Obama’s CLASS Act – Good Idea or Wasted Effort (Part 1)

Congress’ passage of President Obama’s health care reform last month has generated much controversy and fear, including, in some cases death threats against politicians in Washington who voted for it.  I have been asked my thoughts on the long term care provisions contained in the bill, known as the Community Living Assistance Services and Supports or, to add yet another acronym to our vocabulary, CLASS.  First, let’s go over the specifics as we know them. 

 CLASS creates a voluntary government program under which participants will pay a monthly premium, which will then guarantee them a small benefit to cover their long term care needs.  However, they must pay into the program for at least 5 years before claiming the benefit.  The program is not supposed to be funded with any taxpayer dollars but rather through the premiums collected from healthy participants.

 Participants will pay a monthly premium through payroll deduction.  The amount has yet to be determined but reports are that it will be in the $180-240 per month range, although it can be increased on an annual basis to insure the program is actuarially sound.  The benefits are promised for lifetime, to cover long term care needs.  The criteria has yet to be determined as far as what degree of impairment is necessary to qualify for benefits.  The dollar amount of benefit has been reported to be anywhere from $50 to $75 a day.

 Employers who participate in CLASS will have their employees automatically enrolled, although anyone can opt out of the plan.  Self-employed persons and those whose employers choose not to participate will be able to join CLASS through what has been termed a government payment mechanism.  Those are the basics as we know them.   So, is this program going to be a savior or just another ill-conceived government program?  I’ll weigh in on that next week.