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Sebelius Discusses CLASS Act for Long-Term Care

Monday February 7, 2011
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Kathleen Sebelius shed new light on the CLASS Act, designed to help Americans pay for long-term care needs, during a forum Monday at the Kaiser Family Foundation Briefing on Long-Term Care in Washington, D.C.

The CLASS (Community Living Assistance Services and Supports) Act was part of last year’s healthcare reform legislation.

“Americans need better choices,” Sebelius, the secretary of the U.S. Department of Health and Human Services, said at the forum. “We know that one out of six people who reach the age of 65 will spend more than $100,000 on long-term care. If nothing changes, we will see more and more of them either forced into a nursing home against their wishes or forced to clean out their savings to afford the long-term services and supports they need.”

Sebelius said premiums, not taxpayer dollars, will pay for the CLASS Act. The Obama administration is aware of some of the challenges it faces in keeping premiums at a reasonable level.

“Like all insurance programs, CLASS needs to be able to attract a broad base of enrollees,” Sebelius said. “Private insurance solves this problem with underwriting, charging higher rates to those more likely to receive significant benefits and lower rates to others. Since that is not an option for CLASS, one question that we’ve heard over and over again is: How will CLASS successfully spread financial risk to keep premiums down while maintaining benefits?”

The solution, according to Sebelius, is to attract a broad base of enrollees by raising awareness about the program and using information technology to simplify enrollment and payment of premiums.

“Another option would be to change the employment and earnings requirements for the program,” Sebelius said. “The CLASS program was designed to protect the workers of today against future needs. That’s why it included a requirement that people earn a certain amount of money in order to participate.

“But if that standard is set too low, we may have too many enrollees who will quickly claim benefits, thereby threatening CLASS’s financial viability. That’s not the intent of this program, so we will look closely to make sure we’ve picked the right cut-off.”

Striking the right balance between premiums and benefits also is critical, Sebelius said.

“That’s why we’re currently looking at options for indexing premiums so they would rise along with benefits,” Sebelius said. “And because we know that many Americans have had their confidence shaken by large premium hikes over the last few years, especially in the long-term care insurance market, this indexing system would have to be completely transparent.”

Flexibility is another key component.

“Long-term care comes in many shapes and sizes,” Sebelius said. “One person might be able to live on their own with just a few hours a week of assistance with bathing, toileting, and dressing on their own. Another might prefer an assisted living facility. A third might need the around-the-clock assistance you can only get at a nursing home.”

Sebelius, the secretary of the U.S. Department of Health and Human Services, had spoken about the CLASS Act during a Jan. 27 roundtable discussion with Nurse.com and other media outlets.

The National Council on Aging, a nonprofit advocacy group, supported the remarks Sebelius made Monday.

“This voluntary program represents a new, historic, and fiscally responsible opportunity for Americans to invest in reliable long term care coverage that works,” the NCOA said in a news release. “Unlike private long term care insurance available today, no one could be turned down for CLASS coverage because of a pre-existing illness or disability and the benefits could last for a lifetime.”


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