Long-term Care Insurance: CLASS Act Included in Healthcare Law May Be On Hold

Publisher Note:  On October 14, 2011, the Dept. of Health and Human Services reported that the CLASS Act may not be viable as participation is not mandatory for all.  Read More.

Senior care can cost from $34,000 to more than $100,000 in a nursing home each year.  Most of us never plan on needing senior care, but insurance industry professionals who have done the research say we will probably need at least 2 years of senior caregiving.  As Americans are living longer, with the assistance of medications and medical technology, it makes sense that caregiving services will be needed when recovering from surgeries or coping with age-related illnesses.

The government is also aware of the need for care services for seniors and the costs, because they have been footing the bill for a large amount of senior care needs through the Medicare and Medicaid health insurance programs for seniors.  Medicaid, insurance for very low-income seniors (assets must be below $2,000 in most states), does pay for ongoing care in a nursing home.  You must have few assets and little income to qualify for Medicaid, but the good news is right now Medicaid will pay for your nursing care, in a nursing home, for as many years as you may need it.  You can check the Medicaid qualifications in your state, and if you do not qualify for this low-income health insurance as a senior, you are on your own to pay for your long-term senior care needs.

The good news is that the government wants to help you afford to pay for senior care in the future, and has included a long-term care insurance benefit in the new health care law.  Often referred to as "O'bama Care", the new health care law, officially called the Patient Protection and Affordable Care Act. has a provision called "The CLASS Act, CLASS stands for Community Living Assistance Services and Supports Act

What you should now about the CLASS ACT:

• Long-term care insurance, managed by government, with tax benefit for deducting from paycheck

• Must be 18 or older to participate/enroll

• Must be working/employed 

• You will be accepted, regardless of Pre-existing conditions

• Employers can offer and will automatically take out of your paycheck unless you opt-out (note: this is not opt-in, it is opt-out so you will automatically be contributing unless you ask not to be included)

• If Emploiyer does NOT offer, you may enroll individually

• Must work and contribute for 5 years before qualifying for benefits

• Benefits expected to be from $50 to $75 per day 

• Dept. of Health and Human Services has until October 2012 to define the specifics of the daily benefit

• Benefits will be paid to you directly, allowing you to choose your providers

• Benefits may be used for a wide variety of expenses, including hiring a home caregiver and doing home modifications

•  Costs of premiums will be connected to your age and will be cheaper for younger people

•  Cost of premiums for low-income individuals and students will start at $5 per month

The details of the program program must be released by the Department of Health and Human Services by October 1, 2012 and sign-ups will begin after that, in the 4th quarter of 2011 or by January, 2012.  It should also be mentioned that the CLASS Act was a tribute to Senator Ted Kennedy who advocated for it after seeing how the costs for paying for long-term care needs could devastate a family financially.   Nursing homes are rarely a first choice for anyone and the CLASS Act will make it easier to pay for caregiving services in the home.