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Jim Lentini: A CLASS Act for health care

Business Commentary

Posted: June 8, 2010 4:55 a.m.
Updated: June 7, 2010 11:55 a.m.

Although it was introduced in committee in 2009 as part of the proposed health care reform legislation, the CLASS Act received little public attention as Congress and the nation hotly debated the rest of the historic law signed into law this year.

We are already seeing the effects of this legislation affecting our health care coverage.

CLASS stands for Community Living Assistance Services and Supports Act. It was first conceived by the late Massachusetts Sen, Ted Kennedy, who envisioned the act as a way to help individuals stay in their homes in the event of a serious illness.

This act would ensure they have help with their activities of daily living (ADLs), and it is anticipated that some people may even be able to continue working in some capacity. The plan is also intended to reduce government spending on Medicaid.

The act has brought much-needed discussion to kitchen tables across the nation as people begin to consider a critical question: How would they cope financially if they lose the ability to take care of themselves and must pay for care?

However, just as health care reform does not yet address the issue of high health care costs, the CLASS Act is not designed to provide full financial protection from the high expense of long-term care that many will face.

In fact, the easiest way to grasp how the CLASS Act works may be to compare it to today's medical or Social Security insurance systems.

At its most basic level, the CLASS Act is a publicly sponsored long-term care plan that offers a level of guaranteed issue coverage to working Americans. While private long-term care coverage offers many advantages, it can be out of reach for many lower-wage individuals who live paycheck to paycheck.

The premiums for CLASS Act coverage have not yet been established, but the law calls for affordable coverage. It also provides a plan without medical underwriting. Unlike private insurance plans, this means no one can be turned away for coverage, provided they meet the eligibility requirements established by Health and Human Services. And the benefit would be payable as long as it is needed.

This coverage should not be confused with disability insurance or Social Security Disability insurance, which can provide an income stream for those unable to work due to illness or injury. The CLASS Act benefit will be payable when a covered individual experiences a loss of at least two ADLs or has severe cognitive impairment.

Health and Human Services is still developing the details of the plan, but it calls for a benefit of at least $50 per day, and according to the Congressional Budget Office, possibly up to $75 per day, based on the level of ADL loss.

This benefit does not offer coverage for everyone. Anyone who is already retired or not working due to a disability and family members who are eligible to enroll in private long-term care coverage are not eligible to enroll in the CLASS Act under the employee's plan. As noted, the limitations, restrictions and qualifications dictate you discuss long-term care with your advisor.

With the aging of Americans, it is most important to consider long-term care when planning for future retirement needs and financial security.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments Inc. His column reflects his own views and not necessarily those of The Signal.



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