Part 5 of a 7-part series
Hanging grandma out to dry: not a CLASS act.

There are about 10 million families today who are caring for elder or disabled members of their household with long term care. That figure is expected to increase as the baby-boomer population continues to age.  An insurance trade group reported that 8 million long-term care policies are in force right now (2013) in the U.S. and the average purchaser of these policies is in their late 50’s, paying an annual premium of $2,000.

Here are some scary eye-openers: 

1)      Most Americans have no long-term care insurance

2)      Average nursing homes cost about $90,000 per year

3)      Average in-home care costs about $10,000 per month

4)      Two-thirds of working class households have not saved one year’s worth of income

5)      This same group would not be able to maintain their standard of living in retirement

6)      For the non-wealthy, one family member on long-term disability will wipe out any retirement in a few months

With this large demographic of baby boomers quickly growing older, this is a serious debacle! I believe people aren’t saving mainly because they’re generally not “programmed” to save.  They’re not mentally programmed that way because the their culture doesn’t offer excess for saving nor the education to build the excess.

Even with financial assistance, there needs to be a paradigm shift or that extra money will not be appropriated for the greatest good of the family legacy. The government would be helpful if they weren’t too busy putting bandages on the bleeding instead of stopping the cause of the bleeding. 

While everyone’s busy pointing the finger, poor grandma is being hung out to dry.

The Affordable HealthCare Act was attempting to avoid grandma’s calamity with CLASS (pun intended). The CLASS insurance program was created in 2011 as part of the health form legislation. CLASS, which stands for “community living assistance services and supports,” was set to begin in 2012. Some of its features included…

1)      Managed by the Department of Health and Human Services

2)      Any adult 18 years and older could participate

3)      Funded through payroll deductions

4)      Enrollees could not be rejected due to health situations

5)      No paid out benefits (vesting) until after five years

6)      Offered to enrollees with more than one impairment that limits day-to-day functionality

7)      To receive payout, enrollees had to have paid CLASS premiums for 5 years and been employed at least three of those five years

8)      Pay out of at least $50/day for life

9)      That $50/day would be put towards anything that assists the enroller in day-to-day activities (i.e. assistant in the home, wheelchair, rides to stores and doctor appointments)

10)   Participation would supplement other government benefits (i.e. Medicare, Medicaid, Social Security)

That program, as necessary as it seems, never initiated. The plug was pulled on it this past January by the White House due to pressure by many opposing it. One reason was for its expense. One would wonder why since the Congressional Budget Office’s calculations indicated over the next decade, based on a $123 per month premium, CLASS would take in $70 billion in surplus revenue. Remember, the benefits of the program don’t have to be paid out for at least five years either. That would certainly help the government’s deficit in the short run, right?

“Opt-out” skepticism halts a good thing

Well, not so fast. Perhaps the good news of CLASS’s revenue potential paled in comparison to the skepticism over the program’s opt-out provision. The CBO thought that more than nine out of 10 working individuals would opt-out of participation. That left the largest amount of enrollees being those individuals who needed assisted living care now or in the near future. Actuarially speaking, it would be a financial nightmare since they would be using more healthcare services than their premiums covered.  

Even Democrat Senators who supported health reform were not fond of this particular entitlement. There were too many concerns about the money taken in over the first five years not being put in a government account designated for its pay outs. It would instead be used to fund other current programs. You know, the usual governmental method of robbing Peter to pay Paul.  In five years, when time to pay out the benefits, where would the money come from?

As the powers that be continue to scratch their heads, ACA does nothing to help. Even for the 30 states that will expand their Medicaid coverage beginning in 2014, a two-person family would have to make less than $1,800 per month to qualify for it. Those with incomes of $1,800 and higher (still low income level) are forced to purchase health plans that don’t cover long-term care.

Hmm. Is grandma dried yet?

 References available upon request.

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