Guide Details Provisions For New Federal Long-Term Care Plan

March 30, 2010 - PRLog -- President Obama signed into law comprehensive healthcare reform legislation that contains a program known as the Community Living Assistance Services and Supporters Act (CLASS Act).

CLASS creates a new voluntary government program under which participants will pay a monthly premium and will be eligible for modest benefits for their long-term care needs after five years of paying premiums.

While CLASS is often characterized as a long-term care program, it is primarily designed as a program to provide future assistance to the working disabled.   Traditional long-term care insurance requires that applicants meet certain good-health requirements.  CLASS will not have health qualification requirements.  The plan will be available on a guaranteed-issue basis.

Provisions of the CLASS Act become effective in 2011 but most experts don't expect the plan will become available until 2013.  Following implementation and withholding of the first payments from employees' paychecks, there is a five-year waiting period during which premiums must be paid before the participant becomes eligible to receive benefits.  As a result, the earliest anyone could be receiving CLASS benefits may be as late as 2018.

"CLASS is intended to be a voluntary plan primarily offered by employers and paid for by employees," explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance  http://www.aaltci.org .  "Or simply stated, money will be withheld from paychecks -- similar to the way Social Security (FICA) payments are withheld from paychecks."

There are provisions to make the offering available to others who may be self-employed or who may not have access to the plan through an employer.  The monthly premium that will be charged by the government and deducted from paychecks has yet to be determined.  

Congress required that the CLASS plan should be fiscally sound for a 75-year period.  The goal was to have the amounts paid by participants ultimately be sufficient to pay future benefits without the need for taxpayer support.

Because of the "guaranteed (health) issue" nature of the CLASS plan, many experts explain that those most likely to apply for CLASS policies will be those in poorer health.  This will likely create more people requiring benefits in future years.  A fiscally sound plan will mean initial premiums could be high (as much as $1,500 to $2,500 a year per-person.  Some say they could be higher.  "Consumers will have to wait for the Department of Health and Human Services (HHS) to set the rates people will pay," Slome adds.  

An online guide providing information on the CLASS Act and addressing commonly asked questions has been created by the American Association for Long-Term Care Insurance, the industry trade organization.   The guide can be accessed via the organization's Consumer Information Center http://www.aaltci.org/long-term-care-insurance/learning-c... .

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American Association for Long-Term Care Insurance http://www.aaltci.org is the national trade organization for long-term care insurance industry.