LTC Bullet: More CLASS

Tuesday, May 25, 2010


LTC Comment: We've posted new material to our comprehensive "CLASS Act Update" in The Zone. A summary follows after the ***news.***

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*** MRS. AGE WAVE. Maddy Dychtwald's (Age Wave sage Ken's wife's) third book, Influence: How Women's Soaring Economic Power will Transform Our World for the Better, was released on May 4th. If you'd like more information, visit her website (, her blog ( or follow her on Twitter (@GoInfluence). Long-term care is definitely a "women's issue," so I expect Maddy Dychtwald's book will be packed with ideas and statistics that can help you reach women about the critical issue of long-term care planning. ***



LTC Comment: Individual and corporate members of the Center for Long-Term Care Reform have access to our "Members Only" website, aka "The Zone."

In The Zone, they find a wealth of useful information including "The Almanac of Long-Term Care;" a one-hour webinar on the CLASS Act sponsored by the Corporation for LTC Certification; a transcription of our two-hour LTC Graduate Seminar; archives of all LTC E-Alerts and LTC Bullets; as well as many other features to keep you in the know with knowledge at your fingertips.

Our latest addition to The Zone is a comprehensive list of information and documents about the CLASS Act with live hyperlinks to vital source documents. Today, we've added the following new items to our "CLASS Act Update." Check them out in context with dozens of other related materials here.

[If you do not belong to the Center yet or lack a user name and password to gain access to The Zone, contact Damon at 206-283-7036 or He'll have you "Zoned In" momentarily. Annual individual memberships are $150 or $12.50 per month. Corporate memberships start at $1,000 per year. Check out all the Center's membership levels and benefits, each of which includes access to The Zone, here.]


New additions to our "CLASS Act Update" in The Zone

CLASS Act: Madoff Would Be Proud, May 18, 2010, report of the Senate Joint Economic Committee Republicans.
: "Obamacare includes a new long-term care entitlement called CLASS that masks health care reform's full costs. CLASS will add to federal deficits within 15-20 years. It is financially unsustainable due to poor design. Fixing it will require premium hikes, benefit cuts, and/or mandatory participation."

Larry Rubin, Jinn-Feng Lin, Victor Shi, and Alison Yao, "The CLASS Act: Are you prepared?," PriceWaterhouseCoopers, 2010
: "This article attempts to compare the CLASS program with private sector coverage based on information available at the time of writing."
Categories of comparison
: Enrollment process; Participation rate; Underwriting and vesting period; Premium; Benefits amounts; Non-forfeiture benefit; Benefit payout; Administrative expense; Tax treatment; Dependent coverage; and Fund management.

CLASS Act could spur LTC reckoning, May 3, 2010
: "
Organizations that decide to offer the CLASS Act option through payroll deduction as a stand-alone benefit or alongside a voluntary plan will need to explain not only how the government-run program works, but also how it differs from group LTC insurance so that there's no confusion."


LTC Comment: It's obvious from any serious reading of the literature on CLASS that expert opinion on the program is extremely negative. In fact, I think it is fair to say that no one, including the Act's advocates and sponsors, believes the program is operationalizeable as passed. So, what lessons should we take?

First, there is a very real possibility that CLASS, as it currently exists, will disappear. In fact, opposition to the entire health reform plan is so great and growing, that it may itself be repealed taking CLASS with it. See the latest Rasmussen poll for example: "Health Care Law: 63% Favor Repeal of National Health Care Plan." Quote: "Support for repeal of the new national health care plan has jumped to its highest level ever."

Second, whether the CLASS Act survives in some modified and rationalized form or not, advisors should be fully aware of its deficiencies now. Be prepared to warn businesses and individuals of the risks associated with government "insurance" that lacks (1) underwriting, (2) privately invested reserves, (3) definite premiums, (4) defined benefits, (5) contractual protections, or (6) any realistic prospect of actuarial solvency.

If they fix CLASS somehow, there will be plenty of time to re-evaluate


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