The Government's New Long-Term Care Program

Tuesday Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.

Do you have Long-term Care Insurance? You know you should. I don’t. I waited too long. I now have type II diabetes. (Why didn’t I listen to myself years ago?)

Our Government believes that every worker should have long-term care insurance, and to that end has created CLASS, or the Community Living Assistance Services and Supports program. This part of the new government-run health care law will be administered by the Department of Health and Human Services.

The Purpose

To help seniors to stay in their homes. The benefit can be used for home health care aides, adult day care, installation of safety features, like bathroom grab-bars and handrails. However, the funds can also be used for assisted living or nursing home care.

Eligibility

• Program participation is voluntary.
• All active workers will be eligible, regardless of health.
• Worker must need substantial assistance to perform at least two or three (to be determined) of the ‘activities of daily living.’ These are eating, toileting, transferring, bathing, dressing and maintaining continence, or have substantial cognitive impairment.

The Cost

• A monthly premium will be deducted from the paycheck.
• Premium will be based solely on age when entering the program, with the average premium being $1,500, (younger workers pay less, older workers pay more).
• Worker will be eligible for benefits after five year of paying premium. (So, if implemented in 2011, benefits can begin to be paid in 2016.)
• Worker must have worked at least three of five years after entering program.

The Benefit

• The minimum benefit is expected to be $50 a day.
• A higher benefit, maybe $75 a day, depending upon the level of disability.
• No lifetime or aggregate limit.
• Like any insurance company, the government can adjust premiums for both current and future enrollees.
• The government will be able to reduce daily benefits.

The Reality

Wrongly, many people rely solely on Social Security for retirement. Social Security is only meant to be a supplement. Here too, this program can only be a supplement. A daily benefit of $50 or $75 is laughable, considering the average daily cost of a nursing home is over $200, and a licensed in-home health aid is at least $20/hour. Add the uncertainty of the cost and benefit of this Government program, as those in poor health will probably sign up faster than the rest of the population.

Should you participate? Don’t know, as all the facts aren’t in yet. One thing is for certain: if your advisor has suggested purchasing a long-term care policy, DO IT. You can always cancel if the government protection meets all of your needs.

Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.