Seniors who were hoping to take advantage of the Community Living Assistance Services and Supports (CLASS) program, wrapped inside the new federal health care bill, are out of luck. The Obama administration has pulled the plug on the long-term care insurance plan which was dogged from the beginning by doubts over its financial solvency. Targeted by congressional Republicans for repeal, the program became the first casualty in the political and policy wars over the health care law. It had been expected to launch in 2013.
Although sponsored by the government, it was supposed to function as a self-sustaining voluntary insurance plan, open to working adults regardless of age or health. Workers would pay an affordable monthly premium during their careers, and could collect a modest daily cash benefit of at least $50 if they became disabled later in life. The money could go for services at home, or to help with nursing home bills. But a central design flaw was apparent from the beginning. Unless large numbers of healthy people willingly sign up during their working years, soaring premiums driven by the needs of disabled beneficiaries would destabilize it, eventually requiring a taxpayer bailout.
With no public option coming in the foreseeable future, the failure of CLASS further points out the need for retirees to have a long term care plan. Nearly 80% of seniors surveyed in a 2010 AARP poll thought that Medicare or Medicaid were options. Unfortunately, Medicare provides little coverage for long-term care. So many elderly, after depleting their savings, rely on Medicaid to pay their costly nursing home bills. Medicaid only covers about 45 percent of poor Americans with incomes below the federal poverty level. To be eligible for coverage, individuals must fall below certain income thresholds, which vary by state, and belong to certain categories, such as having dependent children, or being pregnant or disabled. In most states, a parent in a family of four who gets paid the federal minimum wage makes too much to qualify.
Due to the recession, most states have tightened spending on so-called, Human Services. The result will be that more burdens will be put on individuals, and their families, to afford care. Many states have even started placing tax liens on deceased person’s estates to recoup expenses. To find out more about how to afford the costs of long term care and protect your assets speak to a qualified financial advisor.