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Life Health > Health Insurance

Subcommittee Sets CLASS Act Hearing

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An arm of the House Energy and Commerce Committee plans to look at the sustainability of the Community Living Assistance Services and Supports (CLASS) program Thursday.

The committee’s health subcomittee has organized a CLASS program hearing to review early efforts to implement Section 8002 of the Patient Protection and Affordable Care Act (PPACA) and hear from witnesses who have thoughts on whether the program is, or could be made to be, actuarially sound.

The program is supposed to be a voluntary, premium-supported long term care (LTC) benefits program that will provide $50 in cash benefits per day, indexed for inflation, in exchange for a relatively low premium.

Congressional budget analysts view the program as being good for the federal budget deficit in the early years, because, for several years, program managers would collect premiums for workers without providing benefits. Many actuaries, including Rick Foster, the chief actuary at the federal Centers for Medicare and Medicaid Services, say the program could suffer from underwriting losses early on, then increase premiums to make up the difference. A resulting series of losses, premium increases and decisions by younger, healthier insureds to drop coverage could lead to a death spiral that would kill the program, critics say.

Other critics say the daily benefit would be far too low to cover the full cost of any kind of nursing home care.

U.S. Health and Human Services Secretary Kathleen Sebelius has suggested that the Obama administration might want to make changes to the program, such as enrollment restrictions that would discourage workers from paying for coverage only when they expect to need long term care.

The Obama administration has asked for $120 million in CLASS program funding for federal fiscal year 2012, subcommittee officials say in a memo discussing the hearing.

The preliminary hearing witness list includes

Kathy Greenlee of the Administration on Aging; Allen Schmitz of the American Academy of Actuaries (AAA), Washington; and Mark Warshawsky of Towers Watson & Company, New York.

In November 2009, the AAA suggested that the CLASS program might be made actuarially sound if managers:

  • Charge an average of at least $160 per month, rather than the $123 planned.
  • Impose tighter underwriting rules, such as requiring eligible participants to be actively at work for at least 30 hours per week when they enroll in the program.
  • Add features such as a benefit elimination period and a benefit duration period that is less than a lifetime.
  • Allow indexing of premiums for inflation.
  • Put a marketing allowance in the premiums to increase participation levels.

More CLASS Act coverage from National Underwriter Life & Health:


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