New Long-Term Care Insurance In Health Care Reform
Will Provide Flexible Cash Benefits
There are about 10 million Americans, mostly senior
citizens, who need long-term care services (about 60 percent over age
65)
By Harris Meyer
Millie Toda of Toledo, Ohio, takes care of her
husband Richard so he doesn't have to be in a nursing home. (JD Pooley)
April 15, 2010 - Millie Toda of Toledo, Ohio, takes
cares of her husband Richard, 83, who is severely disabled from
Parkinson’s Disease. She’s grateful that with the help of
government-paid home health aides and adult day care, he’s able to
continue living at home rather than move to a nursing home.
Even with that aid, Toda, 75, says extra money
would be a big help. She could use the cash to help replace the broken
lift on the front porch so she wouldn’t have to pull and push him up and
down the front steps of their trailer home to get to his wheelchair.
A provision in the health care overhaul law signed
by President Barack Obama last month could bring some help. The law
establishes a voluntary, long-term care program that will provide cash
to enrollees who suffer at least two limitations in daily activities,
such as eating, bathing and dressing.
Supporters say the program, known as the Community
Living Assistance Services and Supports (CLASS) Act, will give families
greater means to care for disabled relatives. There are about 10 million
Americans who need long-term care services, including 4 million under
age 65.
“This will empower consumers by putting money in
their hands. Then entrepreneurial organizations will come to them and
ask, ‘What can we do to help you?’ ” said Larry Minnix, president of the
American Association of Homes and Services for the Aging, which lobbied
for the CLASS Act.
But
some business and insurance groups argue that the CLASS program won’t be
financially sustainable. The key is getting enough Americans to sign up
for CLASS, advocates respond.
James Gelfand, senior manager of health policy at
the U.S. Chamber of Commerce, which opposed the CLASS Act, doubts that
participation will be adequate. Only about 5 percent of eligible
employees choose to participate in employers’ private long-term care
insurance benefit programs and about 7 million Americans own private
long-term care policies.
The CLASS program will be run by the U.S.
Department of Health and Human Services (HHS). After contributing for
five years, participants who are disabled and meet criteria set by HHS
will be eligible for a cash benefit of at least $50 a day. There will be
no screening for preexisting conditions and no lifetime benefit limit.
The CLASS cash benefit will be flexible. It can be
used to pay for a home health aide, transportation, assistive technology
such as wheelchairs, lifts, text telephones and sensors with alarms,
adult day care, respite care to give the family caregiver a break,
household modifications to accommodate the disabled person – or even to
pay a family member to provide the care. Alternatively, it can be used
to help pay for assisted living or a nursing home.
The new health law has an insurance policy that
would provide about $75 a day to help people like the Toda's pay for
long term care. (JD Pooley)
Such care, of course, can be extremely expensive.
Nursing homes costs average more than $70,000 a year and home health
expenses average just under $30 an hour. But Nancy King, chief operating
officer of Senior Independence, a nonprofit service agency in Columbus,
Ohio, said that even $50 a day -- $18,250 a year -- would help people
trying to pay for a home health aide, adult day care, or assisted
living.
HHS has to write the rules for the program,
including setting the premium and benefit levels and the disability
triggers for receiving benefits. That process will determine when the
program can begin.
CLASS Act Provision In Health Law Will Provide
Long-Term Care For Elderly, Disabled
Kaiser Health News: The Community Living Assistance Services and
Supports (CLASS) Act program, a provision of the health reform law,
"establishes a voluntary, long-term care program that will provide cash
to enrollees who suffer at least two limitations in daily activities,
such as eating, bathing and dressing. … There are about 10 million
Americans who need long-term care services, including 4 million under
age 65."
"Under the terms of the health law, the CLASS
program has to pay for itself through premiums and cannot be subsidized
by the government. Keeping the program solvent, CBO said, hinges on
enrollment of healthy individuals" (Meyer, 4/15).
Stateline.org: "It is well known that nearly all seniors and adults
with disabilities want to remain in their homes as long as possible, and
it's vastly cheaper for states to provide the help – meals, bathing and
dressing, and other home services – that allows them to do so rather
than resort to institutionalization."
But "here's the problem: Medicaid -- which pays
nearly 50 percent of all nursing home bills in the country and 40
percent of all long-term care -- is biased in favor of institutional
care. When seniors qualify financially and are deemed to need care,
Medicaid funding for a nursing home bed is guaranteed.
But for those who
want to remain at home, funding is only a possibility and a national
shortage of home health providers often means long delays." The new law
gives states incentive to reduce the costs of long-term care (Vestal,
4/15).
Under the law, premiums will vary based on initial
enrollment age, with younger people paying less; students and people
below the poverty level will pay only $5 a month.
While HHS has
authority to adjust premiums to keep the program financially viable,
it’s expected that participants will pay the same premium amount as long
as they remain continuously enrolled.
In an evaluation of the proposal last fall, the
nonpartisan Congressional Budget Office
estimated that monthly premiums would average $123 at the start.
It
also projected that benefits would average $75 a day, with annual
inflation adjustments. In its analysis, the CBO estimated the program
would reduce net federal spending for the first 20 years – particularly
because no claims would be paid in the first five years – then boost net
outlays by tens of billions in subsequent decades.
Under the terms of the health law, the CLASS
program has to pay for itself through premiums and cannot be subsidized
by the government.
Keeping the program solvent, CBO said, hinges on
enrollment of healthy individuals. If fewer Americans were to sign up,
and many of them were in poor health, the program would face financial
trouble, the CBO concluded.
In an effort to attract healthy Americans, the
CLASS Act hopes to interest employers and their workers by streamlining
the sign-up and premium payments.
Employers can offer workers the
opportunity to pay their premiums through a payroll deduction. If an
employer does that, all employees must be automatically enrolled in the
program, except those who notify their employer that they want to opt
out. The CBO said that this automatic enrollment feature could boost
participation among healthier people.
The law also allows workers to pay premiums on
their own if their employer doesn’t participate or they are
self-employed.
Many hope the CLASS Act will further increase
public awareness of long-term care needs and boost sales of private
policies to cover more expensive care like nursing homes.
In a written
statement, John Hancock Financial, a major seller of long-term care
insurance, said the CLASS act “sends a powerful message about the
importance of long-term care preparedness” that should motivate
Americans. “It will not replace the need for private long-term care
insurance for many Americans.”
'...spouses of people receiving home care on Medicaid
will no longer have to be forced down into poverty before they get help'
By Howard Gleckman, Senior Research Associate at
the Urban Institute
Various online sources trying to provide seniors
information on health reform legislation
