CLASS: What Everyone Needs to Know

LTC AND HEALTH CARE REFORM The Patient Protection and Affordable Care Act (PPACA) passed in March 2010 Establishes a new voluntary LTCP public program called Community Living Assistance Services and Supports (CLASS) Further Expands Medicaid’s home and community- based care options, providing additional federal funding to shift from institutional care.

C.L.A.S.S Effective date: January 1, 2011 – NOT HHS has hired staff for it as of October 2010 Benefits and premiums of the program are yet to be determined PPACA requires completion of plan design and costing by October 1, 2012 It could come in sooner, but likely not available until January 2013

C.L.A.S.S An employer-based, voluntary program to provide some cost relief for long-term care expenses Intended to: Help people stay independent and at home Build support services for that purpose Alleviate family caregiver burdens Move Medicaid away from institutional care Encourage younger people to plan ahead for LTC needs

CLASS is Employer-Based Administered through employers Employers can choose to participate or not If they do – employees are in unless they specifically opt out CLASS program funded by employee contributions only Non-workers (including spouses) are not eligible for CLASS Self-employed and employees of employers with fewer than 50 employees who do not offer the program will have another portal for entry

CLASS: The Independence Fund What LTC benefits are there in CLASS? Called Independence Fund Benefit level likely to be just $50-75/day Must need help with either 2 or 3 ADLs – TQ definition (must last longer than 90 days) No maximum benefit period No underwriting Cash benefit – can be used to pay family members Inflation – tied to regular CPI

The Long Wait There is a 5-year waiting period for benefits. No benefits payable for first 5 years. 60 months need not be consecutive, but if there is a lapse in premium payments of more than 3 months, then at least 24 months of CLASS premium payments must be consecutive During the first 60 months of CLASS enrollment, person must be working for at least three calendar years

Disenrollment According to the PPACA: “An individual shall only be permitted to dis- enroll from CLASS (other than non-payment of premium) during an annual disenrollment period established by the Secretary for HHS.”

What About Retirees? Brochure from HHS highlighted CLASS as a benefit of PPACA to Medicare beneficiaries But the “three years of active employment” may preclude most retirees from being eligible for this program This is an employment-based program

No Risk Management Principles There is no contract, policy or certificate for the Independence Fund 5-year waiting period for benefits – then an unlimited benefit period No underwriting No premium or benefit guarantees No program guarantee (other than a refund of premium paid in if it is disbanded)

CLASS vs. LTC LTC InsuranceCLASS Collects premium/invests reservesReserves: Treasury Bonds Underwritten to price riskNo underwriting Pricing based on experiencePricing subject to future claims State commissioner regulatesHHS regulates Contract enforceable by lawFederal entitlement program VoluntaryOpt-out Average 90 day EP5-year waiting period Available to relatives and Available to active retirees employees

What Does CLASS Cost? No premiums established yet. CBO was working with a $123/month premium assumption for a $75/day cash benefit $5/month premium set for students and people who earn less than Federal poverty level Family of 2: $14,750 Family of 4: $22,050 Only 5% of workers fall into this category