Long-Term Care and the CLASS Act

The Community Living Assistance Services and Supports (CLASS) Act passed as part of the Patient Protection and Affordable Care Act (PPACA) that provides benefits to workers who become functionally disabled – unable to perform their activities of daily living (ADL’s) or need substantial supervision due to cognitive impairment.

The idea behind the program is to help maintain independence and provide support for an impaired person living at home, in the community, or in an institutional setting.  The CLASS Act is an approach to financing some of the costs of long-term care services.  Did you notice I said SOME!  Let me explain the benefits of the plan:  The program,which starts in 2013,  will pay a minimum daily cash benefits of $50.  The actual daily benefit amount a covered person receives will be based on their functional limitations or cognitive impairment.  Those with greater levels of impairment are expected to receive more than the minimum daily benefits of $50, but the Secretary of Health and Human Services has not established what these greater amounts will be.

Enrollees will pay premiums through a voluntary payroll deduction system, self-employed individuals through a (yet to be named) alternate premium contribution system and those on active duty with the military will pay premiums through the military payroll system. Employees can opt out of the plan and employers can choose not to participate altogether.  Individuals enrolled in the plan must pay premiums for at least five years (60 months) which is known as a vesting period before they are eligible for benefits and have had earned income during three of the five years of enrollment.  Premiums are based on the age of the individual when they enroll in the program and not on any health conditions they may have.  You can read the actual document for the CLASS Act at this site #mce_temp_url#

This is a great theory, but I believe the benefits fall extremely short of what is really necessary if one were to have a big event where continued care was necessary.  So here’s my story that I want to share just to give you an idea of the real expense and what can really happen.

As many of your know, my mother, Virginia, has Alzheimer’s.  She is currently 73 years and has had this disease since she was 65.  I bought a long-term care policy for her when she decided to retire in 2002.  She had decided to move to Ohio to be close to her two sisters who live there.  She was able to buy a townhouse for cash with a little money left in the bank.  I had this vision of her falling and breaking a hip while she was there with no one to help her.  Her sisters are both older than her and my two sisters and I all live in the San Francisco Bay Area.  I really had no idea what was in store for us when I bought the policy.

It wasn’t long after she was there when her sister, Gen, started calling me and saying my mom kept passing out and seemed to have memory problems.  Mom had numerous falls that we knew of and numerous bumps and bruises that she couldn’t explain.  She was in Wal-Mart one afternoon and passed out taking two rows of merchandise with her.  She ended up in the hospital needing a pacemaker and later needing surgery for a brain aneurysm, which my sisters and I suspect was the result of one of her many falls.  It was clear that my mom was having so may difficulties that she needed care.

Mom had surgery for the brain aneurysm and once she was cleared medically, Virginia had to be moved back to California.  My sisters and I didn’t have the resources to care for her in any of our homes.  We all work and couldn’t give that up, so we decided to move Mom to an assisted living facility.  She had her own apartment and the fee included laundry, housekeeping services and three meals a day in the dining room.

About a year later, after things settled down, I filed a claim to activate her Long-Term Care policy.  The carrier declined the claim initially.  In order to qualify she had to have “severe cognitive impairment” and the carrier didn’t think she was severe enough.  That was a little hard to swallow.  Watching your Mom decline from an incredibly independent person who lived by the mantra “you can’t tell me what to do” kind of person into a woman who couldn’t remember where her car was (luckily I sold it to my cousin back in Ohio) and thought her brother who had passed away nearly 20 years earlier was staying in the room next door.  But I knew it was just a matter of time before I could get the policy to kick in since this disease isn’t something you can recover from.  I kept taking her back to the Neurologist and having her re-tested.  I filed another claim which the carrier finally approved.

I never envisioned my Mom getting Alzheimer’s.  It’s very sad to watch her decline but I am so happy I thought to buy a Long-Term Care Policy.  She is living in her own room and the staff at her facility are great.  Heck she gets to eat ice cream and cookies everyday.  This past year my sisters and I had to move her to the more secure side of the facility because she was escaping out of the facility in the middle of the night. We tried to resolve the issue before we made the big move, but we couldn’t come up with a solution.  She was getting her days and nights mixed up which is why she was wandering out during the night.  Our first concern was her safety.

Long-Term Care is a must buy insurance.  It’s hard to make yourself spend money on something that you don’t want to use, but even the federal government understands this and that’s why they developed the CLASS Act.  I don’t see the CLASS Act as anything close to adequate.  My Mom’s monthly rate is approximately $5200 and that equals $62,400 a year.  Do you have that kind of money sitting around to self insure?  I recently had a discussion with one of my sisters about a Long-Term Care Policy and if it’s worth the cost.  This is how I explained it to her.  If I were to spend $2000 per year on a plan at age 49, I would have to pay on that policy for 31 years before it would cost what my Mom’s annual rate in her assisted living facility is today.  In 31 years, can you imagine what the cost of coverage will be if you factor in inflation?  If you would like more information, please contact me.