The health bill package includes provisions that could have a big impact on long term care insurance sales, industry experts say.

Members of the House voted Sunday for final passage of H.R. 3590, the giant Patient Protection and Affordable Care Act bill that the Senate passed early on Christmas Eve 2009. President Obama plans to sign that bill Tuesday.

House members also passed and sent to the Senate H.R. 4872, the Reconciliation Act of 2010. That bill, which still must be approved by a 51-vote majority in the Senate and may face legal challenges, would add many changes to the laws and programs created by H.R. 3590.

H.R. 3590 — the bill that is on track to become law Tuesday — includes the text of the Community Living Assistance Services and Supports Act.

A summary of the CLASS Act provisions is available here.

Republicans have talked about trying to repeal parts of H.R. 3590 and H.R. 4872, or block implementation by going to court. But, if the CLASS Act provisions in either H.R. 3590, or H.R. 3590 combined with H.R. 4872, are implemented as written, the government would create a new, voluntary LTC program. Employers would offer the program as a benefit; employees would fund the program by paying premiums.

Employees could choose to opt out, but employees who stayed in the program could collect $50 in benefits per day if they became too disabled to perform normal activities of daily living, such as eating and walking.

Many experts, including actuaries at the government’s own Centers for Medicare and Medicaid Services, have argued that a combination of relatively rich benefits and the opt-out provision would make the program actuarially unsound, by encouraging workers with health problems to flock to the program and healthy young workers to opt out.

LTC insurance marketers are still trying to get a handle on how the program might actually work and how attractive it would be.

“It is too early to predict anything, because, until premium and benefit levels and requirements on employers are truly established, it is anyone’s guess,” says Jesse Slome, executive director of the American Association for Long Term Care Insurance, Westlake Village, Calif.

A high federal premium would be good for sales of private LTC insurance, while a low premium would be not so good, Slome observes.

“On the positive side, the CLASS Act should create enormous awareness among individuals of the real risk they face and the need to plan,” Slome says. “Those without access to CLASS and those with the financial means and a desire to have benefits superior to those available from CLASS will purchase private insurance. We’ll likely also see an entirely new category of supplement LTC insurance plans that complement the CLASS coverage.”

Margie Barrie, master trainer with Hagelman Barrie Sales Training, New Braunfels, Texas, says agents will have to educate clients about what impact CLASS provisions would have.

CLASS “could be a great help to the long term care insurance industry, because it will make people aware that the need to protect themselves against long term care risk is essential,” Barrie says. “Overall, CLASS will be a winning equation for the industry. Finally, long term care will have to be on people’s radar screens because the government says you will have to plan for this.”

Chuck Eberle, president says American Insurnet Agency Inc., Cincinnati, says CLASS might confuse people, or it might present them with a reason to say, “I’m going to need to be protected.”

CLASS could hurt sales or participation rates for voluntary LTC insurance programs sold at the worksite, he says.

For individual LTC insurance sales, “I think it will have an impact, but not a significant one,” Eberle says.

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More information about the H.R. 3590/H.R. 4872 health bill package is available here.

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