I’ve read how, due to the c
ost of administering long-term care (LTC) insurance, some private-sector vendors are either revisiting that benefit or jacking up premiums — partly because not enough people are signing up to sufficiently spread the risk, and costs, around. Well, the federal health reform law included a lofty goal of establishing a government LTC program, but seemingly due to some of the same concerns faced by private-sector vendors, the Obama administration has decided to scrap the program.
The reform law established the Community Living Assistance Services and Supports (CLASS) program, which had this goal, according to a brief from the Kaiser Family Foundation:
The CLASS program gives working adults the opportunity to plan for future long-term care needs by providing a basic cash benefit to those who meet work requirements and have either functional or equivalent cognitive limitations. CLASS is designed to help individuals with functional and/or cognitive limitations remain in the community by purchasing non-medical services and supports such as home health care and adult day care. While the CLASS benefit is not designed to cover the entire costs associated with long-term care needs, it is structured to help offset the costs incurred by millions of adults with chronic and disabling conditions. CLASS has the potential to reduce reliance on Medicaid and provide relief for family caregivers. However, the payout of CLASS benefits will not take effect until 2017, leaving many current seniors and people with disabilities without affordable options to finance long-term care in the short-term. Going forward it will be important to monitor the affordability of premiums and the adequacy of benefits for CLASS enrollees as well as participation rates that will impact the solvency of the program. [Emphasis added.]
The program technically became effective Jan. 1, and a year from now details on the program were to be issued by Kathleen G. Sebelius, secretary of the U.S. Department of Health and Human Services. Instead, today, Sebelius issued a statement essentially saying that, at least for now, solvency and sustainability don’t mix regarding the CLASS program. Here’s an excerpt from her statement:
[D]espite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time. … [T]he law passed by Congress required me to design a plan that would be actuarially sound and financially solvent for at least 75 years. … Our work is detailed in the comprehensive report being transmitted to Congressional leadership with this letter. In the report, you will find the results of our actuarial and policy analyses of the CLASS Act along with our legal analysis of multiple plan design options. While the report does not identify a benefit plan that I can certify as both actuarially sound for the next 75 years and consistent with the statutory requirements, it reflects the development of information that will ultimately advance the cause of finding affordable and sustainable long-term care options.
So yes, CLASS is dismissed, even though Sebelius’ statement indicates hopes that the program will be revived, someday.
But don’t let the public-sector efforts detour you from considering whether LTC insurance may be a good benefit to offer employees. See our coverage here and here.