Obama’s CLASS Act – Good Idea or Wasted Effort? (Part 2)

Last week we reviewed the specifics of the new CLASS Act which is part of the new health care reform bill that passed through Congress and was signed into law by President Obama last month.  CLASS attempts to provide coverage for long term care.  But, is it going to have an impact on the growing long term care problem in this country?  I wouldn’t count on it.  I wouldn’t hold out any hope that this program will solve, or even make a dent in, the growing long term care problem.  Here’s why.

 For one thing, the specifics are very sketchy.  The Department of Health and Human Services is supposed to put together regulations that will govern the administration of the program so that CLASS won’t be rolled out for 2 years.  Add to that the 5 year pay in requirement before you can put in a claim for benefits, which means we won’t see any impact from this program until 2017.  And that’s if you believe that the details will all get worked out on that time schedule (I wouldn’t bet on it).

 And how about the benefit amount of $50 to $75 per day, which equates to $1500 to $2250 per month?  Anyone who is dealing with a long term care expense knows how little that is when compared to a minimum $4000 assisted living facility charge and a $10,000 nursing home charge per month in our area.  For those being cared for at home, $50 won’t cover much more than 2 to 3 hours of in home care a day.  That’s without considering that, with inflation, the cost of care will surely be significantly more than it is now.  I haven’t heard anything about cost of living increases being included as part of this program.

 I also have my doubts about the financial soundness of the program.  Will there be enough people paying into the system, for enough time, to cover those collecting lifetime benefits?  We’ve seen how the Social Security system is being stretched because of an aging population, not enough workers contributing to the syste, and people collecting benefits much longer than was ever anticipated.  Will employees in their 40’s and 50’s commit to a payroll deduction that will reduce their take home by $200 a month, when they are already struggling to pay their bills in recessionary times?  Especially if there is no guarantee that the premiums won’t increase on an annual basis?  My experience tells me that the average person’s reluctance to address long term care needs – the “it will never happen to me” mentality – won’t change.  And 5 years doesn’t seem like a long enough time to collect money into the program before starting the pay outs.

 All in all, I don’t expect much from the CLASS program.  By the time it has any impact, in the best case scenario, the oldest babyboomers will be into their 70’s and the already overburdened long term care system will need more than what this program can offer.