LTC Bullet: CLASS Lives

Tuesday, November 30, 2010


LTC Comment: Despite a resounding "no thanks" from voters, health reform and CLASS march on. More after the ***news.***

*** CENTER CITED IN FORBES. Former CAHI Director Merrill Matthews writes in Forbes: "As for long-term care, upper and middle-income families often use eldercare attorneys to hide grandma's assets so Medicaid will pay for her nursing home. States could crack down on eligibility in several ways. They could dramatically reduce or eliminate a home equity exemption that can go up to $750,000 (England only exempts about $37,000), according to Steve Moses of the Center for Long-Term Care Reform. More than 80% of seniors own a home, and more than 70% of that number have a clear title. States could also require a reverse mortgage so that families actually use up all assets before receiving state help. But these are good ideas even if a state doesn't opt out of Medicaid." Read "Should States Opt Out of Medicaid?" here. ***

*** LET'S BE GRAPHIC. The theme of our New York LTC financing report that I'm writing this week is "denial." Both consumers' denial of LTC risk and, especially, Medicaid policy makers' denial of economic reality. So, I'm seeking a graphic for the draft report's cover. If you have the skill and the interest, or know someone who does, I'd love to receive a picture of a cartoon character who's run over a cliff but hasn't fallen because he has not looked down yet. I'll use the graphic for our draft report though, full disclosure, the think tank underwriting the work will probably utilize their own graphic artist for the final published version. Can you help us out? ***

*** SPECIAL: The National LTCi Producers Summit organized by the American Association for Long-Term Care Insurance takes place April 3-5, 2011 in Las Vegas. It's a 3-day event that brings together hundreds of producers, agencies, insurers. This year, Connie Garner who spearheaded the passage of the CLASS Act will attend to speak and address questions. So will CEOs of leading LTC insurers who'll address attendee questions about the future of the industry. Jesse Slome, AALTCI's director has generously offered to donate $50 to the Center from each new registration received between now and Monday, December 20th. Registration is $279 ($328 for non-members). You must write "CenterLTC" on your registration form for us to receive the $50. All Summit details are online at or by calling the Association at (818) 597-3227. This offer is for new Summit registrations. I'll be attending this outstanding event. So will Damon. We look forward to seeing you there. ***

*** LATE BREAKING: Steve Moses will take the "con" side in a light-hearted "debate" of the CLASS Act at the following event. Come check it out, and take advantage of this scholarship if you qualify. SCHOLARSHIP! Get $800 off the "Early Bird" (before 1/13/11) $895 individual registration fee to attend the 11th annual "InterCompany Long-Term Care Insurance Conference." Discounted room rates of $129 are available at the Atlanta Marriott Marquis venue and you can take in a special Sunday sales training event starring Jesse Slome (AALTCI), Harley Gordon and Skip Liddell (CLTC) and Margie Barrie (LTCP). The requirement to qualify for this scholarship is $50,000 of direct LTCI premium production either in 2009, or in the twelve months prior to application. This is a great deal; jump on it. Details and application here. ***

*** MORE FROM AALTCI. A new industry award will recognize sales achievement by brokerage agencies marketing long-term care products including traditional insurance as well as linked-products. The awards program conducted by the American Association for Long-Term Care Insurance is open to all agencies who distribute LTC products through independently-contracted insurance professionals. The award recognizes agencies in six categories ranging from annual paid business of under $500,000 to those with $10 million or more in (2010) paid premium. All products offering long-term care benefits are included. Entries for the 2011 award must be received by the Association prior to February 18, 2011 to be eligible. To receive an entry form, call the Association at (818) 597-3227 or send an Email to ***



LTC Comment: CLASS is the law of the land. How it happened and why it couldn't be improved or stopped in time are old news we covered long ago. But now the die is cast. Unless and until Congress and the President put a stake in its heart (unlikely any time soon), the CLASS roll out will continue for now. Regs will be written; advisory commissions, appointed; new agencies and boards created, and so on. If the program is repealed or proves infeasible to execute, all this effort will be wasted. We'll all move on to something that makes more sense (hopefully). But in the meantime, it behooves us to keep a close eye on CLASS developments. So here's some of the latest.

If you have any doubt CLASS is on the move, read the New York Times "New Old Age Blog" for November 19.

When the bill passed in March, the Class Act provisions had gone unmentioned for so long that I found myself calling people in Washington, anxiously asking whether the program had survived efforts to strip it from the bill. . . . But the Class Act lives. Last week, the federal Department of Health and Human Services submitted a notice to The Federal Register: It's ready to assemble a 15-member advisory council that will guide Secretary Kathleen Sebelius in figuring out the details and developing the plan, which probably will not start signing up participants until 2012.

Originally, you had a whole two weeks to submit nominations for the CLASS "Independence Advisory Council." But if you have someone in mind, you'd better jump to it. The deadline is tomorrow.

You've been hearing a lot lately about busted budgets, unfunded entitlements, and even the possibility states will bail out of Medicaid. Howard Gleckman of the Urban Institute drew on that theme in a piece yesterday titled "Replace the Tattered Medicaid Long-Term Care Safety Net." I don't agree with him on much, but I find plenty to say "Amen" to in this article. For example:

Medicaid, the state-federal health program that also pays for nearly half of all long-term care services for the frail elderly and younger people with disabilities, is in big trouble. A deep ongoing budget crisis in most states as well as the likely end of special economic stimulus payments could lead to both long-term care service cuts and reduced payments to the nursing homes and home health agencies that provide this assistance.

And this . . .

The long-run future is even dicier. To start, the new health law will add an estimated 16 million more acute care patients to the Medicaid rolls starting in 2014. Congress promised to pick up most of the cost of those added beneficiaries, though the federal payment will slowly decline. If states pay more for those acute care patients, the extra dollars must come from somewhere. And one possibility is Medicaid funding for long-term care.

So true. But then this!

[I]t makes sense to get the program out of the long-term care business. And a way to do that would be to replace it with a broad-based insurance system. The Community Living Assistance Services and Support Act, which was created by the health overhaul, will create a voluntary national long-term care insurance program. Program participants would begin contributing in 2012, but wouldn't be eligible for benefits for at least five years.

But to his credit, Gleckman acknowledges . . .

But there are real doubts about whether CLASS insurance will attract enough middle-class buyers to reduce the burden on Medicaid. If it can't, Congress should begin to think about what insurance design can, and do so before the Medicaid safety net for long-term care is in tatters.

Hear, hear. Finally an avid advocate of CLASS confesses it is most likely unworkable.

Seems to me, however, that the logical next step isn't CLASS but rather to save the Medicaid safety net before it is too late. How? Target Medicaid to people who need it most. Divert everyone else to responsible LTC planning while they're still young, healthy and affluent enough. Private financing alternatives like home equity conversion and long-term care insurance are just waiting to save the day as soon as Medicaid and CLASS get out of the way.

A friend of mine who is a professor of elder law (go figure) has written one of the best analyses of the CLASS Act I've seen so far. The author is Richard L. Kaplan, J.D., the Peer and Sarah Pedersen Professor of Law at the University of Illinois (Urbana-Champaign) where he teaches federal income taxation and elder law. The article is titled "Financing Long-Term Care After Health Care Reform." You can find it in the July-August 2010 issue of the Journal of Retirement Planning or go here for a one-click download. He concludes:

The 2010 health care reform legislation includes a LTC entitlement that is available to all, regardless of health status and financial resources. This program, dubbed CLASS, is a major addition to the array that clients may want to consider in financing their long-term care. It does not, however, replace LTC insurance because CLASS benefits are unlikely to cover the cost of institutional LTC settings, such as assisted living facilities and nursing homes. If insurance is most appropriate to cover catastrophic expenditures, then the CLASS program may not be the most cost-effective approach to funding LTC.

I encourage readers to have a closer look at Dick Kaplan's article. He puts CLASS into historical and programmatic context in a way few authors do successfully. Your time invested perusing the piece will be well rewarded.

For Dragnet-style coverage of CLASS ("just the facts, ma'am"), see pages 11-12 of "How Health Care Reform Affects Seniors," by the Society of Certified Senior Advisors.

You should probably take a quick look at "Setting premiums could present obstacle for CLASS Act implementation, expert says" published November 17 in McKnight's Online. It describes a National Press Club forum held the day before on "Implementing the CLASS Act: Financing Long-Term Care in the United States." What tickled me in the article was this understatement:

The Community Living Assistance Services and Supports Act, or the CLASS Act, which was created under the Patient Protection and Affordable Care Act, has a few hurdles to clear after the midterm elections before it can become a success.

Ya think?

*** THE CLASS CONTENT covered in today's LTC Bullet has been added to our Members-Only Zone website here:, exclusive for Center members. Not a member yet (you should be if you’re receiving this)? Need to renew? Need a refresher on your username and password? No problem. Just contact Damon at 206-283-7036 or Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning. ***