Janemarie Mulvey Specialist in Health Care Financing
Kirsten J. Colello Specialist in Health and Aging Policy
Under current law, the majority of paid long-term services and supports (LTSS) 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 long-term care (LTC) insurance is available to provide some financial protection against an individual’s risk of the potentially high cost of LTSS, fewer 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. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) establishes a federally administered voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program. The stated purpose of the CLASS program, among other things, is to provide a financing mechanism for long-term care services that supports personal choice and independence to live in the community. However, a number of concerns have been raised about the long-run sustainability of the program.
Once the CLASS program is established, employed individuals aged 18 and older can voluntarily enroll in the CLASS program. This is a voluntary program and employers would have the option of participating. The ACA specifies two processes for enrollment into the CLASS program. The first is an automatic enrollment process. Within the automatic enrollment process, employers who choose to participate would be responsible for withholding CLASS premiums through payroll deductions. Employees would then have the opportunity to “opt-out” if they do not want to participate. These enrollment procedures for employers in the CLASS program are intended to be similar to those currently established for 401(k) and other similar retirement plans by the Internal Revenue Service. An alternative enrollment process would also be developed for self-employed individuals, those with more than one employer, and those who have an employer that does not elect to participate in the automatic enrollment process.
Premiums for the CLASS program are to be determined by the Secretary based on 75-year actuarial estimates of expected future use and expenditures. Premiums would vary by age at enrollment. The ACA also includes premium subsidies for workers with incomes below the federal poverty level and full-time students aged 18 to 21 who currently are working. To be eligible to receive benefits an individual must be an active enrollee who meets the five-year vesting and minimum earnings requirements. In addition, an eligible individual must have a functional limitation, as certified by a licensed health care practitioner, that is expected to last for 90 days. Benefits to eligible recipients include a cash benefit of at least an average of $50 a day (based on the reasonably expected distribution of beneficiaries receiving benefits at various levels). Other benefits include advocacy services, and advice and assistance counseling on accessing and coordinating LTSS.
In the 112th Congress, two legislative proposals to repeal the CLASS Act have been introduced (H.R. 1173 and S. 720). On October 14, 2011, the Department of Health and Human Services (HHS) sent a letter to Congress stating that after careful examination of how the Administration might implement a long-term financially stable CLASS program, HHS does not see a viable path forward for implementation at this time. This CRS report first discusses the cost and financing for LTSS as well as the current market for private LTC insurance. It then details those CLASS program requirements for enrollment, premiums, eligibility, benefits, administration, and oversight as specified in the ACA. Included in this discussion are various concerns that stakeholders have raised about long-run sustainability of the program.
Date of Report: November 29, 2011
Number of Pages: 20 Order Number: R40842 Price: $29.95
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