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Update on the CLASS Act

Some people say the CLASS Act would stimulate an "LTCI Supp" market. Others say it will lull the public into a false sense of security. Here's where it is in early November, thanks to my good friend Diane Boyle at the Association of Health Insurance Advisors in Washington, DC, the health insurance arm of NAIFA.

Health care reform has made its way through the committee process resulting in five legislative versions – two Senate proposals and three House plans. Senate Majority Leader Senator Harry Reid has begun convening daily discussions on how to merge the provisions of the Senate Finance version of health reform reported out of committee this month with the Senate Health, Education, Labor and Pensions (HELP) package approved last July. Participating in these meetings are Senator Max Baucus (D-MT), chairman of the Finance Committee; Senator Chris Dodd (D-CT), acting chairman of the HELP Committee during the time that committee worked on the legislation; Rahm Emanuel, President Obama’s White House chief of staff; Nancy Anne DeParle, Director of the Administration Office on Health Reform; Peter Orszag, Director of the Office of Management and Budget; Phil Schirillo, White House Director of Legislative Affairs; and Shawn Maher, White House Senate liaison. This small group of negotiators hopes to negotiate a single bill to take to the Senate floor by early November.

Among the numerous issues the negotiators are examining is whether to include a new federal long term care program. The Community Living Assistance Services and Supports (CLASS) Act would create a national, voluntary program to provide qualified participants long-term care benefits. Participants would pay a monthly premium, to be set annually by the Secretary of Health and Human Services, and receive $50 a day in exchange if they require long-term care services. The program would automatically enroll workers (who could opt out) who would pay (via payroll deduction) a premium of around $65 per month for a benefit of around $50 per day (exact amounts will depend on actuarial calculations) if the worker becomes unable to perform at least two activities of daily living. Benefits would be payable in cash, and only if the worker had participated in the program for at least five years prior to making a claim.

The insurance industry has come out in opposition to the program. With a one-year stay in a nursing home currently averaging $75,000 and home health care running as high as $46 per hour (Genworth, 2009 Cost of Care Survey), the daily benefit of $50 under the CLASS program would not be nearly enough to cover the cost of a full day of these services.

The Senate HELP Committee version – the Affordable Health Choices Act (S. 1679) – includes the so-called “CLASS Act” program. The Senate Finance Committee plan - America's Healthy Future Act of 2009- does not.

The Senate HELP version also includes a tax benefit for employees who purchase long-term care insurance under cafeteria plans. Senators dropped the provision from the Senate Finance Committee bill in order to help cover the cost of other reform efforts.

The three House committees - Ways and Means Committee, Education and Labor Committee, and the Energy and Commerce) each reported out a version of America's Affordable Health Choices Act of 2009. Although not included in the proposed legislation, an amendment passed in the House Energy and Commerce Committee authorizing reforms similar to those in the Senate HELP legislation. On October 29, Speaker Nancy Pelosi (D-CA) released the merged House Health bill (click here to download) including the CLASS program (see page 1562).

The debate is nowhere near over despite the fact that all of the five committees with jurisdiction over health reform have completed work on comprehensive bills. A “manager’s amendment” is still expected in the House and the two bills in the Senate will be fused, with more amendments and debate before the full Senate, and a floor vote possible this month. Once the Senate and House have passed separate measures, they will appoint negotiators to a conference committee. And then there will be a contentious conference to reconcile the difference between the House and Senate bills. Their final bill must be passed again by the House and Senate before it makes its way to the President.

Diane Boyle is a respected Washington lobbyist and is a principal of DBK Consulting and Executive Vice President of AHIA.



LTC Consultants provides long-term care insurance training to agents and educates consumers with information about long term care insurance. This website contains reports and articles about caregiving, assisted living, nursing homes, aging, senior living and elder care, home health care and other long-term care related articles. Order Phyllis Shelton’s Protecting Your Family with Long-Term Care Insurance with articles about whether or not to self-insure or buy combo life insurance and annuity policies or a traditional LTC insurance plan. The book also contains ideas for people who don't qualify for LTC insurance such as Medicaid, life settlements, reverse mortgages, critical illness and also contains in-depth information about Medicare, Medicare Advantage and Medicare Supplements.


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