Have You Heard of the CLASS Act?

Long Term Care Insurance ImageThe CLASS Act, otherwise known as the Community Living Assistance Services and Support Act, is the federal government’s first attempt at a long-term care insurance program.

While Congress spent the last year debating how to provide health insurance for the uninsured, this little-known provision slipped into the heath care law that could cost some Americans upwards of $2,000 a year. Under-reported and the under the radar of most lawmakers, the program will allow workers to have an average of roughly $150 or $240 a month, based on age and salary, automatically deducted from their paycheck to save for long-term care.

Both supporters and detractors admit much needs to be worked out. There are wide and varying opinions on how the program will work — or if it will work at all.

Supporters say the program will relieve pressure on Medicaid and should help keep us out of nursing homes by enabling Americans to save for something most will eventually need — assistance in eating, bathing or dressing in their old age.

Opponents say the provision is little more than a short-term revenue fix that will eventually add to the federal deficit. While the plan’s opponents don’t question the need for long-term care, they say the federal government should not be managing it, and they believe the program will eventually add to the deficit. Many opponents believe in the early years there will be money in it, but at the end of the day there won’t be enough money to cover the problems because there will be too many people in the program.

The statute says the program is designed to be self-sustaining, with an advisory board to assure the fund remains solvent. But opponents say the fine print already tells another story. Unless modifications are made, according to a CBO analysis of the bill, “the program will add to future federal budget deficits in a large and growing fashion.”

Scheduled to go into effect in January, actual deductions could take place in 2012.

Here’s how the program will work:

  • The federal government will approach employers next year about alerting workers to the proposed deduction.
  • The deduction will work on a sliding scale based on age. Younger workers will be charged less, older workers more. The Congressional Budget Office pegged the average monthly deduction at $146. The Centers for Medicare and Medicaid Services put it higher, at $240.
  • After a five-year vesting period, enrollees who need help bathing, eating or dressing will be eligible to take out benefits, estimated to be around $75 a day for in-home care.