The Health Care Reform - CLASS Act

The Community Living Assistance Services and Support (CLASS) Act

Background -
1.                  Introduced by former Senator Edward Kennedy.
2.                  Congress’ first attempt at addressing growing long-term care (ltc) needs through a national long-term care insurance program.
3.                  Creates a National Insurance Trust, accepts voluntary premiums, and is considered a publicly sponsored insurance plan.

Basics –

1.        Enroll through Employer.

2.        Eligible after a.      Pay 5 years of premiums and been employed 3 of those 5 years.b.      Have multiple functional limitations (ADLs) or cognitive impairment.

3.        Benefitsa.      Cash benefit that can be used to purchase non-medical services.b.      Amount based on the degree of impairment: $50-$75/day.

4.        How Interact with Medicaid – CLASS will be primary payer.

Limitations –

 1.        The legislation did not set specific benefits. Secretary of Health and Human Services will develop the details.  No clear way to be funded or remain solvent.  

2.        Not effective until 2017.   Current cost of LTC - $130 to $200 day or higher.

Other Alternatives

 Self-Funding–Estimate (min. $60K/yr – min. 3 years) or $180K per person up to perhaps 15 yrs  

or Long-Term Care Insurance – From 2 years to lifetime benefits paid daily or monthly to cover non-medical services when you have cognitive impairment or loss of 2/6 activities of daily living.

1.   Asset-Based-Set aside $100K to $250K in an annuity-based or second-to-do life insurance policy with a LTC insurance rider providing additional benefits needed up to lifetime coverage.

2.   Premium-Based-Premiums starting from $1K annually providing short to long-term benefits. Long-Term Care Premiums are tax deductible through HSA health plans, itemized deductions, employee benefits, and business deductions up to 100% of premiums.

Partnership Programs give you greater Medicaid privileges

      Every dollar of long-term care benefits that your LTC partnership policy pays will give you an equal one dollar of countable assets that will be disregarded to determine Medicaid eligibility and will not be subject to Medicaid liens and recoveries after you die.   Mandatory features of LTC partnership policies are inflation protection based on age (<61-5%, >76-must offer, 61-76-must purchase some), tax-deductibility of premiums, and tax-free treatment of LTC policy benefits.

Medicaid Long-Term Care Basics

 1.      Provides primarily nursing home care if you are 65 or older and state resident. 

2.      Funded jointly by federal and state funds.  Fed currently funds 61%.  In 2002, 47% of Medicaid’s $84.7 billion was expended for long-term care.

3.      Limitations

a.      Assets must be spend down to $2K ($3K for couples applying)

b.      Community Spouses limited to $109,560, minimum $21,912.

c.      Income Limit – generally $2,022/mo, Spouse at home $2,739. Needs $30

d.      Limited choice of facilities: may not be near family or in best conditions.

e.      Look-back period for TOA is 60 months. TOA Penalty taken from application date.

Securities are offered through J.W. Cole Financial, Inc. (JWC), Member FINRA, SIPC.  Investment Advisory Services are offered through Jonathon Roberts Advisory Group (JRAG).  Tax preparation services are not offered through JWC/JRAG. SETFS, LLC is not a CPA firm. Insurance is offered as an independent agent.