The planning and development process for CLASS, the Community Living Assistance and Support Program, may be either shelved or put on “pause” according to several media reports. Forbes reports that the chief actuary behind the planning of CLASS, Bob Yee, emailed his co-workers to say he was leaving because the entire CLASS staff is being re-assigned to other departments.
One of the large issues with planning the CLASS program is adverse selection. With any insurance product, it’s important to attract a broad base of customers- some who will make claims and some who won’t. Because of the voluntary design of the program, some experts feared that if the only people who enrolled in CLASS were people who would start using the benefits as soon as they could, then the program would be unsustainable.
Family Caregiver Alliance is especially interested in the CLASS program because of our 30 years experience working with and advocating on behalf of family caregivers. One of the most common issues that caregivers face is the financial challenges of caregiving. This includes reduced income from working less or stopping work altogether, as well as medical and long-term care costs for their loved one. For example- with home health care agencies charging around $20 an hour, (often with a four hour minimum), the costs quickly add up.
The CLASS program was included in the Affordable Care Act and is intended to help people with some of the burden of long-term care costs. After contributing to the program for at least five years, if a person became disabled and needs assistance with activities of daily living (i.e. showering, eating, dressing), then the program would pay a cash benefit of at least $50 a day that the recipient could use to purchase services, including hiring a friend or family member.
While $50 a day won’t pay all of the costs of long-term care, it does give the person control over the services they need and potentially allows them to remain in their home to receive services. The $50 benefit could also be used to mitigate some of the financial strain faced by a family caregiver who has quit their job to provide care.
If the planning process for CLASS is on “pause,” or is stopped, does this mean that the challenges of paying for long-term care are “paused” or stopped?
Hardly. So what is in store? A return to the status quo?
Medicaid is the largest payer of long-term care in the U.S. (outside of the $450 billion in “free” caregiving provided every year by family caregivers). If a person needs long-term care, they must first extinguish most of their assets to meet Medicaid’s asset tests.
Once they qualify for Medicaid, they may be able to receive assistance in their home or community, based on several hurdles, including:
• if there is a Medicaid waiver in their state,
• if they meet the eligibility requirements,
• if there isn’t a waiting list for the program, and
• if the program hasn’t been eliminated because of a budget shortfall in their state (for example, California is eliminating Adult Day Health Care as a Medi-Cal optional benefit, which will affect about 37,000 Californians and their family members).
If these “ifs” aren’t met, then a person may have to choose between remaining in their home or going into Medicaid-funded institutional care. Under Medicaid law, nursing home care is an entitlement-meaning a person is guaranteed this benefit as long as they meet the functional eligibility requirements. In contrast, many of the home and community-based programs (like home health care or Adult Day Health programs) that allow people to remain in their homes are not required under federal law. So, when state budgets are strained, these programs become targets.
Long-Term Care Insurance
Long-term care insurance is another option for people who are attempting to plan how they will pay for their long-term care. Unfortunately, about 90% of Americans don’t purchase long-term care insurance, and their options in terms of where to buy long-term care insurance are also dwindling. Met Life announced last November that they would exit the market, joining a long list of companies who have stopped offering long-term care insurance.
If a person can obtain a long-term care insurance policy, they’re also taking a huge gamble on whether or not their insurance premiums will increase after they’re locked into the insurance and have made premium payments for years. If a premium increase is unaffordable, (especially if a person is on a fixed-income), then it may mean no longer making payments and losing the coverage.
If the rumors are true, it is unfortunate that CLASS is being shelved, especially because of the potential it had to allow people to age in their homes while also reducing some of the financial strain of caregiving. If policymakers think that CLASS isn’t the answer, then improvements to the current financing of long-term care are in order. The first step could be stronger regulation of long-term care insurance products, and legislation at the federal and state levels in California, Massachusetts, Minnesota, New York, and Oregon should be considered.
The second step would be for the federal government to continue the shift of Medicaid’s resources towards home and community-based services (HCBS) instead of nursing home care. HCBS in Medicaid is dramatically cheaper and allows people to remain in their own homes, yet in some states, only 14% of the long-term care funding is directed towards HCBS. This is an unacceptably low number, and states need to be encouraged or incentivized to shift where they spend their Medicaid dollars- to the setting preferred by the majority of Americans: their home.