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Getting to the bottom of the CLASS Act

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Q: The CLASS Act definitely impacts the LTCI sale. How will this affect my business, and what do I tell prospects?

A: I predict that the CLASS Act will provide an incredible boost to LTCI sales. Why? Because it delivers a strong message that the federal government considers LTC insurance as very important protection and will not be providing it for free.

Although this Act represents one more speed bump in the LTCI parking lot–meaning another topic that needs to be addressed during the appointment–it actually provides a great marketing opportunity. Actually, two major LTC agencies have immediately seen a significant increase in direct mail response and Internet inquiries after the health bill passed.

I talked to Rob Cohen and Michael Dornfeld, both regional sales directors with LTC Global/Acsia, to provide key points to discuss with prospects.

Here are their suggestions:

  • The CLASS Act is a government-mandated program, not a government-funded program.
  • The program won’t take effect until late 2012 or early 2013, and then premiums have to be paid for five years before benefits can be paid. So it will really be seven years before it goes into effect.

What happens if your health changes in the interim and you need care prior to the government’s schedule?

  • The program was designed for the working disabled. What happens if not enough healthy individuals enroll? If too many claims are exceeding premiums being paid into the program, the government will have to pass a new law to provide additional funding.
  • The benefit and monthly premium aren’t really known at this time. We do know that the daily benefit will be modest, probably $50 or $75. Estimates for the monthly premium range from $160 to $240.

Both experts suggest the following when questioned about the Act and its implications:

The first thing they look at is whether the client even needs LTC insurance.

They may not. If they do, will the CLASS Act or a private plan be best. Just know that the CLASS Act is absolutely appropriate for people who can’t qualify for other options, say Cohen and Dornfield.

If a prospect insists on getting information about the Act, say, “I don’t know if LTCI is appropriate for you or not.” If you cover the bases, the client will know within the first 15 minutes of the meeting, whether the CLASS Act or even private LTC Insurance is right for them and their family.


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