Revealing the Little-Discussed Long-Term Care Insurance Program

While major elements of the Senate health reform bill are discussed daily, not much has been mentioned about a part of the bill that would provide long-term care insurance to the elderly and disabled. This definitely sounds like a great idea for those in need, but the bill would come at a cost to some American workers.

What’s the New Program?

The new program is called the Community Living Assistance Services and Supports (CLASS) Act and is the dream of Senator Ted Kennedy to provide long-term care assistance to millions in need since Medicare doesn’t cover long-term nursing-home stays.

As the program stands, it would pay those who enroll $50 or more a day if they become too disabled to perform their normal daily activities, which include eating and bathing. Coverage would include nursing-home care with a stronger preference toward paying for in-home care (because it’s cheaper), which would include wages for home health care aides and even wheelchair ramps.

Criticisms of the Program

There are some critics of the CLASS Act, which to some seems to unravel its own mission to help people in need. For instance, to stop people from benefiting from the program who are currently in need, the act requires that those who enroll be employed and pay into the system for five years before becoming eligible to collect benefits.

This means, if the full health reform bill is passed, CLASS Act in tow, the program would begin collecting the estimated premiums from enrollments in 2011 and wouldn’t begin paying out until 2016. The premiums collected would be invested in federal securities then when interest was earned it would be transferred back to the CLASS Act trust fund.

Another complaint is that non-working spouses are not eligible to enroll. This means stay-at-home wives would not be able to take advantage of the program.

Will It Work?

According to the American Academy of Actuaries (AAA) there is still room for improvement with the act. The Congressional Budget Office (CBO) predicts that participation will initially be low – around five percent will likely sign up. Unfortunately, this also means that premiums will likely be high – starting at around $180 a month – to cover costs not paid for by the masses.

While the program hasn’t been passed yet, it is something to learn about if you’re interested in planning for your retirement. Will $180 per month premiums be worth the benefit? In case the Senate’s bill – and thus the program – is passed, it’s good to explore these ideas in advance.

Do you think the CLASS Act is a long-term care insurance program with potential to benefit its enrollees?