Health Reform Law Includes Public Long Term Care Insurance Program

VHCA (4/1/2010)

Note: this article contains excerpts from a March 29, 2010 New York Times Article by Paula Span

The Class Act, a provision of the Patient Protection and Affordable Care Act (PPACA) that President Obama signed last week, sets up the first national government-run long term care insurance program and will be offered primarily through employers. Class, which stands for Community Living Assistance Services and Supports authorizes the Secretary of Health and Human Services to establish details including the new program’s eligibility requirements and premiums, and to devise mechanisms to include the self-employed and those whose employers decline to participate.

The Class Act does not require screening of applicants for health problems, so people who might not qualify for private long-term care insurance can enroll. Participants will pay monthly premiums; after a five-year vesting period, they receive benefits if they need care, whether they are 28-year-olds hurt in snowboard accidents or 88-year-olds with Parkinson’s disease.

The law requires that the Secretary must make sure that the Plan is actuarially sound and that it ensures solvency for 75 years; allows for a five year vesting period for eligibility of benefits; creates benefit triggers that allow for the determination of functional limitation; and provides a cash benefit that is not less than an average of $50 per day. For institutionalized eligible beneficiaries enrolled in Medicaid, the beneficiary shall retain 5% of the cash benefit (in addition to the Medicaid personal needs allowance) and the rest shall be applied toward the facility’s cost of providing care. For beneficiaries receiving home and community-based (HCB) services, they retain 50% of the cash benefit and the remainder shall be applied to the cost of the state of providing Medicaid assistance. Medicaid provides secondary coverage subject to various conditions.

The program is not designed to pay the entire cost of long-term care, but it could nevertheless provide substantial help with the burden. And because beneficiaries will receive cash depending on how disabled they are — they can choose the kind of assistance that best suits their needs: several hours’ daily help from a home care aide (including a family member or a neighbor), participation in an adult day program, adaptations to their own homes, or a move to assisted living or a nursing home, though advocates argue that the program will help the disabled stay in their homes.

Jesse Slome, executive director of the American Association for Long-Term Care Insurance, said he expected people with existing health problems to sign up in droves, paying premiums set too low to sustain the program. “Inevitably, Class will morph into an entitlement program that’s a mandatory tax on all individuals,” he said. He calls it “Medicare Part E.”  A central question, said James P. Firman, president of the National Council on Aging, is how many people will take advantage of the program. “You have to have enough healthy people in the pool to make this work,” he said. Otherwise, premiums could rise too high to be attractive or practical.