A portion of the new Health Care Reform act focuses on Long Term Care. It is a Government sponsored LTC plan called CLASS or Community Living Assistance Services and Supports Act. This act will provide for a national LTC entitlement program. The plan offers a basic level of coverage guaranteed issue (no qualifying based on health) to working Americans. It actually works like a “pay ahead” plan like Social Security.
The plan can be offered by employers, but not mandatory. In that case premiums would be paid through payroll deduction. The plan will be offered to everyone even if self employed or their employer doesn’t offer the plan. It will have a mandatory 5 year vesting period before any benefits are payable. There is no set premium yet, but estimates are between $150-$250 per month. Once an individual has the loss of 2 Activities if Daily Living, or Alzheimers, they would be eligible t0 receive at least a $50 benefit per day towards some type of Long Term Care. The plan may pay up to $75 per day depending on the level of ADL loss. And there will be specific enrollment periods that employees could enter and leave the program.
The problem with this type of plan is that is doesn’t go far enough to cover someone fully. The average annual cost for Home Health Care is over $25K. The CLASS plan would only fund half the cost. An assisted living facility average cost is $41K, the plan would fall short there as well. And for Nursing Home care at an average cost of $72K per year the plan is very short. For most people, the need for a private LTC policy to supplement this plan is necessary.
The CLASS plan will not go into full effect until 2016, so the final details are not complete. But hopefully this gives you some idea of what to expect.