Administration weighs changes to long-term-care insurance program

The Community Living Assistance Services and Supports (CLASS) Act creates a voluntary long-term-care insurance program. Employees who become disabled after paying monthly premiums for at least five years qualify for a $525-a-week cash benefit, which they can use to help them stay in their homes independently.

Sebelius said the first task was to raise awareness about the program, which is difficult because most Americans don’t plan for their long-term-care needs even though AARP estimates that 60 percent of Americans will need it. Medicare is not a long-term-care program.

Only about 8 percent of Americans have private insurance to cover their needs if they become disabled. Most of them end up draining their savings to qualify for Medicaid, contributing to states’ dire fiscal condition.

The CLASS Act is designed to work with employers, who voluntarily decide to participate. Employees would then be automatically enrolled unless they choose to opt out.

“We’re looking at ways to make it as easy as possible to enroll and pay premiums,” Sebelius said. One option: having HHS calculate premiums “so employers don’t have to.”

HHS is also reexamining the employment and earnings requirement for people to qualify. Workers must make about $1,000 a month at least to qualify, but Office of Management and Budget actuaries have raised concerns about eligibility criteria in part because poorer people tend to also be sicker.

“We know if the standard is set too low, we may have many enrollees who will quickly claim benefits, thereby threatening the financial stability long-term of the plan,” Sebelius said. “We need to look closely to make sure we picked the right cut-off point.”

In addition, HHS is considering allowing premiums to rise over time, just like benefits.

“We’re currently looking at options for indexing premiums, so that they rise along with the benefits,” Sebelius said. Any premium hikes would have to be “completely transparent,” however, “so people could plan ahead and not be surprised by sudden rate increases.”

In an interesting twist on the Social Security debate, it’s mostly liberals who are clamoring for tighter restrictions on the program. They’re worried that making it too generous could bankrupt the program before it even gets off the ground, as only the sickest patients sign up first.

“You need to start somewhere, and the bigger issue is solvency right now,” said Connie Garner, one of the program’s chief architects as a senior aide to the late Sen. Ted Kennedy (D-Mass.). “But if everyone in the country enrolled in it, then you’d have lower premiums and you’d certainly have a healthy risk pool. And then you can use the flexibility to treat different people differently and add them as you need to add them.” 

HHS also wants to offer different levels of benefits, Sebelius said, because more people will sign up if the agency can tailor programs “more closely to individuals’ needs and preferences.”

Finally, she said, HHS wants to close “loopholes” in the provision that could allow people to stop paying premiums and still re-enroll later and claim benefits.