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A CLASS Act: Long-term health care
A home health care worker combs the hair of an elderly man after shaving him in his home in Miami, Fla.
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TEXT OF INTERVIEW
Tess Vigeland: The new health care law has been parsed over pretty thoroughly at this point. But one piece of it has gotten scant attention. It's called the CLASS Act, stands for Community Living Assistance Services and Supports. Boils down to a national plan for long-term care insurance.
If you're thinking long-term care isn't really something you need to worry about, well, our healthcare reporter Gregory Warner is here to explain why you should. Welcome to the show.
GREGORY WARNER: Hi, Tess.
VIGELAND: So let's start with the basics. Define long-term care for us. What does that mean?
WARNER: Long-term care basically means help with the activities of daily living, like bathing, dressing, getting in and out of bed, and using the toilet. Of 10 million Americans who now need long-term care only about 60 percent are over 65, so we're talking about people who become disabled both old and young.
VIGELAND: Well, that's interesting because I think a lot of people when they think of long-term care think, oh, that's something I'm going to need when I get old.
WARNER: Well, exactly. I mean a lot of people have the attitude, oh, this doesn't apply to me, I'm not going to need that for another 40 years. And speaking for myself, I mean, I don't have long-term care insurance, even though it was offered through my job. I talked to Steve Edelstein of PHI, they're an organization that advocates for home-care aide workers. He says the older people are when they sign up for long-term care insurance, the higher the premiums.
STEVE EDELSTEIN: People don't even start thinking about it until they're in their 60s, and at that point they're just too close to the age of potentially needing it that it costs thousands and thousands of dollars.
VIGELAND: Thousands and thousands of dollars. That I would think would be what would keep people from getting on this kind of program. So let's talk a little bit about what this piece of the health-care reform law does to fix that situation.
WARNER: So now the government's passed a national long-term care insurance program. It's called the CLASS Act. And enrollment likely begins around 2013. The key feature here is that it's an opt-out program, so if you're making enough money to pay Social Security taxes you will automatically be enrolled. The big question is how much people will pay in premiums, and we're still waiting for the White House to tell us exactly how much. The Congressional Budget Office estimated average premiums at around $123 a month, but of course, there's a big difference between whether how old you are when you sign up, and how many Americans actually join in.
VIGELAND: So is this one of those pieces of insurance where the younger you join it, perhaps, the less your premiums are going to be, but you still get the same benefit?
WARNER: Exactly, because the younger you are when you start, the more money you will contribute before you finally need it. The pay-out that's expected, it will be something like a minimum of $50 a day or maybe $75 a day.
VIGELAND: Fifty or $75 a day... You know, if you're truly disabled, how far is $50 going to get you?
WARNER: Well, if you need full-time care, it doesn't get you far. A home health-care aide gets paid about 10 bucks an hour. So if you were to get this $50, say, and put it toward home care, a home care aide only, you'd get five hours. So someone to come over in the morning, help you, say, get out of bed, maybe make a meal. Those five hours could be the difference between going to a nursing home and being able to stay at home.
VIGELAND: But you know, I have to say in a nursing home, you would expect there's some basic level of care, but when you're talking about millions of Americans hiring home-care workers, who is watching that store?
WARNER: Well, exactly. I mean right now home-care aide workers, this is a low-paying job, and yet this is a huge business. I mean we spend $80 billion in this country on some three million home-care workers, and the legislation that we're talking about is supposed to now create a personal care advisory panel to basically advocate for more training, decent wages and more regulation of the industry.
VIGELAND: Now, how would this work? How would these payments be doled out then? Is the government then giving out checks?
WARNER: The government basically gives you a check, which then you spend. And you can even actually hire a family member, which could be great for family members who don't have to then choose between going to work and caring for a parent. Of course, at the same there's a big potential for fraud. I should mention though that you can't hire your spouse, because apparently the pledge to be there in sickness and health extends to long-term care.
VIGELAND: All right, Marketplace's Gregory Warner speaking to us about the CLASS Act. This is part of the health care reform law that's going to provide long-term care benefits. Thanks so much for the help.
WARNER: Thanks, Tess.
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You are so right! I remember when Cheney returned to Washington specifically to cast his vote on this. I tried to tell everyone about the 2005 Act but no one wanted to hear it. I live in a staunch GOP state. I cannot understand why people my parents ages (my dad is a WWII vet) refuse to face this truth. Everything is blamed on President Clinton or President Obama regardless of what the true facts are regarding the 2005 Act. I just do not understand.
Cheney/Gregg's Deficit Reduction Act 2005, passed in RECONCILIATION, illegally with two different documents in the House and Senate, taxes the middle class elderly the total amount of their life savings if they need a nursing home. Most of these nursing homes are non-profit to boot, as it is in my parent's case. In my parent's case this was $600+ a day for 1.5 years before MassHealth (yes Massachusetts) would consider their application. So my parents paid out their total life savings @ $600 a day to subsidize all the others in the nonprofit nursing home who are already on Medicaid. This is the Cheney/Gregg's method of reduction of the deficit...off the back of WWII Disabled Vets (my parents) who remain alive long enough to need a nursing home. If they passed away before they needed the nursing home their life savings would have been inherited tax free (less than 2M). Now that their life savings has gone to the nonprofit and Medicaid has kicked in, my parents still have to pay the nonprofit their retirement income of $69,348 a year, as it should be!!!!!! �but only after Medicaid demands they continue to pay their Medicare and Federal Blue Cross insurance premiums of $5,505 a year. They have prescription coverage under their Medigap policy, but they still were forced to Medicare D. Why wasn�t their retirement income of $69,348 (minus the premiums of $5,505 still required of them going to Medicare and Federal Blue Cross) enough for the nonprofit nursing home from the date of their admissions? Ask Cheney/Gregg. Gregg says now� � We can all agree that no American should lose their life savings or their home because of illness or injury and that the rising cost of health care severely burdens individuals, families and businesses,� Gregg wrote in his letter to Obama this week. �Report after report also confirms that health care costs are a systemic risk to the long-term fiscal health of our nation.� He apparently forgot about his Deficit Reduction Act 2005 he passed in reconciliation which does exactly this to the elderly needing nursing homes who have saved more than $2,000 in their lifetime and not hidden it. Cheney/Gregg's DRA 2005 is the perfect example of how the GOP reduces the deficit off the backs of WWII Vets with a tax of $300+/day...the perfect storm of GOP, health care debate let them eat cake and GOP hypocrisy. Medicare does not cover nursing homes. My parent�s life savings does. Watch Sen. Gregg "not" answer the hard questions about what he did here. The Cheney/Gregg Deficit Reduction Act 2005, passed in reconciliation, is the largest case of Elder Middle-class WWII Disabled Vet Financial Abuse in History!! Wake up all you elders who are on Medicare or Medicare Advantage and LOVE them. Cheney/Gregg are counting on you and your families to remain hapless while they take your life savings from you if you ever need long-term care. The gentleman in the next room to my parents purchased long-term-care insurance to protect his assets. It turns out that this policy will not pay for his long-term care now (he was duped). So his and my parents life savings are paying for all the others in that nonprofit nursing home who hid their assets and/or are already on Medicaid. Pay close attention to how Gregg backpedals from what he did to the elderly with his Deficit Reduction Act 2005 that passed in reconciliation. He counted on the elderly to be and remain ignorant until they are admitted into nonprofit nursing homes�
To Mr. Cohen and Mr. Collins-Young:
You are correct that there is nothing in the CLASS Act legislation that would prevent a CLASS Act beneficiary from paying a spouse to care for him/her.
However, the legislation does require that once per year each beneficiary account for how the money was spent. It is likely that the money will be considered taxable income to the spouse who is providing the care.
Most of the leading long-term care insurance policies today allow for a policyholder to choose a "cash option" at the time of claim. This allows for the claimant to pay a family member to provide care, make modifications to his/her home, or do whatever he/she feels is best with the money.
As with most things in life, the long-term care insurance policies available today are much more flexible and more "user-friendly" than the policies that were available 10 to 20 years ago.
Scott A. Olson
www.LTCInsuranceShopper.com
To: Heather Miller.
As mentioned in my previous posts, long-term care insurance policies can ONLY be cancelled if the premium is not paid on time.
Large rate increases are NOT common on long term care insurance policies. Most of the rate increases on long term care policies have been requested by insurers rated "B+" or lower. Insurers with an "A" rating or higher have had remarkably few requests for increases.
The single largest long term care insurer has been offering long term care insurance since 1974. This insurer has about 1.5 million long term care policyholders, (about 15% of the market share), and has had only 1 rate increase in 36 years of selling LTCi. That rate increase was less than 13% and it was requested on about half of their policyholders. A single rate increase over such a long period of time is remarkable. I wish all my insurance premiums were that stable.
Scott A. Olson
To: Helen Wood.
Long-term care policies cannot be cancelled except for a failure to pay premiums on time. If your father's policy was cancelled, that is the only reason for which it could have been cancelled.
Since 1997, every policy that meets the federal guidelines allows for a policy to be re-instated up to six months after it has lapsed, if the premium was not paid on-time because the insured was cognitively impaired. If your father did not pay his premium on-time because he was cognitively impaired, you may be able to get the policy re-instated.
Scott A. Olson
Long term care insurance seems like such a scam to me. The premiums are horrendous and for the slightest reason the company can cancel your policy or increase your premiums. If you miss a payment or can no longer pay the premiums, you forfeit all you have put into it. My husband and I have set aside a pool of money for long term care that we are hoping will be enough if something happens to one of us, but at lease we know we have that much and it can't be canceled on us.
Mr. Cohen's correction is accurate. The CLASS Act's benefit CAN be used to pay a spouse.
The cash payment can be used for anything "the beneficiary needs to maintain his or her independence at home or in another residential setting of their choice in the community." That includes paying a partner for assistance/care.
This is different from who is eligible to sign up for CLASS. At one point, “non-working†spouses could enroll, but that was changed along the way.
You can read more about the CLASS Act and eligibility rules: http://www.aahsa.org/classact.aspx
I wrote a blog post about this, as I was incredulous that you can't use the CLASS money to compensate a spouse. The post is at: http://familyinequality.wordpress.com/2010/05/17/paid-for-care/
However, now I'm told the regulations have not yet been written, and the spouse exemption is not in the law. Does anyone know where Warner got that? Thanks.
How do you know you are dealing with a reputable insurance company when purchasing Long Term Health Care Insurance? My father paid into a "Long Term Care" policy for about 15 years, and last year they sent him a letter (he was nearing his 80th birthday) and informed him they would no longer cover him. All the premiums he had paid over the years to ensure coverage when/if he needed it for naught. It makes me skeptical of the industry.
As an employee benefit vendor specializing in long-term care insurance I would really like to give CLASS a chance. At the least, it will be a catalyst for an all too important national dialogue on how long-term care can be financed.
But to give CLASS a chance it will need to be embraced by corporate HR, and this is where the immediate disconnect occurs. The darn thing is just too complicated. No one is yet addressing the problem of three different 'classes" of enrollees. Enrollees who initially opt in, dis-enrollees who opt out, and re-enrollees, who after opting out, opt back in. And there are premiums, premium penalties, and credits which need to be tracked. Why bother? From a corporate HR perspective it appears nightmarish. If possible HSS needs to simplify the process. CLASS needs to attract employers- not repel them.
Craig Davis
http://www.ClassActProvisions.com
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