January 1, 2010 | by Robert Gatty

CLASS Act provisions (hopefully) in final health reform

At a glance…

There is a good chance that the ultimate healthcare reform bill to be considered by Congress will include provisions designed to assist individual Americans who want to prepare for the day when they might need help paying for long-term care.

There is a good chance that the ultimate healthcare reform bill to be considered by Congress, probably sometime this month, will include provisions designed to assist individual Americans who want to prepare for the day when they might need help paying for long-term care.

That’s because Republican efforts to eliminate provisions of the Community Living Assistance Services and Supports (CLASS) Act provisions in the Senate’s healthcare reform bill were defeated early in December, increasing chances they would be in the Senate’s final bill expected to reach a vote (at press time) just before Christmas.

Since the House-passed health reform bill included similar CLASS Act provisions, some version of the program should survive House-Senate conference negotiations that will result in the final overall health reform bill to be considered by Congress, probably sometime this month.

“While we are greatly encouraged by the good news so far, we have to maintain our momentum up until healthcare reform legislation is signed into law to ensure that these favorable provisions remain in the legislation,” the American Association of Homes and Services for the Aging (AAHSA) said in an alert to its members. “Please keep up the good work. Contact your senators to urge preservation of the CLASS provisions in the bill.”

That statement was issued after two key health reform votes relating to the CLASS Act occurred in the Senate on December 4. First, by a vote of 98-0, senators approved an amendment that would require surplus funds from CLASS to remain in the program. But more important, senators voted to withdraw an amendment by Sen. John Thune (R-S. Dak.) that would have stripped the health reform bill of CLASS Act provisions.

Of concern to CLASS Act supporters, however, was the fact that the Thune amendment, while defeated, received 51 votes, including those of 11 Democrats. But it fell short of the 60 needed for passage under an agreement between party leaders. Opponents contended the CLASS Act program would add another unaffordable government program and that participants would have to pay into the program for years before they could start receiving benefits.

But CLASS Act supporters said the program would offer badly needed financial support for seniors and disabled people trying to stay in their homes or to help pay for the cost of assisted living or nursing home care. Under the program, workers would pay a premium for the promise of cash benefits that would average about $75 per day. Participants would have to pay premiums for five years and work for three years in order to qualify for benefits. Estimates for the House version of the bill were that premiums would begin at about $146 per month.

Sen. Paul Kirk (D-Mass.), sworn into office in September to succeed the late Sen. Edward M. Kennedy, the original sponsor of the CLASS Act, said in a speech on the Senate floor December 4 that the plan would help both individuals with disabilities and their families, and would help reduce the financial strain on an already overburdened Medicaid system.

“Today, Medicaid spends nearly $50 billion a year on long-term services and supports,” Kirk said, pointing out that millions of Americans currently impoverish themselves so they can be eligible for long-term care financial assistance provided by Medicaid, the only government source for such support.

… millions of Americans currently impoverish themselves so they can be eligible for long-term care financial assistance provided by Medicaid.

“Beyond being a self-supporting voluntary program,” Kirk said, “the CLASS Act program can be expected to generate long-term savings in Medicaid. First, there is the direct offset of the $75 daily benefit which is applied toward any Medicaid long-term care costs. But beyond that, the CLASS program will help people live independent lives at home and in the community. When people with disabilities get the services they need they are less likely to enter a nursing home or hospital.”

Kirk denied that the CLASS Act creates, as opponents contended, another government program funded with taxpayer dollars. “It is a ‘voluntary, self-funded insurance plan,’ the benefits of which are generated exclusively by premiums paid by participants,” he said. “CLASS is a program that stands on its own financial feet,” he declared. “It is not a government entitlement program and it does not affect receipt of or eligibility for other benefits.”

CLASS premiums would be paid through payroll deduction if an individual’s employer decides to participate. Self-employed people, and those whose employers do not offer the benefit, will be able to participate as well. Conditions for qualifying for benefits are the same as those commonly used in private insurance plans, Kirk explained. “When participants in the program need help with a set number of activities of daily living [ADLs], they will be assessed and, if eligible, start receiving benefits.”

To ensure financial viability, spouses are not eligible as dependents, and the Secretary of Health and Human Services can set premiums to ensure 75-year solvency, and has the ability to set eligibility requirements for the receipt of cash benefits-either two or three ADLs. In addition, premiums are age-rated.

Kirk pointed out that the Congressional Budget Office (CBO) assumes a 5% participation rate, following current trends for private long-term care insurance. But he said there are several reasons to believe participation will be substantially higher, including the payroll deductions with employees being required to “opt out” to decline participation.

“It puts the money and the power to decide for themselves in the hands of those directly affected-the individual and their loved ones,” Kirk said. “It keeps people productive in the community and their families financially sound. The CLASS Act has the potential to help millions of individuals, families, and businesses across the country by allowing them to make an investment in their future and determine the quality of life they want to lead.”

Meanwhile, the National Center for Assisted Living (NCAL) was hoping that provisions contained in both the House and Senate health reform bills to eliminate Medicare Part D copayments for many low-income seniors and individuals receiving assisted living services under Medicaid would be retained as the process moves forward.

Kirk denied that the CLASS Act creates, as opponents contended, another government program funded with taxpayer dollars.

Under those provisions, cost sharing would be eliminated for individuals eligible for Medicare and Medicaid covered under 1915(c) or 1115 waivers, Medicaid managed care plans, and the 1915(i) Medicaid HCB State Plan Option. If enacted, the provision would be effective no sooner than January 1, 2012.

When Medicare Part D took effect Jan. 1, 2006, dually eligible beneficiaries, who previously had medication coverage under Medicaid, were switched to Medicare Part D, which does not require Part D cost-sharing for individuals in institutionalized settings.

“There has been a movement toward providing care in the community, and assisted living is one of those settings,” explained Karl Polzer, senior director of policy at NCAL. “We are trying to create parity with nursing homes where patients do not have copayments.”

Bob Gatty has covered governmental developments of the trade and business press for more than 30 years. He is founder and president of G-Net Strategic Communications, Sykesville, Maryland.

To send your comments to the editor, e-mail mhrehocik@iadvanceseniorcare.com.

Long-Term Living 2010 January;59(1):17-19

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