The passage of the CLASS Act as part of the health care reform package recently enacted by Congress may make more Americans aware long term care is an overlooked gap in their retirement planning, an expert says.
“However, we are alarmed that too many individuals may be seduced into thinking that CLASS will indemnify their estates against the catastrophic expenses associated with a chronic illness or accident,” said Stephen D. Forman, senior vice president of Long Term Care Associates, Bellevue, Wash.
He points out that CLASS– the Community Living Assistance Services and Supports Act–has a 5-year vesting requirement, which means buyers of this government-backed LTC insurance would have to pay premiums for 60 months before they can apply for benefits, explained Forman. “But few are aware of the 2-year deferral requirement imposed on CLASS beneficiaries who lapse more than 90 days,” he said.
This provision is a way to prevent sick individuals from flocking back into the program after they have let their policies lap. It “means such individuals may have to pay for their own care for the first 24 consecutive months before CLASS would pay,” he said.