Obama Backs Efforts for Long-Term Care Insurance

President Barack Obama is backing efforts to create a new government program to provide long term care insurance as part of the broader health care overhaul.

The voluntary insurance program — sponsored by Massachusetts Democratic Sen. Edward M. Kennedy — would pay a modest daily cash benefit of at least $50 that people could use for in-home services or nursing home bills.


Health and Human Services Secretary Kathleen Sebelius said in a letter to Kennedy that the administration supports the program because it would help elderly and disabled people stay in their own homes. But the Congressional Budget Office is questioning the program's long-range solvency.

In a letter to Kennedy released Tuesday, Health and Human Services Secretary Kathleen Sebelius said that Obama believes the long-term care program is an "innovative" idea that should be "part of health reform."

"Enactment of this important legislation would expand resources available to individuals and families to purchase long-term services and supports to enable them to remain in their own homes in the community," Sebelius wrote.

Senator Kennedy's idea, known as the Community Living Assistance Services and Supports Act or CLASS Act for short envisions workers and their spouses enroll in the long-term care insurance program for a monthly premium of $65. People would have to pay premiums (become vested) for at least five years before they could claim benefits and they would have had to be working at least three of those years.

Beneficiaries would qualify for assistance if become disabled and unable to perform at least two or three basic activities such as bathing or dressing.

Because of the five-year vesting period for benefits, congressional budget analysts estimate the program would run a fat surplus in its first 10 years. Soon after that, it would get swamped by claims.

To keep the program financially solvent through 2050, the government would have to raise premiums significantly, to $85 a month, and keep benefits at the $50 daily minimum, the budget office said. And even with those measures, the program might still increase the deficit.

It is important that long-term care is being addressed, but how realistic is the government when in 2009 they are putting on the table a $50/day benefit to help cover expenses in the home. At 2009 rates, the average caregiver has an hourly rate of $18-20/hour. Fast forward 10 years and this $50/day benefit will not provide you with 2 hours of care.

Is this really solving your Long-Term Care problem? Is it good planning to wait to see what the government will sign into law?



Consult a Long-Term Care Specialist to see what your options are TODAY!