The Class Act: Long-Term Care Planning as a Result of the Community Living Assistance Services and Support Act, by Kevin Bress

The Class Act: Long-Term Care Planning as a Result of the Community Living Assistance Services and Support Act, by Kevin Bress

Long-term care planning

As part of the Health Reform Bill signed into law by President Obama, Title VIII of the Patient Protection and Affordable Care Act establishes a government-run long-term care insurance program to be funded by payroll deductions from employees. Dubbed the "Class Act" this program becomes effective in 2011. In this Analysis, Kevin Bress examines the Class Act and addresses planning concerns for those who may be considering long-term care insurance. He writes:

Basic Structure of the Class Act

     Under the Act, employees shall be automatically enrolled by their participating employers unless an employee affirmatively opts out of this new voluntary insurance program. Premiums will be collected through payroll deductions. It does not appear that the premiums to be paid under Class Act policies will be paid with pre-tax payroll deductions. The employee gets insured under a government-issued long-term care policy with fairly limited benefits designed to help with the cost of long-term care, but certainly not to cover the costs. Until regulations are promulgated by the Secretary of Health and Human Services that shed more light on how this program will work, here is what we understand thus far:

  • No claim for benefits can be made until an insured has paid five years of premiums into the program
  • The insured must be employed three of those first five years.
  • There is no "pre-existing condition" limitation - so enrollment is open without medical underwriting. . . .


The Problem: Long-Term Care Insurance Is Viewed as "Too Expensive"

     With baby boomers now reaching retirement age, there are literally millions of people who should be considering the costs of long-term care and how to finance the potential cost. Long-term care costs are now generally viewed as being prohibitively expensive for the average individual. The first line of defense against such costs would be to purchase a long-term care insurance policy. Given the premium cost for a long-term care policy, insurance salespeople struggle to convince shoppers that the cost is worth the benefit.

     Few incentives have been offered by the government to encourage people to purchase this type of insurance.

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