ACLI raises debate over proposed long term care legislation

The American Council of Life Insurers (ACLI) is telling the federal government to stay out of the long term care insurance business. The organization insists a piece of health reform legislation will actually leave older Americans exposed to substantial and unexpected costs.

The organization says the Community Living Assistance Services and Supports Act, or CLASS Act (which would provide those who participate in a government-sponsored program $50 per day for long term care services) would leave those needing costly long term care under the false idea that they are being adequately covered by a government-sponsored program.

Under the Act, participants would have to pay a monthly premium that would be adjusted annually to maintain the program's solvency.

"The benefits received by program participants are a fraction of the real cost of long term care services. Nursing home care now averages $203 per day and will rise to $740 per day in 30 years. Round-the-clock home health care services now cost $1,100 per day and will likely rise to $2,000 within five years. The $50-a-day benefit under the CLASS Act leaves a substantial cost gap," ACLI President and CEO Frank Keating said.

"It is very likely that many people will believe their long term care needs are addressed by their participation in the program. In fact, studies show that many Americans already mistakenly believe Medicare covers their potential long term care needs. The CLASS Act will serve to add to the confusion, and people will not take the appropriate steps on their own to address this crucial financial planning issue," he added.

Moreover, ACLI says, a recent independent study raises serious questions about the viability of the program, with a projected insolvency by 2022. It would take significant increases in premiums or infusion of billions of federal dollars to keep afloat such an entitlement program, Keating said.

"The fact is, no long term care policy based on such a weak financial footing would be allowed on the market today," he said.

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