Health Insurance and You!

Late last week, the Obama administration decided to drop one major part of health reform: the Community Living Assistance Services and Supports (CLASS) program, a long-term care insurance program for people who become disabled at some point during their life and require long-term help. Under the original plan, people who paid into the program during their working years would have received services like home care, adult day care, and nursing home residency if and when they needed them.

According to an article by Noam Levey of the Los Angeles Times, CLASS reflected a key goal of Senator Edward Kennedy, who died in 2009. Kennedy, a longtime advocate of healthcare, wanted to create an entitlement program, like Medicare or Medicaid, that would help the elderly pay for home care or a nursing home. However, several months of analyses by government and private experts have found that CLASS would not collect enough money in premiums to stay afloat.

We discussed some of these analyses on our blog in August. Primarily, experts worried that while initial premiums for CLASS may be low, encouraging people to enroll, the program’s costs will soon go beyond what it can earn from those low premiums. (By definition, long-term care lasts a long time, if not indefinitely, and those costs can add up.) The increase in costs would force the program to raise its premiums, driving away the healthy enrollees who help to pay for the customers who need help and starting a vicious cycle.

In order to avoid this problem, organizations like AARP and the National Council on Aging suggest requiring workers to enroll in the program. Like Medicare and Social Security, these advocates say, people could pay a portion of their paycheck into the program and be able to receive benefits as and when they need them. For now, however, that option is not on the table.

Surveys have shown that Americans are largely unprepared for the expenses of long-term care. As a result, many face expensive bills for home care or nursing home residency, neither of which is covered by Medicare. Fortunately, long-term care insurance exists, and a variety of plans are available depending on your needs and what you can afford. Take a look at our reference page on long-term care to get started.