(Community Living Assistance Services and Supports Act)
The Community Living Assistance Services and Supports Act, or better known as the "CLASS Act," is a federally-administered, consumer-financed, in-home and long-term care insurance plan. It was introduced by President Obama in March 2010 within his Patient Protection and Affordable Care Act. The goal of the CLASS Act is to provide middle-income people who have a qualifying level of disability with the opportunity to obtain supportive services in their homes. Beneficiaries will receive cash to help pay for needed assistance, alleviating burdens on family caregivers and supporting personal choice and independence to live in the community.
Provisions of the CLASS Act are considered effective on January 1, 2011. However, there are a number of time-intensive details that need to be decided upon and implemented by the Secretary of Health and Human Services ("the Secretary") before applications will be accepted. The law of this Act requires the Secretary to release the details of the plan no later than October 1, 2012, so Americans should plan to sign up in late 2012, early 2013.
Who is eligible to enroll?
Enrollment in the CLASS Act is voluntary, and not everyone will be deemed eligible. The program will be available to Americans who are over the age of 18 and are "actively employed." There will be no medical underwriting, and thus people cannot be excluded from enrolling due to a pre-existing condition such as a physical disability or other health issue. Applicants cannot be residing in a hospital, nursing facility, immediate care facility, correctional facility, or receiving Medicaid at the time of application. Unlike most private health insurance plans, non-working spouses of the applicant will not be eligible to enroll.
What constitutes "active employment"?
This will also be covered in the Eligibility Assessment System released by the Secretary on or before January 1, 2012. However, it has already been determined that persons who are self-employed, active in the military, or employed full-time students will be considered actively employed.
How will people enroll?
Employers who choose to participate will have the option of automatically enrolling employees in the same manner as retirement plans, with premiums handled through a payroll deduction like many other benefits. However, because the program is voluntary, employees subject to this automatic enrollment may choose to "opt-out"; neither employers nor employees are required to participate. The Secretary is still working to development enrollment procedures for those who are self-employed or whose employer elects not to participate.
How do you qualify for benefits?
The Secretary will establish an Eligibility Assessment System by January 1, 2012. It will be based on the loss of the ability to perform a number of activities of daily living (ADLs) without substantial assistance, such as eating, toileting, bathing, or dressing. It will also take into consideration an applicant's need for supervision due to threats to health and safety caused by cognitive impairment. In order to prove either, applicants will need to obtain certification from a licensed health care practitioner stating that the applicant demonstrates these functional limitations.
What are the benefits?
While no finite cash benefit has been decided upon, the Secretary has estimated that beneficiaries can expect an average payment of $50 per day. This benefit will be based on the significance of the applicant's care needs (i.e., people with greater need for help with basic ADLs will receive more money). The cash benefit amount will increase annually to keep up with inflation, and there will be no lifetime limit. The benefit will continue until the person enrolled no longer has a qualifying level of disability.
How long does it take for a participant to receive benefits?
In general, those enrolled must contribute to the plan for a minimum of five years and be actively at work for three of those years before receiving benefits. After the three-year employment and five-years of payments requirements are met, a person may completely retire and still be considered a CLASS Act plan participant.
What is the cost of the premiums?
Because the CLASS Act program must be financially solvent for 75 years and require no money from tax-payers, the Secretary is still working to develop a monetarily sound program with the best mix of benefits, premiums, and other features to meet needs and assure longevity. The Secretary is required to determine premiums in the Benefit Plan by October 1, 2012.
However, the following are features regarding premium prices are currently stated in the law:
- Low-income (below poverty level) and student (under the age of 22) applicants will pay a nominal premium of $5/month, adjusted annually by the Consumer Price Index (CPI).
- Premiums will not increase unless the Secretary determines they are insufficient to cover costs
- The nominal amount for low-income and student beneficiaries will remain the same.
- There will be no increase for beneficiaries who are 65 years old, have paid premiums for 20 years, and are not actively employed.
- Premiums may include a 3 percent administrative expense.
- Special rules regarding premium prices will apply to people who enroll, drop out, and re-enroll at a later date.
How will participants receive their cash benefit?
The Secretary is still working to establish payment procedures. One option is to create a Life Independent Account for each beneficiary to which funds would be added every month. Beneficiaries will be able to roll-over month-to-month benefits, but not year-to-year.
Dates to Remember
January 1, 2011: CLASS Act effective
January 1, 2012: Eligibility Assessment System established
October 1, 2012: Benefit Plan established
January 1, 2014: Annual reports begin
