Senior Fellow, NASI
The United States is going to try something new – a social insurance approach to the problem of paying for long-term services and supports. As more and more of the 76 million baby boomers move into their 60s and beyond, there will be a growing population of people who need help with the activities of daily living (using the toilet, dressing, bathing, eating, getting in and out of bed, walking around in the house or apartment). To date, this has been a private responsibility, with individuals and families providing care or paying for it out of their own funds. The government gets involved only if you go into a nursing home and “spend down,” using all your money until you have just $2,000. Then you qualify for Medicaid, the government’s health program for the poor.
The new approach, included in the health reform legislation passed by Congress and signed by the President in March, is called the Community Assisted Living Services and Supports Act (CLASS Act). Employers will offer it, with workers permitted to opt out. Participants must pay premiums for five years to be eligible to collect benefits. A doctor would have to certify that an individual needs help with at least two activities of daily living to collect benefits. The cash benefit is likely to be $50 or $75 a day. The premium is uncertain, depending on the number of people who enroll in the program. Estimates range up to $240 a month, the figure calculated by the Richard Foster, the chief actuary of the Medicare system. Premiums would be subsidized for certain groups of consumers, with students and people at incomes up to 100% of the poverty level paying just $5 a month. The SCAN Foundation, through its research and policy library, has up-to-date information on the CLASS Act.
NASI has produced a working paper with a detailed explanation of the CLASS Act. Long-term care expenses will be a burden for a millions of people as the baby boom generation ages and many develop physical and mental problems requiring long-term services and supports. The CLASS Act offers a new solution to this problem, but it remains uncertain how many people will decide to participate in this approach.