For Professionals: Long-Term Care

The CLASS Act: Health Reform Creates New Voluntary Long-Term Care Insurance Program

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Published: June 30, 2010

Note: The CLASS Act was repealed in January 2013; it will not be implemented. Instead, the government has appointed a 15-member Federal Long Term Care Commission to compile recommendations for addressing the substantial long-term care needs of our growing elder population. More info will be posted soon.

The health care reform legislation, the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, March 23, 2010), created a new voluntary federal long-term care insurance policy and is a part of the legislative legacy of Senator Ted Kennedy. This program, often referred to as the Community Living Assistance Services and Supports (CLASS) Act, is for actively employed individuals who will pay premiums through a payroll deduction system. People who pay into the program and later require benefits can receive an average of $50 a day to pay for home and community-based care, and other long-term care expenses designed to help maintain their independence. The Secretary of Health and Human Services will issue regulations to spell out the details of the CLASS Act no later than October 1, 2012, with a period for public comment. Those regulations will then explain the details of the program, its method of operation, premiums each population group will pay, how people will qualify for and obtain benefits, how decisions can be appealed, and a host of other program details.

Our updated summary on the CLASS Act, by Bonnie Burns, our Training and Policy Specialist, reviews the CLASS Act provisions, examining what’s in the law that will become this new long-term care benefit program. Below is a highlight of a few of the summary details pertaining to premiums, enrollment and disenrollment.

Premiums

Premiums will be the only source of funding for this LTC insurance program; the use of taxpayer funds is specifically prohibited. Premium amounts can be based on the age of the enrollee but not on their health condition. The actual premium amounts will vary depending on a number of factors yet to be determined, such as: 1) the initial and projected numbers of participants in the program; 2) how long people are likely to stay in the program; 3) the probable health status of enrollees; and 4) the amount and cost of services enrollees are likely to need. Administrative costs are capped at 3% of program funds.

Note: individuals enrolled in the program must pay premiums for a minimum of 60 months, known as a vesting period, before benefits will be available. Enrollees must have been actively working for 3 years of those first 60 months.

Enrollment

Active workers age 18 and older will be automatically enrolled in the program through a payroll deduction system. Employers and individuals can opt out and choose not to participate. Individuals who opt out and later want to enroll may pay a late enrollment penalty. Non-working spouses or other non-working individuals are not eligible to enroll.

An enrollee, however, can continue their participation in the program if they stop working but they must have accumulated a minimum of 3 years of employment credit during at least the first 5 years they are enrolled in the program.

People with low-income who meet the requirements for active employment, and full-time students who are working, can also enroll in the program. These individuals will pay a nominal monthly premium of $5, with annual increases based on the Consumer Price Index (CPI). A nominal premium must be maintained for them to stay enrolled.

Full-time students who stop working can stay enrolled in the program by paying a premium based on their age when they first enrolled in the program. Both low-income individuals and working students must annually self-certify their status.

Delayed Enrollment, Re-Enrollment and Disenrollment

Individuals who choose not to enroll when first eligible, will have a chance to re-enroll every 2 years. A late enrollment penalty can be applied and added to their monthly premium.

Individuals disenrolling will have a 90-day window to re-enroll at the same premium and retain their vesting credit equal to their prior months of coverage. After 90 days, but within 5 years, an actively working individual can re-enroll at the premium for their current age. However, the Secretary will determine the amount of vesting credit for prior months of coverage. Five years after disenrollment an individual will not receive any vesting credit for prior months of coverage, and premiums will be based on their current age plus a premium penalty for each month of non-coverage.

The CLASS Act also calls for the Secretary to enter into agreements with public and private groups in each state to provide advice, assistance and counseling services on this new benefit.

Also of note is that CLASS benefits are in addition to any Medicaid benefits, and cannot supplant or replace those benefits. CLASS Act benefits cannot have any effect on eligibility or continued eligibility for any federal, state, or locally funded assistance program.

For more details, please see our updated summary report, Community Living Assistance Services & Supports (CLASS) Act Passed with Health Reform Legislation .

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