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CLASS Act Long Term Care Program

Community Living Assistance Services and Support Act (CLASS Act)

January 2013 – Congress has formally repealed the federal long term care insurance program (the CLASS Act) as part of the American Taxpayer Relief Act of 2012 signed into law by President Obama.

The CLASS Act is a voluntary, federally administered, consumer-financed insurance plan that became law on March 23, 2010. The CLASS plan provides plan participate with cash to help pay for needed long term care, if they become functionally limited, in their home or a long term care facility. Although most provisions of the CLASS Act were made effective January 1, 2011, people probably won’t be able to participate in the new program until 2012 or later.

The CLASS long term care program will be available to all working Americans through their employer. If an employer decides to participate, employees will be signed up automatically, with premiums handled through a payroll deduction. People cannot be excluded from enrolling due to pre-existing health conditions and employees may opt out if they do not want to enroll in the program or would rather purchase private long term care insurance.

CLASS Long Term Care Benefits

The CLASS long term care program is estimated to pay a cash benefit of $50/day. A higher cash benefit may be paid for people with greater need and the cash benefit will increase annually to keep up with inflation. There is no lifetime limit on the benefits.

CLASS long term care benefits are not immediately available. Unlike private insurance, a participant will need to pay premiums for five years and be actively at work for three of these years before they are eligible to receive benefits.

How Much Will CLASS Long Term Care Insurance Cost?

Right now, no one really knows how much this program will cost eligible employee participants. The non-partisan Congressional Budget Office has estimated that premiums would average $125/month, but many feel this is an overly conservative estimate since many sickly individuals will join the program. This will probably result in higher premiums to cover the programs expenense. Never the less, the following guidelines have been established:

  • Premiums may be lower for younger people than for older people.
  • Premiums should remain the same, but this is not guaranteed.
  • People with health issues or a disability may not be charged higher premiums.
  • Working students and people with low income will be charged a special low premium price.

There are many opinions about this very controversial government program and many details about its implementation are still up in the air. Although the CLASS long term care insurance program may eventually be a viable alternative for individuals with significant health problems that are otherwise uninsurable, most healthy people will find private long term care insurance a better value.

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