The new health law creates, for the first time, a national, voluntary long-term care insurance system called the Community Living Assistance Services and Supports (CLASS) Act. Participation will be optional, but if you enroll, you'll get a basic cash benefit for life to help pay for personal assistance if you are disabled or very frail and unable to care for yourself. Here is how CLASS will work:
How Will I enroll?
The insurance probably won't be available until at least 2012. Once policies are on the market, you may be able to sign up through your work. If your employer agrees to offer CLASS, you'll be automatically enrolled starting at age 18 unless you choose to decline coverage. If you do opt-out, you'll still be able to buy in later, although your premiums will be higher.
How much will those premiums cost?
That's a really important question, but we don't know yet. The government will have to work with insurance experts to design a benefit plan people will want to buy at a premium they can afford. Supporters of the bill hope to be able to keep the premium below an average of $100 per month, although a new report suggests they'll cost an average of about $115. If you are poor, or a student, your premiums will be as low as $5 per month. And, as with private insurance, the younger you are, the lower your premium.
Can I be denied coverage?
No. As long as you are working at least part-time you'll be able to enroll. And you'll have to pay premiums for five years before you can collect benefits. But you can't be rejected or required to pay higher rates because you have pre-existing health problems.
What will the benefits be like?
Like the premiums, the exact benefit amount is uncertain, but it will probably be between $50 and $75 per day for most people. It is very important to know that the benefit will be paid in cash, so you'll have lots of flexibility to use the money however you want. For instance, you could pay a friend or family member to stay with you, hire an aide from an agency, put in a wheelchair ramp or grab bars to make your home safer, or spend a few days a week in an adult day center. Benefits will be available to people living at home, in assisted living, or in a nursing home.
$75-a-day doesn't sound like much if I have to go to a nursing home.
You're right. It isn't. But 85 percent of people get care at home and this will make it a lot easier for them and their families. Combined with Social Security and a pension, it may even make it possible for some people to move to an assisted living facility.
What if I already own long-term care insurance?
You won't have to enroll in CLASS, so you can simply keep the coverage you have. Some insurance companies may redesign their policies so they work with CLASS insurance, much like private Medigap insurance supplements Medicare. For now, if you own a private policy and like it, keep paying premiums. If you think you need insurance now, don't wait, go ahead and buy it. But ask your agent how your new policy will work once CLASS policies become available.
Are insurance companies really going to sell policies that will work with CLASS?
Some will. Others think they can sell similar coverage at a lower cost than the government and may try to sell policies that compete against CLASS insurance. But we won't know for another couple of years.
I've heard CLASS is going to be another budget-buster. Is that true?
CLASS is designed to be self-funding for the next 75 years. But until we know how many people will buy the insurance, there is no way to predict how the law will work. No other country has ever tried a voluntary national long-term care insurance system like this, and many experts worry that too many healthy people will decline coverage, driving rates up even higher for those who do want to enroll. If that happens, the program might shut down without some government funding.
Will CLASS make it harder for me to qualify for Medicaid?
No, although you'll first have to spend your CLASS benefit before Medicaid pays its share of your care. But because CLASS benefits are far more flexible than Medicaid's, that may be an advantage to you.