Future seniors may opt for CLASS help

July 11, 2010
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It may be tough for an employer to imagine that pierced, smart-phone-toting, newly hired millennial with gray hair and wrinkles.

But that is what the CLASS Act will ask business owners and managers to do, said Miller Johnson lawyer Mary V. Bauman, a specialist in employee benefits. She said the act will ask employers to think about whether they want to help their workers pay for in-home help they may need in the future.

The Community Living Assistance Services and Supports Act sets up a federal voluntary insurance program that will offset part of the cost of support services for elderly or disabled persons who are unable to handle at least two tasks of daily living because of functional or cognitive disability. CLASS benefits are aimed at such non-medical costs as personal assistance with tasks such as dressing or bathing, adult day care, homemaker assistance and accessible transportation. 

More than 10 million Americans need such services, according to Georgetown University’s Health Policy Institute. Demand is expected to grow as the baby boomer generation, now ages 46 to 64, moves into its golden years.

Retired surgeon Robert Levine, co-chair of Advocates for Senior Issues at the Area Agency on Aging of Western Michigan, said he thinks the program is a positive development for future senior citizens.

“This should go a pretty long way toward helping people who need home care to cover the cost of that care, thereby helping to keep them at home rather than in nursing homes,” Levine said.

The Congressional Budget Office has estimated that the program will save taxpayers money, shrinking the federal deficit by $70.2 billion over 10 years and ultimately reducing Medicaid spending, mostly by keeping the elderly in their own homes and out of nursing homes.

CLASS — one of the last pieces of legislation to pass through the hands of the late Sen. Edward Kennedy of Massachusetts — would provide at least $50 per day for long-term support services in exchange for five years of premium payments. The CBO says the average benefit could be $75 per day.

Employers will need to decide whether to offer an automatic payroll deduction for the CLASS program or send employees to an alternative yet-to-be-decided method of buying it directly, Bauman said. Enrollment via payroll deduction will be automatic unless the employee opts out, she added, as a tool to increase participation.

Workers who want to participate in the CLASS program but whose employer chooses to avoid payroll deduction would be able to buy it directly from the government through another yet-to-be-determined manner.

The new program also puts another question before employers: Should they offer the payroll deduction for the CLASS program, offer voluntary long-term care insurance, offer both, or neither, Bauman said.

“They can offer both, neither or just one. Then again, philosophically, are they going to be willing to help educate their work force about this?” she said.

Like much of health care reform, the regulations issued by the federal Department of Health and Human Services will shape the CLASS program, and those have yet to be issued, Bauman said.

Various sources estimated the earliest CLASS payouts could occur in 2016, 2017 or 2018, depending on when the first premium payments begin.

The employee must contribute monthly premiums for five years, and earn wages for three of those years. Cheaper premiums will be available for low-income individuals and for full-time students who have jobs and are under age 22, Bauman said.

The CBO estimated the average premium at $123 per month, which will be placed in a “Life Independence Account.”

That money plus interest will go toward paying for help with what are known as Activities of Daily Living, or ADLs, such as bathing, dressing and eating, which are necessary for maintain independence. It also could be used to provide respite to regular caregivers.

The functional or cognitive impairments don’t have to be permanent, but should be expected to last at least 90 days. But it’s a once in a lifetime benefit, and becoming ineligible for the program means forfeiting the remainder of the account.

Using the CLASS benefit won’t impact eligibility for Medicaid, Medicare, Social Security retirement or disability benefits or Supplemental Security Income.

What remains to be seen is whether workers, already pressed by pay cuts and higher costs for health coverage, will go for another bite out of their paychecks when the payoff may be years away.

Holland Home President and CEO David Claus acknowledged that nursing homes could feel the effects of CLASS non-medical benefits, if enough people enroll and the help they receive keeps them in their own homes. But not everyone who is elderly or disabled will be able to manage without nursing home care, he said.

“Care could be covered and paid for to go into a person’s home or into assisted living,” Claus said.  “Could people be served adequately in there as a substitute for nursing (homes)? Some, yes. I’m not sure what the total impact would be.”

CLASS could fuel demand for home services, he said.

“I think they ought to be ready to gear up for it,” Levine added.

Bob Cole of Elders Helpers in Grand Rapids was less certain about the impact.

“There’s lot of work out there for us,” he said. “We’re not sure what health care reform, what kind of impact it may have on our type of agency. It may not have any at all.”

Much of that depends on how attractive people view the deal.

“I think generally people would like to say, ‘Sure, I’d like to stay home and get all my services, and then go meet my maker,’” Claus said. “So this would help pay for this, if they enroll in it.”

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