Want Some Class?
I have recently had numerous requests for more information on Long Term Care Insurance. With the recent passage of the health care reform bill, long term care and long term care insurance has been brought into the spotlight again. And I am glad that it has.
For those of you who have been following In Simple Language for the last couple of years, you will probably remember that I am a big proponent of long term care insurance. I feel it is a very important part of a person’s “financial plan” that is often overlooked or ignored.
Since I have had personal experience with long term care issues because of my brother’s health problems before he died in January 2009, I have felt even more strongly than ever that everyone needs to learn more about long term care and long term care insurance.
Your CLASS Act: Community Living Assistance Services and Supports Act of 2009
As usual, our congress has created confusion when trying to get information out to the public about certain topics. Trying to research this topic was confusing because there are two CLASS Acts of 2009. One is the College Learning Access Simplicity and Savings Act of 2009 and the other is the Community Living Assistance Services and Supports Act of 2009…both “CLASS” Acts. We will be discussing the latter.
What this act offers is a voluntary payroll deduction from workers to fund future long term care needs. If you allow your employer to withhold an amount of “premium” from your paycheck- just as they do now for social security and Medicare-you will be enrolled in the government’s long term care insurance program.
I am not certain at this time if this is a good idea or not. On the surface it seems like a good idea. All of us at one time or another will face long term care needs for ourselves or someone we know. That is just a fact of life and especially when growing older. Then there are the people who will need long term care, regardless of age, because of some accident or illness in their life.
The Pros and Cons of CLASS
Because of my experience with long term care needs in my family and the past 15 years being involved in educating, promoting, and selling long term care insurance-although I do not sell any financial or insurance products any longer-I think it is a good idea to provide all Americans with the option of providing for their long term care needs whenever they arise.
This act only provides bare bones amounts of coverage for minimal employee cost but I think it is a good start towards people providing for their eventual long term care needs. There would be a minimum of hassle with paperwork and the premium payments would be automatically taken from each employee’s paycheck so you wouldn’t have to worry about missing a payment.
What I don’t like about this program is the government having another of its hands in my pocket. I am required to pay into the miserably failing social security system and the incredibly complex and barely functioning Medicare system. Now the government wants to add another layer of withdrawals to your already diminishing paycheck. And they will control and monitor it just like they have controlled and monitored the social security and Medicare system. This is the part that scares me.
Right now the act says that paying into the long term care proposed system is voluntary. When did the government, any government whether it was federal, state or local, not turn a voluntary withdrawal system from an employee’s paycheck into a permanent, required withdrawal. If you don’t believe me ask those people that had their states put in a “temporary” state income tax or cities with “temporary” city taxes.
Once the bureaucrats get their hands on your money they just can’t seem to let go.
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on June 30th, 2010 at 12:10 pm
The CLASS Act’s $50 per day “average benefit” will only cover a small portion of the $75,000+ per year most Americans pay for in-home care. Most people who want to protect their savings will still need to purchase long-term care insurance–especially Long-Term Care Partnership policies.
One of the biggest problems we face is that most Americans still think that Medicare or their medical insurance covers the cost of long term care.
The CLASS Act addresses this problem by making a very clear statement: You have to pay for your own long term care. You either have to pay for your own long term care by using your savings, the $50 per day CLASS Act benefit, LTC insurance, or a combination of these.
Most of the ten million Americans who own LTC insurance own it because they’ve seen family spend down their assets before qualifying for Medicaid. The CLASS Act will help alert the rest of the country to the fact that they need to financially plan for their future long term care needs.
There are 2 reasons the projected premiums for the CLASS Act are much higher than a comparable long term care insurance policy.
1) Anyone who is working (even just part-time) can enroll in the CLASS Act regardless of their health history. Enrollees with severe diabetes or crippling arthritis will pay the same amount for the CLASS Act benefit as those who are in perfect health.
2) Those who earn less than the federal poverty level will be automatically enrolled in the CLASS Act for only $5 per month (unless they opt-out). Their premiums are being subsidized by the rest of the enrollees.
Many of the leading long-term care insurance policies today can pay family caregivers. And many even offer a refund of premiums paid upon death. Most of the leading LTCi policies offer “lifetime” coverage, not just 3 or 4 years. However, if you purchase a “Long Term Care Partnership” policy, you only need to buy the amount of insurance that is equal to the amount of assets they want to protect from Medicaid.
Scott A. Olson
on July 26th, 2010 at 12:22 pm
Life Insurance Quotes…
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on July 26th, 2010 at 12:42 pm
Thanks for your comment.
on July 27th, 2010 at 4:21 am
Jim…
Thanks, just what I was looking for. Found you by looking in yahoo with the word (Financial) by the way:-)…
on July 28th, 2010 at 10:46 am
Jim,
We are glad to be of help.
Rich