of confusion among consumers. And, confusion will give people a reason (albeit not a good one) to put off what is a very important decision. It's especially hard to talk about a CLASS plan when no prices (costs) have been established and no definitions for benefit qualification have been established.

But in time, all of this will be revealed. And consumers will have the information they need to make an educated and informed decision. I view CLASS as very similar to retirement savings. Some will only have Social Security.

Others don't want to depend on (or solely depend on) government programs. They have 401(ks), IRAs, Roth IRAs and company plans. These types of people will understand that CLASS provides a minimal benefit that won't give them the choice and control of their future that private long-term care insurance coverage provides. When they do, they will continue to purchase protection.

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How Do I Find A Good LTC Insurance Agent?

If you are ready to see what coverage costs start by learning simple ways to get the best long term care insurance costs. Take three minutes to read two guides published by the American Association for Long Term Care Insurance. They appeared in issues of Kiplinger's Personal Finance magazine but you can read them online. No sign-in is required.

If you'd like to compare long term care insurance costs click on this link and request no-obligation information from one of the American Association for Long-Term Care Insurance's designated LTCi specialists. There is no obligation for the information and it is (of course) provided free of charge.

If you have a relationship with a financial planner or other professional, you can ask them for referrals to a long-term care insurance specialist.

You can also use the agent look-up to find local members of the American Association for Long-Term Care Insurance. Simply click on this link now.

Or, if you take a minute to answer some simple questions, we'll forward your name to an Association member who can provide information including free rate quotes. There's never any obligation to buy and if you are dissatisfied with their services, please feel free to let us know. Click here now to start the process.

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