The Community Living Assistance Services and Support program, also known as the CLASS Act, was part of the Patient Protection and Affordable Care Act, Obama’s effort at health care reform. It was supposed to provide accessible long-term care insurance for Americans who have not already bought coverage. However, it failed to convince the Department of Health and Human Services (HHS) that it could remain solvent for the 75 years mandated by law and was terminated in October. That leaves a wide swath of people uncovered and likely to remain so.
While LTC insurance is not accessible to everyone—it requires sufficient assets to pay premiums and good enough health to pass underwriting, two things the CLASS Act was supposed to address—many people do not buy policies for reasons that have nothing to do with either factor. Coverage is perceived as expensive, which can be true; however, according to the American Association for Long-Term Care Insurance (AALTCI), the average cost of a policy for a couple aged 55 would be $2,350 combined, for a benefit package that would immediately be worth $338,000 and that would grow to $821,000 at age 85.
Other reasons for not purchasing coverage are perhaps more interesting. HHS issued its findings in a study titled “A Report on the Actuarial, Marketing, and Legal Analyses of the CLASS Program.” Among men in particular the perception is that they will not need it—a perception not borne out by statistics. Another attitude was that if a policy didn’t pay for everything, it wasn’t worth having. That last is a logical disconnect between LTC insurance and other forms of insurance, none of which cover everything.
A popular statistic shows that one out of two people over 65 is likely to need some amount of long-term care, but according to Jesse Slome, executive director of AALTCI, that includes people needing care for as little as a couple of days to a couple of months, as well as those who truly need care for a long period of time. Still, he adds, 40% of people after age 65 will need two years or more of care.