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Life Health > Health Insurance

ACLI: CLASS Act Still Unsound

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WASHINGTON BUREAU — The American Council of Life Insurers says the revised federal long term care insurance program proposal in the new Senate health bill is about as shaky as earlier versions of the proposal.

An early version of the Community Living Assistance Services and Support Act, or CLASS Act, was introduced in July by the late Sen. Edward Kennedy, D-Mass., who then was chairman of the Senate Health, Education, Labor and Pensions Committee.

The House has included a similar provision in its health bill, H.R. 3962, and Senate Majority Leader Harry Reid, D-Nev., included what appears to be a somewhat different version in the Patient Protection and Affordable Care Act, the Senate’s main health bill.

Staffers at the National Association of Insurance and Financial Advisors/AHIA, Falls Church, Va., say that, unlike the H.R. 3962 version of the CLASS Act, the PPACA bill version would require employers to enroll employees automatically, subject to an employee opt-out provision.

Unlike the H.R. 3962 version, the PPACA version calls for workers to pay actuarially sound premiums, estimated at about $65 per month, for a daily cash benefit. The daily cash benefit also would have to be actuarially sound, and it is projected to be about $50 per day.

The benefits would be paid if, after at least 5 years of participation in the program, a participant were to become unable to perform at least 2 activities of daily living, or ADLs.

ACLI staffers believe the PPACA bill version of the CLASS Act requires that no “taxpayer funds are used to pay benefits.”

If a Centers for Medicare and Medicaid Services board determined that enrollment trends and expected future “CLASS Independence Fund” benefit claims were not actuarially sound when compared to budget projections, and were “unlikely to be resolved with reasonable premium increases or through other means,” the board would have include in a report “recommendations for such legislative action” as the board determined to be appropriate, “including whether to adjust monthly premiums or impose a temporary moratorium on new enrollments.”

Another provision would require the Health and Human Services secretary to consult with the CMS board to “ensure that enrollees premiums are adequate to ensure the financial solvency of the program, both with respect to fiscal years occurring in the near term and fiscal years occurring over 20- and 75 year periods.”

The bill seeks to protect disability insurers by requiring a proposed LTC Clearinghouse to show how CLASS Act benefits would be different from disability insurance benefits.

“Nothing in this title is intended to replace or displace public or private DI benefits, including such benefits that are for income replacement,” according to the bill text.

The Congressional Budget Office predicted the CLASS Act program proposed in July would begin running a deficit soon after 2019 and then, unless changed by Congress, would start adding growing amounts to the federal budget deficit.

The CBO says the program proposed in the PPACA bill “would begin paying out more than it brings in starting in 2029,” ACLI representative Whit Cornman says.

“Addressing long-term care is a worthy goal, but the unsustainable CLASS Act is not the answer,” Cornman says. “Long-term care is an issue that deserves serious debate and sound solutions, not a new program that is doomed to failure.”


For more information about the Senate health bill, see Reid Lugs Out Senate Health Bill.-


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