The Death of CLASS

I’m not talking about a loss of manners or style or discretion in a world in which technology has helped push the doors open wide to reveal everything that used to be private or personal.  That’s a whole other subject.  I’m referring to CLASS, President Obama’s attempt to establish a national long term care insurance plan.

            CLASS, which stands for Community Living Assistance Services and Support was the part of President Obama’s 2010 health care reform bill that addressed long term care.  There weren’t many specifics in the bill, just a general outline.  The plan was to be a voluntary government program under which participants pay a monthly premium, which would then guarantee them a small benefit to cover their long term care needs.  However, they would be required to pay into the program for at least 5 years before claiming the benefit.

Participants would pay a monthly premium through payroll deduction.  The program was not intended to be another government funded one.  How much of a benefit would be paid and for what types of care weren’t clearly defined in the bill which became law.  The plan called for a committee to be formed to develop all the details over the next 2 years with the goal of beginning enrollment in 2012 and payouts in 2017.  Now, you may notice that I keep referring to the plan in the past tense.  That’s because only 19 months after the law was passed the President scrapped the CLASS program.

Last April, in this blog, I pointed out the many flaws in the plan.  It didn’t take an actuary to look at the numbers and figure out very quickly that there would be serious problems collecting enough premium dollars from a shrinking workforce to be able to pay out the mountain of claims that are sure to come as our population continues to age.  There was also the matter of the benefit amount which, although never finalized, was rumored to be in the $50 to $75 range.  The whole plan just didn’t seem to be well thought out, and perhaps that’s why the Obama Administration chose to announce its death on Friday.  (If you have bad or embarrassing news to release the PR trick is to release it on Fridays so it hits the papers Saturday when readership is at its lowest.)

So, where does that leave us?  I said last year that I wasn’t expecting much from CLASS and that proved correct.  But, I am also sure that this isn’t the last we will hear from this president or the next administration on the subject.  We can’t continue to ignore the problem of long term care in this country and we can’t hope and pray that the government will come to our rescue.  Each of us needs to ask some hard questions.  “Do I have a plan and is it adequate to meet my needs?”  If you don’t or it isn’t, then you’ve got to talk to the right people, such as your financial advisor, accountant, insurance agent and elder law attorney and get help now.  The clock is ticking and time is most definitely not on our side.

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