Embedded in the Patient Protection and Affordable Care Act (PPACA) is the CLASS Act, a bill that was designed to shift Long Term Care exposure from Medicaid to a participant-funded program. As a broker, this is an ideal opportunity to educate clients about this component of healthcare reform and generate broker revenue through the offering of a private long term care insurance offering.
CLASS ACT OVERVIEW
Community Living Assistance Services and Support Act
• Incorporated into the 2010 Healthcare reform (PPACA)
• Creates an insurance-based system
• Launch date of 2012
• Moves long term care funding from federal (Medicaid) to private (individual)
• Anticipated mandatory opt-in for employers if employee requested
• Likely to evolve to employer mandated
CLASS ACT BENEFITS
The CLASS Act is beneficial as an introductory program offering:
• Ease of access for employees
• Effort to reduce financial strain on Medicaid
• Guarantee Issue
CLASS ACT DEFICIENCIES
The CLASS Act has several inadequacies, including:
• A five year waiting period
• Anticipated cash benefit of $50 per day
• Less coverage compared to a private offering
• No pool, resulting in volatile rates
• Administration by the employer
• One coverage option for all employees
PRIVATE LONG TERM CARE INSURANCE
Employers who supplement CLASS with a private long term care option can benefit from:
• Increased coverage offering
• Executive carve-outs
• Cost-share opportunities for recruiting/retention
• A triple tax benefit
BROKER BENEFITS
• Generous commission opportunity
• Critical portfolio diversification in a post-reform world
• Insulates against competing brokers
• Turnkey solution to a growing market
By taking a fact-based approach to decisions about long-term care insurance, everyone emerges a winner. Employees can have policies that provide realistic coverage; employers can have a powerful cost-effective tool for attracting, retaining and rewarding employees; and brokers can have one more option in their portfolio that gives employers the value-added service they are looking for.