Specialist in Aging Policy
Kirsten J. Colello
Specialist in Health and Aging Policy
Under current law, the majority of paid long-term care (LTC) services are funded by public programs, such as Medicaid and Medicare. However, these programs are limited in scope and continue to face increased financial pressures. Although private LTC insurance is available to provide some financial protection against an individual's risk of the potentially high cost of LTC, less than 10% of individuals aged 50 and older own such a policy. Thus, for the majority of older Americans, the out-of-pocket cost of obtaining paid help for these services may far exceed their financial resources. To address gaps in LTC coverage and assist individuals and families in paying for such services, the House and Senate have each passed their versions of comprehensive health care reform legislation that include the establishment of a national voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program. On the House side, these provisions appear in the Affordable Health Care for America Act (Sections 2561 of H.R. 3962) passed on November 7, 2009. On the Senate side, similar provisions are included in the Patient Protection and Affordable Care Act (Sections 8001 and 8002 of H.R. 3590), passed on December 24, 2009.
Both the House and Senate bills are similar with respect to benefit determination, eligibility, enrollment, oversight and administration of the CLASS program. Specifically, both would allow employed individuals aged 18 and older to voluntarily enroll in the CLASS program. CLASS enrollment would not be subject to underwriting so coverage would be available to all persons who enroll regardless of pre-existing conditions. The CLASS program would provide employers the option to automatically enroll their employees in the new voluntary publicly administered LTC insurance program through payroll deductions. Employees would then have the opportunity to "opt-out" if they do not want to participate. One key difference between the proposals is that the House bill would allow non-working non-institutionalized spouses of employed workers to enroll in the CLASS program; the Senate bill does not have this provision. The bills also differ with respect to the authorities given to the Secretary of Health and Human Services and the Secretary of Treasury.
Premiums for the CLASS program would be determined by the Secretary of Health and Human Services (HHS) based on 75-year actuarial estimates of expected future use and expenditures. After a five-year vesting period, eligibility for benefits from the CLASS program would be based on the existence of a functional or cognitive impairment that lasts for at least 90 days and that would be certified by a licensed health care practitioner. Benefits to eligible recipients would include a cash benefit of at least $50 a day and would vary based on the degree of the beneficiary's functional or cognitive impairment. Other benefits of the CLASS program would include advocacy services and advice and assistance counseling on accessing and coordinating LTC services. The key difference in premiums between the two proposals would be that the Senate proposal includes explicit premium subsidies for workers with incomes below the federal poverty line and full-time students at the ages of 18 to 21 who currently are working.
This report discusses the cost and financing for LTC services as well as the current market for private LTC insurance; compares the CLASS provisions in both the House and Senate health care reform legislation and identifies key differences between the two bills; and discusses the federal budget implications of the proposed CLASS program, as estimated by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services (CMS).
Date of Report: January 15, 2010
Number of Pages: 18
Order Number: R40842
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Tuesday, January 26, 2010
Community Living Assistance Services and Supports (CLASS) Provisions in H.R. 3962 and Senate-Passed H.R. 3590