Janemarie Mulvey
Specialist in Aging and Income Security
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, 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. To address gaps in LTC coverage and assist individuals and families in paying for such services, the recently enacted Patient Protection and Affordable Care Act (PPACA; P.L. 111-148, as amended) establishes a federally administered voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program.
Once established, employed individuals aged 18 and older can voluntarily enroll in the CLASS program. PPACA specifies two processes for enrollment into the CLASS program. The first is an automatic enrollment process. This is a voluntary program and employers would have the option of participating. 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. PPACA 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 LTC services.
In December of 2010, the bipartisan National Commission on Fiscal Responsibility and Reform released its report containing a set of recommendations to address the nation’s fiscal situation among which include a recommendation to either reform or repeal the CLASS Act. In the 112th Congress, the House passed H.R. 2 on January 19, 2011, which would repeal PPACA (including the CLASS Act). This bill has now been referred to the Senate for consideration. This report first discusses the cost and financing for LTC services 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 PPACA. It then discusses the federal budget implications of the CLASS program, as estimated by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services (CMS). Finally, the report provides a timeline of CLASS program provisions enacted under PPACA.
Date of Report: February 3, 2011
Number of Pages: 19
Order Number: R40842
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Specialist in Aging and Income Security
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, 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. To address gaps in LTC coverage and assist individuals and families in paying for such services, the recently enacted Patient Protection and Affordable Care Act (PPACA; P.L. 111-148, as amended) establishes a federally administered voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program.
Once established, employed individuals aged 18 and older can voluntarily enroll in the CLASS program. PPACA specifies two processes for enrollment into the CLASS program. The first is an automatic enrollment process. This is a voluntary program and employers would have the option of participating. 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. PPACA 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 LTC services.
In December of 2010, the bipartisan National Commission on Fiscal Responsibility and Reform released its report containing a set of recommendations to address the nation’s fiscal situation among which include a recommendation to either reform or repeal the CLASS Act. In the 112th Congress, the House passed H.R. 2 on January 19, 2011, which would repeal PPACA (including the CLASS Act). This bill has now been referred to the Senate for consideration. This report first discusses the cost and financing for LTC services 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 PPACA. It then discusses the federal budget implications of the CLASS program, as estimated by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services (CMS). Finally, the report provides a timeline of CLASS program provisions enacted under PPACA.
Date of Report: February 3, 2011
Number of Pages: 19
Order Number: R40842
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
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