Saving for long-term care will soon be easy

One provision of the Health Care and Education Reconciliation Act of 2010 that has — suprisingly — garnered little attention from the media is the CLASS (Community Living Assistance Services and Supports) Act. Overshadowed by concerns about seniors losing Medicare benefits, the CLASS Act basically functions much like a long-term care insurance plan, with deductions coming out of participating employees’ paychecks.

According to California Health Advocates, a participant would be required to participate in the plan for at least five years (60 months) before becoming eligible for benefits. Once the eligibility period is completed and there is a need, cash benefits are paid out on a sliding scale based on the patient’s needs. Estimates indicate the average daily payout to be around $50. These funds can be used to pay for home care and support services or to help cover the cost of assisted living or nursing home stays.

The CLASS Act will likely begin in 2012, and although it’s optional, employees of participating companies will need to opt-out of enrollment during the start-up phase if they don’t want to participate. If an employee opts out but chooses to enroll at a later time, a premium penalty would be imposed. These benefits won’t replace Medicaid, and they won’t impact an individual’s ability to qualify for any type of government-assistance program.  

The most interesting point to note is that funds from the CLASS Act may also be used to compensate family caregivers for their services, which will help alleviate the financial burden on caregivers who are forced to take time off from work to attend to the needs of an elderly or disabled loved one.

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