What Health Care Reform Could Mean for Your Client’s Long-Term Care Plan

Posted on September 9, 2010.

Author: Frank N Darras

After years of trying to pass health care reform, Congress has passed an act to assist the people who just can't afford health care. The new Patient Protection and Affordable Care Act has many health care components, one which includes a nationwide long term care program that will be extended on a voluntary basis to anyone who wants it. It's called the Community Living Assistance Services & Supports Act — or, the CLASS Act.

This is the first real attempt by Congress to address the long term care needs of our growing senior population. And while the implementation of this act is still clear as mud, the gist is that all participants will be asked to pay a monthly premium for a period of five years before they will be allowed to receive long term care benefits.

If we are unclear about what the act offers and when help will arrive, imagine the confusion and uncertainty among our senior community regarding what this act really means to them. Early estimates suggest that willing participants will receive roughly $50 to $75 per day in benefits. Will that really be enough down the road when participants are ready to collect benefits, since medical expenses and care costs are on the rise? No one knows for sure, but let's look at some numbers:

* Nearly 1.5 million Americans live in nursing homes
* Nine million people over 65 need long term care of some kind
* Ten percent of those who reach age 65 will live in a nursing home for an average of five years
* Almost 70 percent of all people in nursing homes are women
* In 2010, an estimated 13 percent of the senior population will be diagnosed with Alzheimer's

What does long term care cost today? On average:

Home health care $80/half day; $160/day
Adult daycare $64/day
Assisted living $101/day
Semi-private nursing home $191/day
Private nursing home $212/day

And here's what aging America will look like in the very near future:

* There will be more than 71 million people age 65 or older by 2030
* By 2020, 12 million will need long term care of some kind
* Half of these people will be 85 or older

The math is simple. Looking at the cost of health care today and the direction in which America's aging population is headed, we will all have to pick up a portion of the cost on our own or supplement this government program with a private long term care program. The CLASS Act is a good start, but long term care is now the must-have insurance of the 21st century.

Your clients may also have other questions about whether they should go with private coverage versus this public plan. Some wonder how private LTCI compares with the coverage they will receive from this new act. Some wonder whether they should buy private or wait. The act won't begin until 2012 or 2013. This two-year wait, along with the five years consumers have to pay in premiums before they receive benefits creates a seven-year dead zone, at best.

If your clients do enroll in the public plan, will they be allowed to supplement with some sort of private coverage to make up for the skinny benefits? What will the restrictions be on the type of care a person can receive? This will require research and careful planning so interested Americans can make a good financial decision.

Insurance companies both big and small are also wondering, who must offer this policy? Who is exempt? What if a voluntary plan is already in place? Unfortunately, the act creates more questions than answers.

One thing is certain: It's crucial to put a spotlight on the need for long term care. The CLASS Act is a well-intentioned step to help our aging population prepare and embrace their own long term care needs. We will all need some assistance with activities of daily living as we age, and dementia appears to be on the rise without a cure in sight.

I always suggest to consumers that they buy their own individual coverage if they can afford the premiums. Individual coverage offers outstanding consumer remedies should a carrier wrongfully deny much-needed benefits, and provides the policyholder peace of mind knowing they have the protection they need in place today.

Frank N. Darras is founding partner at DarrasLaw and specializes specializing in disability and long term care insurance law. He can be reached at 800-458-4577 or visit info@darraslaw.com.