The Community Living Assistance Services and Supports Act — more commonly known as the CLASS Act — is part of the Patient Protection and Affordable Care Act, the healthcare reform legislation signed into law on March 23, 2010. The new legislation creates a national voluntary program to defray some of the costs associated with long-term care for working Americans.
The CLASS Act addresses challenging problems brought about by an aging population — problems that tear at the very fiber of American society. As more Americans become working caregivers, one study estimates that lost productivity will cost businesses $33.6 billion. Another study estimates that healthcare costs eight percent more for working caregivers than for employees without caregiving responsibilities.
Although employers are encouraged to offer CLASS Act coverage, they are not required to do so. In companies that choose to participate, employers will automatically enroll their people unless they specifically opt-out.
Significant concerns have been voiced about the CLASS Act by actuarial experts both from within and outside of government. One concern is the potential for what the insurance industry calls adverse selection. The legislation requires pricing to ensure solvency over a 75-year period but must accept all employees over age 18 who meet a minimum ‘at work standard’ regardless of pre-existing medical issues. As higher pricing limits participation, a disproportionate number of people with pre-existing health issues will enroll.
Other concerns are the cost of subsidizing rates for the poor and the young, a ‘one-size-fits-all’ design that will cover only a minimal level of the expenses associated with long-term care, the exclusion of non-working family members, and the absence of protection against future premium increases. In fact, there are concerns that the cost of coverage may actually be more expensive than private insurance.
One of the benefits of the new law is that it gives employers a unique opportunity to protect their own productivity by educating their people on a problem that has been quietly — but rapidly — growing: the combination of an aging population and the rising costs connected with long-term care issues. It will also help their people avoid the financial pain and even devastation that can accompany the need for long-term care.
Long-term care has the potential to affect both a company’s productivity and the financial well being of its employees, and employers will be required to decide whether or not to participate in the program.
So what does CLASS Act mean for businesses?
Our new White Paper “The Class Act: What it means to employers, their employees, and the nation” addresses questions and concerns about the CLASS Act and is available as a free download. To get your copy:
Employers and individuals may download by going to: http://www.empowerltci.com/2010-class-act-guide.html
Brokers and agents may download by going to: http://www.empowerltci.com/2010-class-act-guide-for-brokers.html
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