Legislative Update
The recent enacted Healthcare Reform will provide long-term care benefits. It is referred to as (CLASS) the Community Living Assistance Service and Supports Act of 2009.
This provision points out the need of long-term care benefits, however will not completely solve the long-term care issue.
The CLASS Act will set up a voluntary government program under which employees will pay a monthly premium, be covered on a guaranteed-issue basis, and be eligible for benefits after paying premiums for the first 60 months of coverage.
Enrollees will be automatically covered unless they opt out, but can opt out back in at a later time. Based on the severity of the situation you would be able receive a minimum of $50 per day or $100 per day, payable as long as you remain eligible.
Relying solely on the government program will undoubtedly fall short of actual cost of long-term care now and in the future.
With the average cost in Pennsylvania approximately $240 per day (over $100,000 per year) the government program may be a good starting point for some.
However, even if the program is run efficiently, premium increases will be needed in the future to cover the increasing costs of long-term care. But there are other factors to consider, too:
- What if not enough people enroll and/or stay enrolled to sustain the program without significant premium adjustments?
- What if only enrollees in “poor health” stay in the program?
- What if the program “pays out more” ( benefits) than “takes in” (premiums)?
Just as people on Medicare (Federal government Hospital/Medical insurance) need to “supplement” their Medicare benefits, or many people now on Medicare have decided to go “private” and have their own Medicare Benefits (Medicare Advantage). One of these approaches should be considered with the CLASS act.
- Supplement the CLASS act with a “supplement” long-term care plan. Or
- Have your own “private” comprehensive long-term care plan.
In fairness, the government is addressing the long-term issue that all of us are facing. However, the biggest mistake you can make is getting a “false sense of security” that all your long-term care needs will be met by the federal government.