Congress Passes CLASS Act: Natl. LTCI

The healthcare reform bill, under debate in the Senate, includes a new way to pay for long-term care.  The Community Living Assistance Services and Supports (CLASS) Act would create a national long-term care insurance program.  The benefit payments will be in cash, allowing seniors and the disabled to spend the benefit money on hiring a caregiving service or purchasing medical equipment, allowing them to remain in their own home.

Currently, only Medicaid pays for ongoing senior care and requires seniors to spend down all of their assets in order to qualify.  Medicaid also only provides ongoing care in a nursing home, not in a senior's home (a few states have recently begun to offer home-based Medicaid care).

The CLASS Act would give people who qualify, based on needing assistance with at least two activities of daily living, to receive up to $75 per day to pay for their caregiving needs.  The program would be funded through payroll deductions.

The late Senator Edward M. Kennedy was an advocate for the CLASS Act and now his replacement, Senator Paul G. Kirk, Jr., has championed the inclusion of the act in the current healthcare reform bill.

This new way to pay for senior care would greatly assist seniors and their families, as often just part-time senior care services are needed to assist in coping with memory loss and mobility issues.

The Senate voted on Friday to keep the CLASS Act in the healthcare reform bill.

Highlights of the CLASS Act:

• funded by voluntary participation and payroll deductions (@ $50 per month)
• must contribute for 5 years before collecting benefit
• benefit maximum of $75 per day (paid in cash)
• may hire caregiver of your choice, as benefit is paid in cash
• must need assistance with at least 2 activities of daily living (ADLs) to qualify
• provides lifetime benefits
• premiums are age-rated
• financially viable and self-sustaining (modeled after private insurance)

Reason the CLASS Act is needed:

• only 5% of Americans have long-term care insurance
• part-time caregiving services in the home delay the need for nursing home care
• caregiver stress is a large reason for nursing home admissions
• research shows eliminating caregiver stress would reduce nursing home admissions by 1/4th
• nursing home care costs an average of $70,000 per year
• paying for part-time care in the home will eliminate or delay spending down all assets on care services

Senator Kirk's prepared remarks on the CLASS Act:

Today in the United States, approximately 200 million of our citizens are elderly or disabled. These are not mere statistics. They are family members and loved ones – vulnerable, challenged and too often forgotten. But they always had a friend and advocate in Senator Ted Kennedy. He understood that a fair and civilized society should be judged on how it treats its most vulnerable citizens.

Sadly, millions of seniors and persons living with disabilities struggle to obtain the services and supports they need to live fulfilling lives and to remain in their communities among their friends and families – in what they hoped would be their productive “golden years”.

As Senator Kennedy understood, it is morally wrong for so many disabled men and women who need assistance to be forced to face the heartbreaking choices: Do I abandon my job? Spend down my savings? Move out of my home? And give up my American Dream in order to qualify for Medicaid —the only government program that can provide me with the supports I need? Or do I forgo my independence and resign myself to living the rest of my life confined to a facility?

Senator Kennedy also understood that it is morally wrong when friends or a loved one must also face the heartbreaking choice: Do I give up my job and commit my time to care for my parents at the expense of my own family and children? Or do I resign myself to confining my aging mother or father to a facility?

Families across the country understand this heart-wrenching crisis all too well. A recent scan poll found that nearly 60% of those surveyed had a personal experience with long term care. Nearly 80% would be more likely to support health care reform if it included a long-term care program. These families know that the current long term care industry is not meeting their needs, and that change must come.

As always, Senator Kennedy cared how our society would be judged. He didn’t just sit idly by. He acted. He drafted The Community Living Assistance Services and Supports Act, known as the CLASS Act, which we are debating this morning.

This program was at the heart of his effort to help people with functional limitations and their families to obtain the services and supports they need. It gives them the chance to maintain their independence and remain active and productive members of their communities. Under the CLASS Act, a worker in Massachusetts or any other state can choose to pay a premium into this voluntary insurance program through affordable payroll deductions. After contributing for five years, they become eligible for a cash benefit of at least $50 a day if they become disabled. That cash benefit can make the difference in allowing a disabled person to live with independence, self-respect and dignity. For example, it can pay for having a ramp installed to their home, or to pay for needed transportation, or to purchase a computer to work from home and remain self-sufficient. It can also pay for a caregiver to come to their home, help them bathe, get dressed, and cook meals—services that otherwise often fall to family and friends, who are forced to work reduced hours on their own jobs, or quit those jobs altogether.

Currently, long-term care, as we know it, is paid for through a fragmented combination of sources, including family budgets, Medicaid, Medicare, and private insurance. Without a prior and voluntary insurance investment, which the CLASS act offers, paying for long term care can be financially catastrophic for many individuals and families, since home care and nursing homes can cost over $70,000 a year. Only one in five individuals can afford private long term care insurance, and many are excluded because of pre-existing conditions. Medicare’s role in providing long-term services is extremely limited, covering only short-term skilled nursing care and home health. This lack of options forces many people to turn to Medicaid, which is our nation’s primary payer and only safety-net program providing comprehensive long-term care services and supports.

But who is eligible for Medicaid? People only qualify for Medicaid if they are, or become, poor, which forces many families to impoverish themselves to obtain the support they need. We have all heard the stories.

Persons work hard all their lives, and then, due to an accident, they cannot afford to pay for needed services and supports out of pocket. So they now must give up their savings to become eligible to turn to the government and Medicaid to provide the proper care they need to survive.

No one wins. Not the disabled or elderly parent. Not the family care giver. Not the government and not Medicaid.

I know family who lives on the Cape in Massachusetts who know firsthand how powerful the CLASS Act could be for families. Jerilyn has been caring for her sister who is brain damaged and legally blind, paralyzed and incontinent.


The CLASS Act will help turn this serious no win situation into an everyone wins result. It gives individuals with disabilities and their families the funds they need to obtain some of the services they need, without having to resort to Medicaid. The current reliance on Medicaid is not only a strain on families — it is also a strain on our already overburdened Medicaid system. Today, Medicaid spends nearly $50 billion a year on long term services and supports – in 2007, Massachusetts spent over $3 billion on long-term care. Estimates indicate that by 2045, that national spending could exceed $200 billion. Obviously, the current course is unsustainable.

In addition, the private insurance industry is not doing enough to meet the growing demand for such care. Aging Baby Boomers and longer life spans will increase the demand for long-term care dramatically for decades to come. Yet, 95% of people over 45 do not have private Long term care insurance, and fewer and fewer people are able to buy such coverage. Make no mistake — as it stands today, if someone without adequate long term care coverage becomes disabled, they will more than likely have to turn to the already overburdened Medicaid system to get the help they need.

The CLASS Act is designed specifically to remedy this looming crisis. By giving people an affordable option other than Medicaid, the act will save the system over $1.6 Billion over the first four years that people start receiving benefits. Some opponents of the CLASS Act argue that the program will not be sustainable over time, and that it will become insolvent and end up costing taxpayers large amounts. That argument could not be further from the truth.
Let’s give proper credit where it is due. With the help of our friends on the other side of the aisle, we have taken real steps to ensure that the program remains solvent for years to come.

The act establishes a strong work requirement, to make sure that funds continue to come into the program from the payroll tax deduction or from an individual’s voluntarily paid premium. It requires the Secretary of HHS to review and set the premiums annually to ensure that the program will remain solvent for the next 75 years. It directs the secretary, in addition, to review the cost projections 20 years into the future. And, finally, it mandates that no taxpayer funds will be used to pay benefits. Let me repeat that final point, since I have often heard it misrepresented by opponents of the program: no tax payer funds will be used to pay benefits. Benefits will be paid through self-funded and voluntary premiums.

During the markup in the HELP Committee this summer, Senator Dodd led a major discussion about this program. With the help of the Republicans on the committee, especially Senator Gregg of New Hampshire, additional safeguards were included to ensure that the act will stand on strong financial footing for years to come. After the Committee adopted Senator Gregg’s 75-year amendment, the program won strong words of support from both parties. In fact, Senator Gregg published an op-ed praising the program in the July 20th issue of Roll Call.

In short, the CLASS act creates a voluntary, self-funded insurance plan that is a cost saver for Medicaid.

It puts the money and the power to decide for themselves in the hands of those directly affected - the individual and their loved ones. 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.
The CLASS Act is a realistic answer to the serious problems of our current system. It enjoys strong support from the White House and from hundreds of disability groups throughout our nation. More importantly, it provides financial and health security to the lives of millions of Americans. Disability could suddenly strike any of us in the years ahead. As we work to provide health insurance to the tens of millions of Americans who do not have it, it makes no sense to ignore the needs of millions of people with disabilities and the elderly, who desperately need our help.

I hope very much that our colleagues will support the CLASS Act as part of the current health reform bill, and I look forward very much to its enactment.