BOSTON —
The new health care reform law introduces a new type of voluntary long-term care insurance to help individuals remain in their homes if they become disabled or sick. Called the CLASS Independence Benefit Plan, the program will pay cash benefits to help with the cost of non-medical services and supports such as home modification, assistive technology, transportation, personal care and more. They may also be used to cover part of the cost of assisted living or nursing home care.
“Planning for long-term care is an important part of protecting your financial security as you age,” says Deborah Banda, state director for AARP Massachusetts, which represents more than 800,000 members age 50 and older in the Bay State. “The CLASS Plan is designed to help you live more independently if you have or develop a disability. You can use its benefits along with other public programs and private long-term care insurance.”
Starting as soon as next year, those age 18 or older and employed will be automatically enrolled in the CLASS Independence Benefit Plan, unless the employee or employer “opts out,” choosing not to take part in the program. Premiums will be paid through payroll deductions. Individuals whose employers do not offer the program, and those who are self-employed, will also be able to participate in the CLASS Plan.
To receive benefits from the CLASS Plan, individuals must have paid premiums for five years and worked for at least three of those years. Cash benefits will be made to those who have a qualified disability that is expected to last more than 90 days, as certified by a health care provider. CLASS payments will continue as long as an individual remains eligible, which could last a lifetime.
“Over the next several months, federal officials will provide additional details about the CLASS Plan, including premium costs and the amount of cash benefits,” explains Banda. “AARP will continue to closely monitor how the health reform law is implemented to ensure the best possible benefits for our members and their families.”
The new health care reform law also makes additional improvements to long-term care, including:
- Provides better information and accountability for nursing home care. Starting next year, it will be easier to file complaints about the quality of care in a nursing home, and more information about nursing home quality and resident rights will be available.
- Extends financial protections to more spouses of people on Medicaid. If you are married to someone on Medicaid who is receiving care services at home, you will have the same protections for your income and other resources as spouses of those on Medicaid who live in a nursing home. This new protection begins in 2014.
To learn more – or ask your own questions – please visit AARP’s web page devoted to providing information about the health care reform law: www.aarp.org/getthefacts. To receive a free informational brochure, “How the New Health Care Law Benefits You (D19272),” call AARP Massachusetts toll free at 866-448-3621.
Connect with AARP MA online at www.aarp.org/ma, www.facebook.com/aarpma and www.twitter.com/aarpma.
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The CLASS Act’s $50 per day “average benefit” will only cover a small portion of the $75,000+ per year most Americans pay for in-home care. Most people who want to protect their savings will still need to purchase long-term care insurance–especially Long-Term Care Partnership policies.
One of the biggest problems we face is that most Americans still think that Medicare or their medical insurance covers the cost of long term care.
The CLASS Act addresses this problem by making a very clear statement: You have to pay for your own long term care. You either have to pay for your own long term care by using your savings, the $50 per day CLASS Act benefit, LTC insurance, or a combination of these.
Most of the ten million Americans who own LTC insurance own it because they’ve seen family spend down their assets before qualifying for Medicaid. The CLASS Act will help alert the rest of the country to the fact that they need to financially plan for their future long term care needs.
There are 2 reasons the projected premiums for the CLASS Act are much higher than a comparable long term care insurance policy.
1) Anyone who is working (even just part-time) can enroll in the CLASS Act regardless of their health history. Enrollees with severe diabetes or crippling arthritis will pay the same amount for the CLASS Act benefit as those who are in perfect health.
2) Those who earn less than the federal poverty level will be automatically enrolled in the CLASS Act for only $5 per month (unless they opt-out). Their premiums are being subsidized by the rest of the enrollees.
Many of the leading long-term care insurance policies today can pay family caregivers. And many even offer a refund of premiums paid upon death. Most of the leading LTCi policies offer “lifetime” coverage, not just 3 or 4 years. However, if you purchase a “Long Term Care Partnership” policy, you only need to buy the amount of insurance that is equal to the amount of assets they want to protect from Medicaid.
Scott A. Olson
LTCInsuranceShopper.com