CLASS: What Everyone Needs to Know

1. CLASS:What Everyone Needs to Know

2. 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.

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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.”

9. 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

10. 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)

11. CLASS vs. LTC • LTC InsuranceCLASS • Collects premium/invests reserves Reserves: Treasury Bonds • Underwritten to price risk No underwriting • Pricing based on experience Pricing subject to future claims • State commissioner regulates HHS regulates • Contract enforceable by law Federal entitlement program • Voluntary Opt-out • Average 90 day EP 5-year waiting period • Available to relatives and Available to active • retirees employees

12. 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