Health Reform

More on The CLASS Act: Improving Access to
Home- and Community-Based Services
and Long-Term Care Insurance

 

Many people who currently require long-term care receive benefits through Medicaid. However, Medicaid is structured to favor institutional care over home- and community-based care. T he CLASS Act, one of the provisions of the National Health Reform law, will allow states to create new options for Medicaid beneficiaries to obtain home-and community-based services and will create incentives for states to restructure their Medicaid programs to offer these services. It will also create a voluntary long-term care insurance program that will help people afford the services they need so they can remain living in the community longer.

Improving Access to Home- and Community-Based Services

Not only is community-based care preferable to nursing facility placement in many cases, but experiences from some states show that providing more long-term services in the community can save money, too. While community-based services can be cost-effective in the long run, developing them requires an initial investment, and that can be hard for states, especially during the current economic downturn. As a result, Medicaid beneficiaries’ access to home- and community-based services is often inadequate. To address this, health reform establishes a new Medicaid state plan option called the Community First Choice Option, starting October 1, 2011. This option covers community-based attendant services and supports to help Medicaid beneficiaries with daily activities and health-related tasks. States that take up this option will receive a 6 percentage point increase in their federal match for costs associated with the program.

Health reform also creates a second optional program, State Balancing Incentive Payment Program, the goal of which is to give states incentives to make program changes that have been shown to increase the use of home- and community-based services. Effective October 1, 2011 through September 30, 2015, this option gives additional federal funding to states if they make structural and administrative changes to their Medicaid programs—changes that have been shown to reduce nursing home use, increase the use of home and community services, and help contain spending on long-term services. These include rules to prevent the impoverishment of spouses of individuals who use home- and community- based services. Starting in 2014, health reform will require states to provide the same financial protections that are currently available to spouses of Medicaid beneficiaries who are in long-term care institutions to the spouses of Medicaid beneficiaries who are using home- and community-based services.

Long-Term Care Insurance

Health reform establishes the CLASS program, a voluntary public insurance program for long-term services. The program will start in 2011; the initial date to enroll has not been set. The program will be available to working adults. After a few years’ enrollment, individuals can stay in the program if they no longer work. There is a five-year vesting period. After that, enrollees who need long-term services will be eligible for a daily cash benefit. The benefit can be used to pay for services and supports such as home modifications that assist with continued community living.

About 70 percent of people over age 65 need some long-term services. But only about 9 percent of all adults have insurance that covers that type of care. There are several reasons for such low insurance rates. Employers don’t typically offer long-term care insurance, so people must buy policies in the individual market. That can be very expensive; benefits can be difficult to compare; and consumer protections for policy holders are often inadequate, which makes people wary of buying such policies. In addition, many people incorrectly believe that Medicare covers long-term services. In fact, Medicare coverage of these kinds of services is quite limited and does not include home- and community-based care.

Without insurance, the cost of long-term services can be financially devastating for the average family. Many eventually exhaust their financial resources and qualify for Medicaid, but that does not always mean that they will have access to the community-based care that many need and want. While Medicaid covers long-term nursing facility care, coverage of community-based care is optional and varies tremendously from state to state.

The CLASS program will provide more reliable and more accessible assistance with the costs of home- and community-based care than most other coverage options that are available today. The program will not deny coverage or charge a higher premium based on health status, like private insurance can. It is a lifetime benefit, so it pays as long as you need it; private insurance often limits the dollars or time period covered.

A $75-a-day benefit translates to $27,000 a year. While that may not pay for all of the care that someone needs, it can be a substantial contribution. The benefit will be adjusted to increase with inflation, something that not all private long-term care insurance policies do. The CLASS program will keep many people from spending their assets to the point of reaching Medicaid eligibility. The Congressional Budget Office estimates that the program could save more than $3 billion in Medicaid costs in its first 10 years.

More Information

Families USA has recently updated two reports, from which this article was adapted, which detail the benefits of the CLASS ACT. For more information see:

-From “New resources for the LTSS community”, e-mail, Families USA, May 03, 2010.

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