Heard of the CLASS Program? Well, You Will

July 6, 2011

The Community Living Assistance Services and Supports Act, the CLASS Act, was enacted in 2010 as part of the federal health care reform legislation. It establishes a national, voluntary, long-term-care insurance program. The CLASS Program will be administered by the U.S. Department of Health and Human Services (HHS) and is scheduled to begin operation in the fall of 2012.

 

Uncertainties

HHS has just begun the process of designing the Program’s administrative structure and has not yet published any official information regarding the Program, including how to enroll, the benefits available, or the required premium. But we do know the basic outline.

  • Enrollment will be open to individuals who are at least age 18 and who are actively working.
  • Individuals who have paid into the Program for at least five years and meet employment requirements for three of those years will be eligible for benefits.
  • The Program provides cash benefits that can be used for services that help maintain independence as well as assisted living or nursing home expenses.
  • Benefits do not affect eligibility for Medicare, Medicaid, or Social Security but will offset certain Medicaid nursing home benefits.

One of the major concerns about the CLASS Program is whether it is financially viable. Because it will be open to all adults, HHS needs to attract a broad base of enrollees to spread financial risk sufficiently to both keep premiums down and maintain benefits. According to HHS Secretary Kathleen Sebelius, the first step toward that goal is raising awareness about the Program, and HHS will “will work aggressively to make sure people know about this new option.”

 

How CLASS Affects Employers

Secretary Sebelius has also stated that HHS wants to make sure the Program is appealing to employers and their employees. Why? Because one of its key components is a mandate for HHS and the Department of Treasury to develop procedures under which you can automatically enroll your employees, allowing them to pay the required premium through payroll deduction. Fortunately, your participation in the automatic enrollment feature is optional. To the extent any promotional materials for the Program imply otherwise, they are incorrect.

 

But HHS has a big stake in convincing you to sign up for automatic enrollment, because if a significant number of employers do so, it will go a long way toward the goal of making the Program financially viable. As a result, you can expect to see a significant marketing push for the CLASS Program and the automatic enrollment feature over the next 12 months.

 

Because HHS has not yet taken the steps necessary to fill in the outlines of the Program, including benefit and premium levels, it is difficult to predict whether it will be attractive to individuals and whether the automatic enrollment option will be manageable for you. Miller Johnson’s Health Care Reform Team will continue to monitor its development over the coming year.