What it is
A national voluntary program to help people insure against the cost of long-term services. The program is to be established in January 2011, although exact dates for initial enrollment are not specified in the law.

Eligibility

To enroll: The CLASS program will be open to all working adults who have a taxable income. There is no health rating, so individuals can sign up regardless of health; health status will not affect the premium one pays.

For benefits: Individuals must have been enrolled in the program for a minimum of five years before becoming eligible for benefits (vesting period). To receive benefits, individuals also need to meet the program requirements on functional limitations. The law states that individuals will be eligible for benefits when they need assistance with a minimum of either two or three activities of daily living. Program requirements regarding functional limitations will be developed through the regulatory process.

Premiums

Financing of program: The CLASS program will be financed by enrollee premiums.

Premium levels: The premium levels are not yet established except in the following two categories: people with incomes below 100 percent of poverty and full-time students under the age of 22 who meet the work requirement. The baseline premium for both groups is $5 a month. That monthly premium will increase annually based on the consumer price index for urban consumers (CPI-U). For others, premiums will vary by age at enrollment. Premiums will not change unless:

• The individual no longer meets student or low-income status criteria.
• Enrollment lapses. For a lapse of between three months and five years, at re-enrollment, premiums are recalculated (age-adjusted); also, prior months of enrollment are credited toward meeting the five-year vesting requirement. If enrollment lapses five years or more, premiums are recalculated based on age, there is a re-enrollment penalty, and all prior payment credits for meeting the vesting period are lost.
• Increases are needed to ensure program solvency. Enrollees over 65 who are no longer working or who have been in the program 20 years are exempt from a solvency-related increase (see below).

Annual rate setting: Annually, the Secretary of the Department of Health and Human Services will set premium levels so that the program will remain solvent for 75 years.

Benefits

Amount of benefit: The program will provide a cash benefit. There will be multiple benefit levels. An individual's benefit will be determined based on a functional needs assessment. Details on program benefit levels are not yet established, but the minimum benefit will average at least $50 a day, which is $18,250 a year. Benefit payments will increase annually, based on the CPI-U.

Uses of benefit: The cash payment can be used to purchase nonmedical services and supports needed to help an individual remain living in the community. This can include, but is not limited to, paying for home modifications, personal assistance, transportation, assistive technology, respite care, and homemaker services.

Lifetime benefit. The CLASS program provides a lifetime benefit; that means that it pays benefits for as long as an individual meets eligibility criteria.

Exercising the benefit option and opting out

Employer-based enrollment: Systems will be established for employers to automatically enroll individuals; premiums will be deducted from paychecks. Employers do not have to participate in this process. Alternate systems will be set up for the self-employed, people with two jobs, and individuals whose employers do not participate in auto-enrollment.

Opting out: Enrollment is voluntary. Individuals do not have to sign up or can notify their employer that they want to opt out at any time. There will be certain times in the year when opt-out elections become effective. Those have not been determined. While individuals can elect to get out at any time, that election will only become effective during an annual disenrollment period.

Program administration
There is a limit on program administrative expenses. Funds will be deposited into a CLASS Independence Fund. An advisory council will be appointed to assist with benefit design.

Program benefits will not affect eligibility for other assistance programs. For individuals also eligible for Medicaid, benefits will help offset Medicaid costs, although enrollees will be able to retain a portion of the program's cash benefit payments.

The program also requires that a Personal Care Workforce Advisory Panel be established to advise Congress and the Secretary of Health and Human Services on workforce issues, to help expand the direct care workforce.

Why this is important
This is a major opportunity to shift the way Americans pay for long-term services. It is the first national long-term care insurance program open to everyone. It could expand individuals’ ability to pay for long-term services and increase general awareness of the need for long-term care planning.

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