Age and Disabilities OdysseyJune 20, 2011

Is The CLASS Act The Answer to Long-Term Care Financing?

Presenters

• LaRhae Knatterud, Aging 2030Minnesota Department of Human Services (DHS)

• Tom Devine, Executive Vice President, The David Agency, Minneapolis, MN

• Kim Carolan, Manager of Long-Term Care Eligibility, DHS

Outline of Presentation• What is the CLASS Act?• What are the key provisions?• What is the status of its implementation?• How does it interact with other long-term care

financing options?• How does it interact with Medical Assistance?

What is the CLASS Act?CLASS Act stands for “Community Living Assistance Services and Supports”• It is a national, voluntary public long-term care insurance

program included in the health care reform legislation• It would automatically enroll all workers 18-64 in the program

and deduct a premium from paychecks, with that money diverted to a trust fund—much like Social Security—for use when individuals need long-term care

• Persons not working (retired or disabled) cannot enroll

What are the key provisions?• Enrollees are vested after paying premiums for five years,

but must continue to pay premiums after that period• There is no exclusion for pre-existing conditions and

benefits are paid on a lifetime basis (no lifetime limit)• This cash benefit could be used for any assistance or

expenditure that the person prefers

What are the key provisions (cont)• When they have 2+ Activities of Daily Living (ADLs), enrollees

would quality to draw a daily benefit of at least $50 per day or more depending on their level of disability

• Enrollees with conditions limiting ADLs for >90 days will be eligible for benefits

• To receive benefits, the HHS Secretary must set a standard that includes:

• Limitation in at least 2 or 3 ADLs• Substantial cognitive impairment, or• An impairment equivalent to these two disability levels

Impact on LTC Financing• Federal estimates assume that < 6 percent of eligible Americans

would participate• The premium must be set at a level to keep the program solvent

for the next 75 years• Even at $50/day, this would total $1,500 per month or $18,000

per year• Premiums are entirely paid by enrollees, including subsidies for

low-income workers and students

Impact on LTC Financing (cont)• Critics say that the premiums won’t be enough to cover

spending and that the government will have to raise premiums or increase the threshold of people who can receive benefits

• This level of benefit is actually twice the national average now spent per beneficiary for Medicaid HCBS services

Options to Encourage Enrollment• It will be important to make workers aware of this program and

the need to have a “plan” for their long-term care• Important to encourage employers to educate their workers

about long-term care planning, the role of this program and to set up automatic enrollment

• There may be other incentives that could be offered to workers or employers to increase take-up rate

Medical Assistance (MA) Payment of Long-Term Care (LTC) Services

LTC services covered by MA include:• skilled nursing facility (SNF) care.• nursing facility care in an inpatient medical hospital

or intermediate care facility for developmentally disabled (ICF/DD).

• home and community-based services through a waiver program (Community Alternative Care (CAC), Community Alternative Care for Disabled Individuals (CADI), Developmental Disabilities (DD), Elderly Waiver (EW), and Traumatic Brain Injury Waiver (TBI).

How does CLASS interact with MA?

• MA is the payor of last resort. • CLASS benefits reduce MA payments for LTC

services.• Beneficiary may retain 5% if in a medical

facility; 50% if receiving home and community-based services through a waiver program.

Minnesota Long-Term Care Partnership (LTCP)

• public-private program designed to encourage more people to purchase long-term care insurance.

• enables people who buy certain qualified long-term care (LTC) insurance policies to keep more assets if they later need to request Medical Assistance (MA) to help pay for their LTC services.

• allows a person with a Partnership policy to designate assets for protection. Protected assets do not count against the MA asset limit.

• protected assets cannot be recovered from a person’s estate.

Long-Term Care Partnership Statistics

• Based on the Federal Reporting, as of December 31, 2010:

• The total number of MN LTC Partnership policies was 30,494.

• 85.6% (26,121) became Partnership policies as of the date of purchase.

• 14.3% (4,373) were exchanges for existing LTC policies.

• Source: http://w2.dehpg.net/LTCPartnership/Reports.aspx

Where to Get More Information

• Current Status of CLASS Act, by Congressional Research Service

http://www.heartlandltc.com/hltc/Media/Storage/files/Website/CRS_CLASS_ACT_PPACA_05-13-11.pdf

• http://www.longtermcare.gov