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Long-term Care Insurance Affected by Reform

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President Obama signed the Patient Protection and Affordable Care Act into law last week. The bill contains provisions for a federal long-term care insurance program. Called the Community Living Assistance Services and Supports (CLASS) Act, the program calls for workers to pay a monthly premium, to be set annually by the Secretary of Health and Human Services, and receive an average daily benefit of $50 to $75 in exchange if they require long-term care services.

The American Council of Life Insurers (ACLI) contends that while the bill’s sponsors are to be commended for seeking ways to address American’s long-term care needs, the CLASS Act will lead to more confusion for those planning for their future, and will do little to ease the strain on entitlement programs.

In its argument, ACLI references an independent study on the CLASS Act from the American Academy of Actuaries and the Society of Actuaries.

“Due to its design and the high level of required premiums, the program is unlikely to cover more than a very small proportion of the intended population or achieve its goal of broad participation,” the study concludes. “There are significant concerns that the program’s design may limit the ability of the program to be both sustainable and affordable for participants.”

Current projections by government entities and outside actuaries expect the cost will be between $110 to $160 per month for participants in their 50s, according to the American Association for Long-Term Care Insurance (AALTCI).

"The new plan will offer little benefit for anyone currently age 55 or older," says Jesse Slome, executive director of the association. "The plan may be attractive coverage for those unable to health qualify for traditional long-term care insurance or those working for employers not offering a long-term care insurance benefit to their employees."  

Most experts don't expect details to be finalized until 2012, and then the first offerings extended to employees in 2013, making one ineligible for any benefits until 2018, according to AALTCI.

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